What are the advantages of Project Management Offices?
Estimated reading time: 9 minutes
- Creating a Project Management Office is a great way to solve the targeted issues, pain points and performance gaps that may hinder your business.
- A Project Management Office brings repetition and organization to project management activities, driving greater project assurance and control.
- PMOs help capture and maintain the quality data that will enable accurate planning, business predictability, and informed decision making. They will also go a long way towards driving cost efficiency and optimizing budget planning.
- Finally, having a Project Management Office will help improve the selection of projects in order to secure and maintain long-term competitive advantages.
The Many Benefits of a PMO
“How would my organization benefit from implementing a Project Management Office?”. From a business leader perspective, that’s a worthy question. If you are exploring the topic, you are probably well aware that PMOs are designed to streamline and improve project activities across an organization. But tying that action with visible and measurable business value or bottom line improvement may not necessarily be that obvious. Yet that kind of high-level, big-picture organizational benefits are precisely what you’re hoping to drive in your company by setting up a PMO. Here is a round-up of the key advantages of having a Project Management Office.
A Project Management Office is often created in response to the need to address a set of specific problems, issues, pain points or performance gaps that the organization wants and needs fixed.
For example, a key problem for many organizations is the energy wasted on non-value-added tasks — which accounts for up to 90% of all project work. This means there is vast room for improvement in project delivery productivity. The issue of non-value-added tasks around projects — in other words, project waste — may be rooted in the lack of a formal way to centralize and share information. It can effectively be mitigated by consolidating all your project-related data into a centralized repository in order to get the proverbial “single version of truth” and ensure consistent data visibility and integrity. With a single location for all project data, no more time wasted searching for information, and no more distributed Excel spreadsheets: everything that the business needs to track and manage its projects is there at the push of a button, readily available, and up-to-date at all times. Overall, a PMO equipped with the right capabilities can drive a 25% reduction in project manager time spent performing non-value-added tasks manually. This will free up time for your teams to focus on higher-value work.
Other widespread business problems include a high rate of projects that fail to deliver the expected business value. This may be amongst other things due to a suboptimal project selection process or poor project execution. This can also be the result of longer-than-average project completion times, which ties up key resources over elongated periods of time and delays the time to market of new products and services.
The Project Management Office has a fix for those long standing issues that bedevil businesses. By auditing the processes and ways of working in place and optimizing when necessary, by introducing more structured approaches and more effective tools and best practices, PMOs have the power to solve the specific pain points that have been holding back the business and weighed on its performance.
Project Management Offices seek to develop and enforce standard processes across their domain in order to improve uniformity across project teams. Those standards may apply to the full range of project-related activities and tasks: data collection, reporting, project tracking, cross-team communications. A case in point is project milestones: left to their own devices, individual project managers will most likely use different milestones to plan, track, and manage their various projects. They may also use different languages, or give different meanings to the same term, which can give way to misunderstandings and affect the projects.
With a PMO standardizing methods and practices across the board and aligning all project teams around a common language, you can rest assured that misalignments and disconnects won’t get in the way of project management. Your Project Management Office will in any case oversee and monitor the course of execution and the related activities to make sure that everything stays perfectly under control, that each team member is doing what he or she is supposed to be doing at the right time and completes within the deadline, that best practices are applied and replicated, and that all projects are on track to succeed.
Project Management Offices also establish a governance structure for project management activities, defining clear responsibilities and determining who’s accountable for what. This way, in case of unanticipated problems or unexpected events, a clear chain of command expedites resolution. Long story short, with a PMO, you can be confident that the project side of the business is working like a well-oiled machine, that people consistently know what they have to do, how to do it, how to solve or flag up hiccups or problems, who makes decisions, etc.
Many are the organizations and business leaders who are plagued by subpar data visibility and not-so-reliable reporting. Without the right process and the right tools, collating, generating, and sharing reports can be a tedious and time-consuming activity that eats up a lot of project manager time. Plus, manually produced reports are not necessarily up-to-date or accurate, and they can come in all shapes and sizes as each project manager will use the tools and views of their choice and may highlight different information. As a result, reports edited by different project managers may not be comparable.
A Project Management Office will make sure that the organization enjoys a comprehensive view of all projects and portfolios by centralizing and consolidating all the data into a single repository with automatic updates in real time. Thanks to this visibility, PMOs are enabled to support high-level management teams with comprehensive and clear information on everything project-related. Since data can be crunched and exported directly from the repository, the automation of report generation frees up valuable time for project managers. Decision-makers get consistent standard reports, with engaging and compelling data visualization to facilitate information consumption.
The PMO is, in a way, the custodian of the data. With the support of professional tools, Project Management Offices guarantee the quality, accuracy, and freshness of the information they use and report. Digital systems consolidate the information, leaving no room for discrepancy, and store it safely to guarantee integrity. Improved accuracy of planning, resource, schedule and budget data, with the ability to drill down at a granular level, enhances the organization’s ability to make optimal decisions. That accurate data can be automatically processed and cross-analyzed to deliver insights that’ll further improve decision-making abilities.
The ability to perform simulations based on that quality data translates into greater predictability and planning accuracy. Project Management Offices will leverage their professional tools to run multiple what-if scenarios simulating the impact of any given decision on schedules, resources, budget, milestones, etc. This helps chart the best course for the projects and readjust when needed during the execution phase. Ultimately, this will boost the success rate of projects, including their chances of meeting all expectations.
Another key advantage of having a Project Management Office is the significant positive impact on the bottom line of your company.
As the PMO automates basic, high-volume activities and tasks with low value-added, such as putting together dashboards and reports, time tracking, completion monitoring and so forth, you’ll see significant productivity gains. This means that you’ll make more out of your investments in productive resources. All the more that most PMOs also tackle the issue of resource allocation. A Project Management Office will standardize resource and capacity management processes or tools in order to improve the organization’s ability to forecast capacity needs across teams and projects and prevent conflicts over the utilisation of key resources.
Fine-tuning resource management will not only sustain overall productivity by preventing over- or under-allocation of key workers, but also improve project cycle times: your Project Management Office will help ensure that the right resources with the right skills are available for your highest value projects and that they are working at the maximum utilization rate achievable. Ultimately, this enables your firm to compete more effectively: reducing delays in project delivery and accelerating time to market positively impacts the organization’s finances, but also customer satisfaction and market share.
Increased budget adherence
Improved visibility, predictability, and tighter control over all aspects of project execution also translate into a better grip on project budgets. Project Management Offices implement dedicated processes and tools to estimate the track costs, and to allocate realistic budgets for projects and portfolios. As they anticipate problems, they can identify the changes that have to be made and take action early on — which is much more economical than having to find a last minute fix to a problem detected at the eleventh hour.
If you combine cost savings and productivity gains, increased revenue from heightened competitiveness, and improved budget adherence, the business really gets value for the money it has invested in a PMO and supporting tools.
Last but not least, the benefits of a PMO include improved business agility, strategy alignment, and ability to seize new opportunities.
A Project Management Office will help tackle the key challenge of project selection. Your projects need to be aligned with the business strategy in order to generate value. Insufficient business alignment is usually caused by lack of clarity on business objectives at the project selection stage. And a project selection quality issue tends to result in productivity loss or failed business initiatives.
As organizations strive to do more with less, they depend on their PMOs to select the projects to be launched with great care, so that scarce resources are allocated to those projects and initiatives that are deemed most valuable and critical. The PMO’s demand management capabilities can be used to select and prioritize the best projects, optimizing business alignment and increasing the strategic impact of project activity. The goal is to improve the percentage of projects that deliver value, and reduce the rate of projects that are deemed failures.
As your Project Management Office can spearhead and execute large strategic initiatives, it enables organizational change and contributes to key business outcomes and C-level drivers such as profitable growth and long-term competitiveness. According to Gartner, 82% of CEOs currently have a digital transformation or management initiative, up from 62% in 2018.
As a platform for smarter decision making, the PMO is also invaluable to help adjust the course of the business in times of crisis.
According to Statista, 83% of organizations worldwide have one Project Management Office or more. Besides, 71% of project professionals expect the scope of services offered by the PMO to grow, and 72% believe that its perceived value should increase moving forward.
Much more than a mere project controller, a Project Management Office is an actual driver of value for the business. The advantages of implementing one span an impressive range of business areas. However, in order to truly maximize the benefits of your PMO, you need to make sure it is suited to the specific challenges of your organization. No two PMOs have the same mandate and responsibilities, and no two PMOs do the job the same way. Accordingly, when setting up a PMO in your company, you need to make sure that you carefully assess the organizational needs and expectations in order to determine the type of PMO that is tailored to support your growth path.
For more information on the PMO’s role, consider reading:
- The Culture of a Project Management Office
- What are the functions of a Project Management Office?
- Why a Project Management Office is so important for an organization?