How to establish a Project Management Office?
The Road to Creating a Successful Project Management Office (PMO)
Establishing a Project Management Office can deliver huge benefits and value for an organization, improving project execution, speeding up delivery and time to market, streamlining processes and driving increased strategy alignment.
However, setting up a new organizational management body — especially from scratch — is never an easy task. All the more so as there is no single, one-size-fits-all model for creating a PMO. As a matter of fact, there are as many different kinds of PMOs as there are organizations. Accordingly, defining and establishing the PMO that is right for you will require a keen, in-depth understanding of your organization’s specific challenges, needs and objectives.
Here are a few considerations and tips to support you in the process of creating a Project Management Office.
What is a PMO?
A Project Management Office (PMO) is an organizational body in charge of centralizing the management of all the projects under its domain. It acts as the backbone of the practice of project portfolio management. It sounds straightforward — until you consider the extent of the scope of possible PMO responsibilities and start exploring the variety of the work it can perform.
- A PMO will typically define and implement standardized processes and methodology for project management.
- Additionally, it can develop sets of best practices, templates and other shared documentation to drive further consistency and alignment.
- Some PMOs will also be in charge of monitoring compliance with policies via project audits based on predefined metrics.
- PMOs can manage communication across teams and projects, coach and train users, providing guidance.
- In some organizations, the responsibility for managing the pool of resources falls on the PMO, which will be deciding on the selection and deployment of project resources.
- Some PMOs have the authority to take decisive action on projects and manage projects directly, while others will focus on providing support to the project management communities.
- The core mission of yet other PMOs will be to offer insights and recommendations to decision-makers.
A Project Management Office is therefore a highly versatile function. Which means that the structure, shape and mission of your PMO should be tailored to the specific features of your company.
Why establish a PMO?
Establishing a Project Management Office can help solve specific issues and focused pain points (for example project delays, cost overruns). More importantly, it will help improve Project Portfolio Management in the organization and create long-term value.
Here is an overview of possible organizational and PPM benefits from a PMO:
- Consistency: A PMO will introduce professional PPM principles and practices into the company, develop metrics, best practices and standard processes, defining a common methodology for all project teams under its domain.
- Effectiveness: Standardizing execution-related processes will facilitate the Project Portfolio Management process, boost project team productivity, and help meet or exceed market expectations by improving the quality of products and speeding up delivery.
- Clarity: A PMO brings to the table a big picture view of all activities, including the links and dependencies between different projects and teams. This gives PMOs the ability to plan for and prevent conflicts.
- Efficiency: A focused PMO will strategize the use of shared resources to ensure optimal utilization and improve efficiency throughout the organization.
- Traceability: Your Project Management Office will make sure that projects are and stay on track to deliver successfully. It will track progress using metric-based audits and assessments, issuing alerts in case of issues so that problems can be fixed in time. It can also manage project history and consolidate best practices for continuous improvement.
- Collaboration: As the PMO coordinates work across a variety of stakeholders, it can facilitate communications between different populations — including communications across the board — and make sure that everyone is on the same page.
- Skill development: It can offer guidance, support and information to various populations of project practitioners, provide training, coaching, or mentoring to support the growth of their skills and maturity.
- Accountability: The PMO can ensure that a sound and clear governance is in place, and that the right decisions are being made in a timely manner. It will also own and maintain quality data to support and guide those decisions.
- Strategy alignment: Project Management Offices can provide strategic insights to senior decision-makers, monitor and report on projects and portfolios to management in order to inform strategic decisions, and help better align the company's operations with its long-term strategic goals.
A few different types of PMOs
Although there is no universally accepted typology of Project Management Offices, they can be classified in broad categories.
PMOs can be differentiated on the basis of their place in the organization:
- Project Specific PMOs facilitate specific projects or programs on a case-by-case basis.
- Departmental or Functional PMOs support a business line or business unit, or a department. For example many organizations have elected to start by setting up PMOs for their IT departments and operations.
- Enterprise PMOs are very mature Project Management Offices, active at the level of the organization, and usually play a strategic role.
The PMO can also act as a “Center of Excellence”, supporting project work by providing enabling processes, a body of knowledge, and technology tools.
Another type of classification categorizes PMOs based on the influence and control they wield on project activity, and the authority they are delegated to act on the projects.
- “Supportive” PMOs will primarily play a consultative role, offering information and recommendations to stakeholders and decision-makers.
- “Controlling” PMOs will require and enforce compliance with the standard process.
- “Directive” PMOs typically manage the projects directly, with a hands-on approach.
A process to establish a PMO
So, everything is possible? Quite, so long as you make sure to tailor your PMO to your company’s requirements. There is no standard recipe for the creation of a Project Management Office from the ground up, but a structured approach can guide you in the process. The key is to envision the creation of your PMO as another project, for which you would usually followed three key steps:
- First, analyzing the existing situation and defining objectives before taking any action.
- Second, charting out an action plan to address the situation as defined.
- Finally, put that plan into practice.
1. Analyzing the requirements
A good starting point is to identify the Project Portfolio Management processes, practices and tools currently in place in your organization. Based on the observation of ongoing projects, you need to gain an understanding of who is working on what, who is managing what, and how the various stakeholders are interacting. Is there already something akin to a PPM charter? Even if there is no formal process, are there shared procedures and best practices?
When you have a good picture of what is in place, you can assess effectiveness and scan for potential weaknesses and pain points. Can you identify anything that might have brought past projects to unsuccessful outcomes, anything that could be done better or more efficiently? Are the tools and the IT environment perceived as powerful and effective, or is the toolset a source of frustration for the teams? Is anyone overburdened or idle? Are there significant performance gaps compared with similar companies?
The goal is to draw up a comprehensive and detailed list of requirements and expectations in order to help you define your PMO’s mandate.
Sources & Prerequisites
To obtain that clear picture, the analysis should be conducted based on industry benchmarks, but also based on stakeholder inputs. Make sure you identify all the populations and key stakeholders involved in project activity and liaise with them in order to collect their feedback and suggestions for improvement. The idea is to understand which problems and challenges they are facing, and what are their expectations.
You should also factor in any feature that makes your company specific — for example a matrix organization will probably not face the same challenges as a vertical one; some lines of business will be more exposed to regulatory pressures, others to technology or financial risk, and so on.
It is a good idea to document that preliminary analysis for future reference.
2. Drawing up an action plan
Then we need to use that list of expectations to answer a series of key questions. What are the services that a Project Management Office could and should provide to address the issues and explore new opportunities? Where is it needed, what should be its areas of responsibility? Who needs its help?
First of all, what should the scope of your new Project Management Office be? What services is it expected to provide? Should it be a supporting structure focused on managing and distributing tools and resources across empowered project practitioners? Is it mostly needed to provide training and coaching to newly-integrated workers who lack PPM experience? Do severe flaws in the execution and delivery process warrant a complete overhaul of the way work is done, and strict enforcement of the new process? Does the company crucially need data intelligence to update its strategies in a complex or troubled market environment? Is there a need for selecting and procuring new project management tools? Should the PMO come into play as early at the project selection and planning phases, or focus on execution-related matters?
Which stakeholders, both internal and external, will benefit from the action of the structure? How will project executives, project managers, resource managers, IT populations or the CIO be impacted? Will the new PMO also cover budget-related matters and collaborate with accounting and financial control teams? How will PMO leaders work and interact with the various project practitioners?
c. Accountability and value
Who will the PMO report and respond to? Can it depend upon senior management support? Who could its executive sponsors be, and how can you keep them engaged?
Finally, how can the PMO demonstrate its value? How can you quantify the business value added to the organization by the establishment and work of the PMO?
Answering these will help determine what competencies your Project Management Office should have, as well as the position it should have in the company and in the hierarchy. This latter decision should also take into consideration the structure of the organization and the corporate political climate.
It is important to not overextend your new PMO from the get-go. Setting up this new entity and getting it up and running will inevitably take time. Starting by focusing its responsibility and tasks on a couple of key areas will accelerate the process and enable your PMO to demonstrate value early on, which is key to gain and maintain stakeholder support.
It is of course possible to extend the scope of your Project Management Office later on, once it has begun delivering benefits on the initial areas of focus.
3. Rolling out your plan
After presenting your plan to your executive management and revising it if needed, you are ready to implement it. You need to secure the required infrastructure, toolset and personnel, training when appropriate.
Among the requirements is a robust supporting IT system that can be used to create efficiencies at every stage of projects, providing a wide set of PPM functions and capabilities to support the current and future needs of the PMO and of the organization. While project management functions for day-to-day work are indispensable to most PMOs, many others actually need tools that also offer strategic portfolio management capabilities.
After procuring the right technology solution and training the PMO teams appropriately, the challenge and focus will be change management.
Change management at the crux
The phased process defined above is based on the — critical — assumption that you have already secured buy-in from executive decision-makers. Also, because you have reached out to the key stakeholders in project activity as part of your initial analysis, they are aware of this initiative designed to solve some of their problems and they are engaged to some extent. You need to cement that early support and to dispel any doubt that might remain. And you need to get the rest of the organization on board.
Communication is key
To that end, you need to communicate the purpose and the responsibilities of the PMO to each and every person involved in project activities. Clearly explain what are the services it will provide, who is in charge, and what will the process be. It is often a good idea to establish a formal project charter and to disseminate it across the company or department.
Deliver a transparent and honest assessment of what can be expected in the short-, mid- and long-term. You need to convince all stakeholders of the beneficial impact of your new PMO for them and for the organization as a whole. Assert and reassert the expected benefits, the rationale behind the initiative — but deceiving people with overpromising claims would actually hurt your PMO in the long run. These initial communications will also serve as a baseline for you to track and measure progress over time.
The change management effort should not be underestimated. The new Project Management Office will probably introduce new standards, new roles, new responsibilities, new tools. This can feel confusing for workers and managers alike. To get and keep everyone on board, you need to make sure that all that novelty is clearly understood. This will inevitably take time to sink in.
Monitoring, updating, improving the PMO
The go-live of the PMO is only the start of the journey. Once the Project Management Office has been established and starts yielding benefits, it is critical to engage in active ongoing monitoring to make sure that the new structure is and stays relevant. You need to track progress against the objectives, document the accomplishments and challenges, and measure the positive impact of the newly minted Office to make sure it does fulfill expectations and deliver value.
This might require adjustments. The initial expectations might have been slightly off base, some assumptions may not stand the test of reality. PMO leaders should be prepared to tweak their system and pivot if needed. Any formal change should, again, be documented and discussed with the concerned stakeholders.
Finally, PMO managers should keep publicizing what they are doing, and what they are doing it for. Make sure you report on successes and wins, share and communicate accomplishments over time, so that the organization is fully aware of the value of your PMO.
- A company can take different approaches to creating a PMO. PMOs come in all shapes and sizes, and creating one is really a matter of figuring out what is the best fit for your specific organization.
- Just like with any other project, you can follow a phased, 3-step approach: analysis, planning, implementation.
- Successful change management is essential when establishing a PMO.
- Project Management: how the game changed in 2020?
- The Role of the PMO in Project Portfolio Management
- Your PMO's value: show it in your organization.