As an organization grows and matures, as the headcount increases and the number of active projects multiplies, there comes a time when in-house Project Portfolio Management or Information System professionals get to consider the option of creating a Project Management Office (PMO).
After all, increasing numbers of companies and organizations worldwide have established — or are establishing — Project Management Offices. Why is that? Is the PMO yet another buzzword, a trendy nice-to-have — not unlike foosball in the office? Or can it actually make Project Management much more effective and help your organization move up to the next level?
Here is an overview of the value and benefits of Project Management Offices for businesses and organizations.
A Project Management Office for more effective processes
The Fifth Edition of the PMBOK® Guide to the Project Management Body of Knowledge defines the Project Management Office as “a management structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques”.
A core responsibility of the PMO is the formulation of a consistent methodology, or mix of methodologies, for project work. A Project Management Office will make sure that sound processes are used to plan, execute and monitor the progress of the various projects, that all individuals, teams and departments use the same standards and benchmarks, and work based on common processes and terminology. In other words, that everyone is on the same page and speaks the same language.
PMOs will encourage the sharing of best practices and see to it that workers have the right toolsets and skillsets. They will more often than not be in charge of selecting the management tools to be used in the organization. Similarly, they will also drive further consistency in the reporting process.
Comparability and traceability
Common processes and ways of working will improve execution efficiency and project quality. They will also make projects comparable across departments and traceable in time. If the delivery methods change every other week or vary widely from team A to team B, there is no telling why a project performed better than another; whether a project failure was due to external events, or if it can be blamed on execution flaws and could have been avoided. There is no way to know what went right or wrong; no way of telling what is working and what is not. Which means that there is no way to learn from past mistakes and to improve.
In addition to standardizing and unifying processes, Project Management Offices are also in charge of maintaining them in time, conducting ongoing reviews, updating and improving as needed.
A Project Management Office for more effective coordination
Project Management Offices are typically set up to oversee project activity over a somewhat wide and diversified scope. In fact, a PMO will generally act as a linchpin between multiple business lines, business units or departments, encompassing people from diverse backgrounds, with diverse roles or trades, and engaged in different kinds of projects.
Rarely are all teams fully aware of what their counterparts in other areas of the business are doing, even in small- to mid-size companies. Yet very different teams may well need to share the same critical resources, and two or more departments may be planning projects that will require the same resources at the same time. Or, the ability for one team to launch a project may be dependent on the successful completion of another project carried out by another team. Or a large initiative may require the involvement of several business lines, which are not used to working together.
In all of these cases, there is an obvious need for an overseer and a go-between. Your PMO will keep an eye on all project activity across teams and departments — or even at the enterprise level in the case of an Enterprise Project Management Office (EPMO) — planning for project and resource dependencies, facilitating interactions, and making sure that the various parts and pieces dovetail and that everything is optimally coordinated.
A Project Management Office for more effective decision-making
Cross-functional view and supervisory responsibility over project activity also enable PMOs to make sure that clear and timely Project Portfolio Management decisions are made and enforced.
In an increasingly dynamic business environment, fast-changing market conditions and technology landscape require increasingly fast responses and decision-making.
Together with a set of processes for project work and delivery, a Project Management Office will establish a PPM governance system with clearly defined roles, responsibilities, decision rights and accountability in order to ensure consistent management and leadership.
The Project Portfolio Management framework defined and established by the PMO should also include criteria to manage project demand and investment decisions, as well as resource allocation.
These governance and decision-making mechanisms enable all key decisions regarding the project portfolio, helping portfolio managers optimize value while keeping cost at bay, and also while reducing and mitigating risks.
The benefits of a clear command structure and of a central PPM hub to turn to for answers, tips or guidance is always valuable, even when the sun shines. But the PMO’s role as a coordinator and decision facilitator becomes invaluable when faced with problems — which always eventually arise. Conflicts between competing projects or the impact of unexpected events may call for management decisions. In practice, such decisions — especially if they are tough calls — are often delayed because of ownership and accountability issues. People may expect someone else to step in and settle the situation. Or they may believe that they are not high-ranking enough to even consider offering a solution. No one makes a move. And, meantime, the problem remains and festers.
Well, here again the PMO takes the thorn out of your side, making and empowering decisions before the issues escalate. Either the PMO leadership makes the calls themselves, or they will take it to the attention of the relevant business leader. In any of these ways, a Project Management Office will facilitate and accelerate trade-off decisions.
A Project Management Office for more effective insights
As a hub for project-related data, the Project Management Office acts as the custodian of the information that can and should guide the decisions. It has a responsibility to ensure data consistency, visibility and integrity, and to make sure that accurate information and clear insights are available to inform prioritization decisions. Based on data intelligence, it can perform analyses, anticipate future problems, recommend fixes and remedies. Insightful decisions will drive proper resource allocation, boost the impact of the enterprise’s project management and support project success.
To fully harness the potential of data, though, Project Management Offices need to achieve flawless data visibility. This requires the support of industry-grade software tools that will automatically consolidate, process and crunch huge amounts of data, keeping it updated in real time. More specifically, organizations need a single version of truth and a proprietary, centrally administered system of record for Project Portfolio Management. This system should consolidate structured as well as unstructured information across all PPM categories, replacing distributed spreadsheets and siloed work documents or applications. A PPM tool should also offer sound capabilities for data analysis, including advanced predictive analytics.
A Project Management Office for more effective project delivery
The framework and the set of processes and standards implemented by the Project Management Office also aim to increase the performance of the project execution teams, improving project work and speeding up delivery.
Based on an audit of existing processes and ways of working, the PMO can identify and leverage opportunities for betterment. This may lead to automation of low-value, repeatable tasks, in order to reduce the time spent by project teams on administrative activities and free up some of their valuable time. This may help optimize resource distribution and allocation in order to maximize the overall capacity utilization, boosting resource efficiency and driving costs down.
A Project Management Office’s actions across the spectrum of Project Portfolio Management activities deliver superior project value through increased efficiency and speed. It will help drive a reduction in project life cycles and accelerate time to market while maintaining or even improving the quality of deliverables.
A Project Management Office for a Project Management culture
The creation of a PMO is often the driver of a cultural change in an organization, as the implementation of a set of common rules helps instill and spread a project-oriented mindset.
Through a variety of training programs, ongoing guidance and support, the development of libraries of shared documents and best practices, a PMO can further acculturate the organization to Project Portfolio Management notions and concepts.This will, in turn, promote a result-oriented approach and encourage the development of new practices.
As PPM maturity grows across the organization, the PMO can refine the Project Management framework and process, introducing more advanced PPM capabilities.
A Project Management Office to enable organizational transformation
For today’s organizations, it is vital to keep pace with the never-ending changes brought by the digital era. A Project Management Office can enhance the enterprise’s ability to adapt rapidly in a fast-changing environment, and help it pivot and respond swiftly to external forces and events.
Initiatives and projects are by definition the agents of organizational change. As they provide a central hub for Project Portfolio Management, PMOs are best-positioned to drive and manage the continuous change inherent in digital transformation and position the organization for the future.
According to Gartner, “PMOs succeed by creating new perceptions and changed actions.”
Part of their role is to assess the effectiveness of current practices and identify areas for improvement, to manage expectations, to overcome the natural resistance to change of the various internal and external stakeholders, to determine and encourage the desired traits and behaviors in the workforce and management.
A Project Management Office for strategy alignment
Project Management Offices are in a perfect position to ensure that project activity fits the strategy. Because of their ability to provide valuable, data-driven inputs and insights, PMO leaders often have access to the organization’s senior decision-makers. At the same time, their strong linkages to operational and project teams are keeping them close to execution-related matters. This double focus enables them to bridge the all-too-common divide between strategic directions and project execution, reconnecting project activities to the strategic vision of the company.
The PMO has all the data required to review and assess project alignment with strategic priorities, making sure that all active and potential projects contribute to strategic outcomes and Key Performance Indicators. Strategy-oriented project selection and management will increase the performance of portfolios against objectives in order to support the directions of the organization and its ability to achieve goals and benefits. Based on a clear roadmap for project portfolios, PMO will turn project activity into an actual driver for long-term strategic value.
Accuracy, efficiency, speed, seamless collaboration, increased performance in delivery: if this is not effectiveness, what is? Because the Project Management Office addresses various areas of Project Portfolio Management, providing structure, methods, insights and guidance, it has the potential to improve project management capabilities significantly.
While the mission, functions, and roles of Project Management Offices can greatly vary from one organization to another, a PMO is all about creating value, supporting and increasing the effectiveness of Project Portfolio Management at the level of the enterprise.
- A Project Management Office can significantly improve the overall effectiveness of an organization’s Project Portfolio Management.
- Among the benefits and value from a PMO are clear processes, decision roles and criteria, improved coordination across teams or business units, enabling data intelligence, and greater efficiency.
- Additionally, a PMO will provide an impetus for change and drive increased alignment between project work and the strategic objectives of the enterprise.
To learn more about the role of a PMO, consider reading: