How to build a successful project management office?
Estimate reading Time: 10 minutes
Key Takeaways :
- The core mission of a Project Management Office is to standardize the project management process and improve delivery. But the benefits of having a PMO extend way beyond the performance of execution. Successful PMOs align the whole organization on a common vision to make the business more competitive.
- Every PMO is unique. The right PMO model for your organization depends on its specific features and requirements. This is why you need to understand the needs and challenges of your business in order to create a PMO that’ll make an impact.
- Managing the expectations of stakeholders (both decision-makers and team members) is of key importance in order for your PMO to be successful.
A Guide To Establishing An Impactful PMO
Many are the businesses and organizations looking to set up a Project Management Office to help improve the efficiency and consistency of their Project Portfolio Management activities. However, it is all too frequent to see firms invest a lot of time, effort and money in the creation of a PMO, only to realize that their new Office doesn’t really add business value, doesn’t meet the needs of the organization, or is not understood and identified as a relevant business function by employees and decision makers. This does not mean that the benefits of PMOs are overblown. Only that, when creating a Project Management Office, you need to do it right.
We hope that the considerations and tips below will guide and help you in your journey to creating a successful PMO.
Traditionally, a Project Management Office is defined as “a group or department within a business, government agency, or enterprise that defines and maintains standards for project management within the organization”.
The PMO is therefore a process-oriented organizational function with a responsibility to formulate consistent methodology — or methodologies — for project- and portfolio-related activities. Project Management Offices make sure that the different departments, business units or other organizational groupings follow the same process and use the same metrics for managing project delivery. In addition to establishing the standards, PMOs are often in charge of enforcement: they usually monitor project work to control compliance with the company-wide PPM policy they’ve implemented.
However, the job description of today’s PMO seldom stops there. As the custodian of standardized practices and consistent ways of working across the enterprise, the Project Management Office acts as a “binding agent” that brings teams together. In the digital age, the PMO is expected to ensure that diverse departments, teams and workers speak the same language and collaborate in a frictionless manner.
By disseminating best practices, by defining benchmarks, by developing libraries of shared knowledge and internal communication tools, the Project Management Office has the power and the responsibility to align all team members around a common vision and common goals — and to make sure those vision and goals actually match the strategic directions of the enterprise.
As a cross-functional entity, the PMO has a more comprehensive view of project activities and can coordinate work across projects and programs to avoid interdependency issues or conflicts and maximize value at the organization level.
So, a Project Management Office is a multipurpose function that may take on a wide array of tasks and duties, which all contribute towards increasing alignment across the organization. And this is how PMOs create lasting value for their organization. True, the PMO’s most immediately visible impact is the improvement of project execution. Project Management Offices streamline the project delivery process to eradicate specific pain points, to improve productivity and resource efficiency, to increase project success rate, to speed up time to market, and so forth. That’s a valuable contribution in itself. Yet, in addition to operational improvement, a PMO is instrumental in strategizing project activity.
Fostering alignment means making sure that decision-makers are aware of operational challenges and opportunities — and, conversely, that strategic directions are known and understood at all levels of the business. That project selection and prioritization factor in the strategic goals of the organization, and that project execution is geared towards achieving those goals. In sum, a Project Management Office gives greater purpose to project activity by emphasizing its business value. And that changes everything.
Establishing a Project Management Office is expected to provide a number of organizational benefits, which makes the initiative worth your while. Now, how do you proceed? A good first step is to define your “dream” PMO as precisely as possible.
In order to determine where you want to go, you need to understand your starting point. That is, the features that make your organization unique, its current market landscape, and most of all the challenges it faces. To gain that understanding, you should assess the processes, structures and tools that are currently in place for managing projects and portfolios of projects. Get a feel of the current behaviors and practices of team members. Identify the key stakeholders and understand their respective roles and responsibilities. Figure out how decisions are made and communicated and identify the problem-solving mechanisms. Try to get a sense of the overall PPM maturity of project teams.
You will also need to take into account parameters that go beyond the realm of project activity as such. For instance the overall culture of the organization (e.g. digitally-minded or control-oriented), its shape and structure (decentralized versus integrated, matrix versus vertical, etc.), and even its political climate. You may have to consider industry-specific factors. According to your line of business, your organization’s activity may be more or less influenced by specific forces — e.g. heavy regulatory requirements, reliance on capital-intensive assets, exposure to fluctuations in raw material prices, etc.
In particular, you need a fine-grained understanding of the requirements, constraints and limitations that your organization and its projects are facing. Those are the boundaries within which you can operate. They delineate the playing field for your future Project Management Office. For that reason, it is usually a good idea to focus on the negative. Pinpoint the frustrations, the problems, the performance gaps, the daily issues and blockers that bedevil your teams. Are outdated tools driving people crazy? Is excessive workload at the level of a department crippling productivity? Is poor cost tracking and management clobbering the business? Has it become urgent to solve targeted pain points? Is there a specific area of project management that you’re hoping to improve?
To achieve this understanding, you may directly observe project activity and analyze the course and outcomes of past initiatives, conduct employee surveys to collect ideas and feedback, meet with project teams and other stakeholders involved in project activity — both internal and external — to understand their expectations.
The preliminary mapping of requirements will help you build a Project Management Office that’s tailored to the needs of your firm. The possibilities are boundless.
Some narrow-scope PMOs will concentrate their action on a specific domain (like a key business unit, or the IT department) while others cover the whole organization. Enterprise PMO hubs have actually been gaining traction over the past years, especially for larger organizations.
Some Project Management Offices are execution-oriented and favor a very hands-on approach, others will rather focus on the formalization of the strategy at a higher level.
Some will feel the need to formalize and enforce ironclad policies, while others will try to empower teams and promote agility, play a supportive role, encourage skill development or continuous improvement, or increase collaboration.
In specific cases, the Project Management Office’s mission may focus on a targeted facet of PPM — for example, optimizing the allocation of project resources to ensure maximum utilization and cost-efficiency, or making sure that the project selection process consistently leads to the launch of strategy-aligned, high-return initiatives.
As you can see, there is no unique model for a Project Management Office. It’s up to each organization to define which kind of PMO suits its specific needs and challenges best.
Based on your first analysis and the requirements you have identified, you now have an idea of where you want to go. You can start drafting an action plan to realize your vision and create the Project Management Office that you want.
Lay out what the scope of your future PMO’s responsibilities should be: the extent of its domain, the nature of its missions, its governance structure and the stakeholders it should respond to. Try to figure out how it should interact with the project populations on a daily basis so as to create maximum value for them.
At this stage, you should also identify what your Project Management Office will need in order to perform optimally — for example hiring new staff with targeted skills, or acquiring PMO tools. A professional PPM software platform is usually a prerequisite for a successful PMO. PPM tools consolidate all your data to provide visibility over project activities and break down information silos. Automation features free up project teams from administrative tasks and minimize the risk of human error. Structured workflows help streamline project management at every step and stage of project life cycle. Analytics and data intelligence capabilities help make sense out of the information and support smart decision-making. Long story short, a Project Portfolio Management solution is definitely worth considering.
Tools and competency matter, that’s a fact. But the make-or-break factor when creating a Project Management Office is people engagement.
First of all, your initiative probably won’t go very far without a modicum of executive support. At the very least, you will need funding for your PMO’s infrastructure, tools and personnel. That means securing buy-in from your executive management. You will need to build a business case to demonstrate why your initiative is worth investing in, and how it will generate return. For that, you should come up with metrics designed to demonstrate progress over time.
The good news is that the same metrics and analyses can also be used to get the rest of your stakeholders on board. In addition to decision-makers, you need to convince all project populations, as well as the key managers (in HR, procurement, IT, etc.) your Project Management Office will have to deal with. Their support will be instrumental in the success of your PMO. So it is key to clearly explain the rationale behind your initiative, the services that the Project Management Office is going to offer, the problems and blockers that it is designed to solve. Illustrate the expected improvements, with focus on pain point eradication — telling people that you’re going to take away their most vexing problems is usually a great way to please the crowd!
One of the key reasons why communicating the value-added of your Project Management Office is so important is to avoid ending up with what Gartner has dubbed “Zombie PMOs”. You may have come across one of them at some point. The role of those PMOs is typically confined to that of custodians of the schedule. They lack authority and struggle to be heard. They are “there”, but do not bring measurable improvement to the business.
More often than not, this sad situation is not the result of an intrinsic lack of competency. Rather of the PMO’s inability to respond to the organization’s actual needs, or to demonstrate to its stakeholders what it does for the business.
Just “having a PMO” is not enough. You need to make sure that the Project Management Office you’re about to create will actually make an impact. That’s the key to its survival.
More and more organizations, large and small, are seeing the lure of a PMO and are setting out to create one. They have good cause to do so: from improved delivery efficiency to more insightful strategic planning, a PMO has much to bring to the table.
However, in order for your PMO to really create value for your organization, you need to do things right. That starts by making sure you create the kind of PMO that will fit your business and address its unique challenges. And that also requires getting everyone concerned on board, from project team members to C-level sponsors.
Creating a new function from scratch is seldom an easy endeavor, but the bottom line of having a successful PMO definitely makes the effort worth your while.
Suggested reads :
- PMO Set Up kit
- How a project management office can improve organizational effectiveness?
- The Role of the PMO in Project Portfolio Management