What are the advantages of a Project Management Office?

Estimated reading time: 9 minutes

Key Takeaways:

• Creating a PMO can help 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 PMO 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’re exploring the topic, you are probably aware that PMOs are designed to streamline and improve organizational project activities. But tying that action with visible and measurable business value or bottom line improvement may not necessarily be that obvious. Yet those kinds of high-level, big-picture organizational benefits are precisely what you’re hoping to drive by setting up a PMO. Here is a round-up of the key advantages of having a Project Management Office.

PMO Advantage 1: Fix Key Business Problems and Pain Points

A Project Management Office often forms to address a set of specific problems, issues, pain points, or performance gaps.

A key problem for many organizations is time wasted on non-value-added tasks — up to 90% of all project work. This means there is vast room for improvement in project delivery productivity. The issue of this project waste comes from 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. By doing so, you get the proverbial “single version of truth” and ensure consistent data visibility and integrity. Critically, this saves time previously spent searching for information across folders, emails, and distributed Excel spreadsheets. In other words, everything needed for project tracking and management is readily available at the push of a button.

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 result from elongated project completion times, which tie up key resources and delay time to market.

The Project Management Office has a fix for those long standing issues that bedevil businesses. By auditing and optimizing processes, tools, and best practices, PMOs have the power to solve the business’s pain points.

PMO Advantage 2: Improved Control Over Activities

Project Management Offices seek to develop and enforce standard processes across their domain, 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 PMs will most likely use different milestones to plan, track, and manage their projects. They may also use different terminology, which can give way to misunderstandings and affect projects.

With a PMO standardizing methods, practices, and project language across the board, you can eliminate misalignments. 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 they are 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, 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.

PMO Advantage 3: Get a Better Handle on Data

Improved visibility

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 eat at PM time. Plus, manually produced reports are not necessarily up-to-date, as each PM will use the tools and views of their choice. 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.

Valuable insight

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.

Greater predictability

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.

PMO Advantage 4: Improved Profitability

Another key advantage of having a Project Management Office is the significant positive impact on the bottom line of your company.

Cost savings

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.

Improved competitiveness

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 necessary changes and take early action — 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.

PMO Advantage 5: Empowered to Position Your Firm for the Future

Last but not least, the benefits of a PMO include improved business agility, strategy alignment, and ability to seize new opportunities.

Strategic Project Selection

A Project Management Office will help tackle the key challenge of project selection. Your projects need to be aligned with business strategy for them to generate value. Insufficient business alignment usually comes from unclear 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 projects with great care, so that scarce resources go to those projects and initiatives deemed most valuable and critical. The PMO’s demand management capabilities can help 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 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.

Change Management

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 suit it 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 must carefully assess the organizational needs and expectations to best determine the best type of PMO for 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?