Every project aims to deliver unique outputs and outcomes intended to solve problems within specified constraints like time, cost, quality, etc… Associations such as the PMI, ASAPM (US), APM (UK), GPM (Germany), PMAJ (Japan), and IPMA continue to empower project management professionals, businesses, communities, and societies worldwide with standards and best practices based on state-of-the-art research. There are millions of project management practitioners striving to deliver successful projects with better outcomes every day.
The impact of projects on strategy forces organizations to utilize the best project management processes and methodologies to maximize the realization of benefits within increasingly complex environments. According to a study by PwC, “Organizations that execute projects successfully employ effective project management practices as a tool to drive change and achieve business objectives.” Effective PM processes include measuring progress, managing risks, and properly selecting the right projects in alignment with organizational priorities.
A Project Management Office (PMO), whether internal or external to the organization, can achieve this standardization as one of many other functions.
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A PMO is a centralized and coordinated management entity within an organization that defines the standards of project management processes, provides governance, enforces accountability, and aims to enhance efficiency, optimize synergy, and establish discipline among projects in a consistent and objective manner.
As the number and complexity of projects managed by single organizations grew, PMOs became increasingly mission-critical. Companies with a PMO increased from 47% to 80% from 2000 to 2012 according to PMO 2014 Research Report. Today, they are a dynamic component in every project-based organization. PMOs serve as an essential partner to other units creating a platform for decision-making and organization-wide communication.
According to a study in 2020, more than half of the respondents (52%) were somewhat or very dissatisfied with the current level of project management maturity within their organization. The figure has grown steadily since the 45% rating in 2016 (Wellingtone, 2020). Only 40% of the project and program governance activities of organizations are considered very effective according to a study by KPMG in 2020.
Moreover, up to 59% of project managers run two to five projects simultaneously. Only 15% work only on one project, while another 15% take on more than ten. Meanwhile, according to a recent survey, only 11% do six to 10 projects at a time.
It is eminent that organizations need to use a centralized PMO to synchronize project activities. PMOs are expected to also increase in scope and responsibilities, up to 72% from 61% in 2019 (Wellingtone, 2020). According to the same study, 89% of organizations have one or more PMOs, with 50% having more than one.
There is a growing demand for services offered by PMOs in different industries such as real estate, engineering, manufacturing, and organizations that deliver a high volume of projects. According to the Project Management Institute, PMOs can even enhance success metrics related to customer satisfaction and revenue growth.
Project environments are very dynamic. There is a constant need to respond to the changing environments by deploying systems, structures, functions, capabilities, processes, and assets. Organizations must increasingly adapt to the new changes. PMOs can be great avenues for executing changes and support adaptation within an organization.
Organizations struggle to standardize project management practices and methodologies across project teams. PMOs are the core of successful project management in organizations. They offer a diverse set of functions to support and ensure project success. Here are some of the top benefits of a PMO:
A PMO’s effectiveness rests on three interdependent components: functional, structural, and disciplinary. Though different, each complements the other in bringing forth the purpose of the PMO. You need to look at each component individually and then collectively to insure a successful PMO implementation.
A functional component of a PMO is defining its purpose or role within the organization. The functional component can be:
Understanding and defining the scope of the intended PMO is an important step that defines how a PMO will function.
The second component of the PMO is its structure as it relates to People, Processes, and Tools.
The third component is related to the project management disciplines managed by the PMO. The main disciplines of PMOs are:
If you were mandated with setting up a PMO, you may be overwhelmed and concerned about your chances of success. You have to be able to describe the value of the PMO to your executives and make sure the team does it right. Like project implementation, setting up a PMO needs an equal amount of assessment, planning, and analysis. To establish a successful PMO, you need to respect the below steps:
If you are setting up the first PMO in the organization, you need to ask about its objective. What are the requirements with respect to the functional, structural, and disciplinary components? What is the maturity of the current project management processes? What is the desired target the organization would like to achieve by setting up the PMO?
Answering these questions will help you understand the current status (PMO Maturity) as well as the required future state. This will help you highlight the gaps and identify the areas and level of intervention across people, processes, and tools. In your assessment, you need to figure out the components that make up a PMO and which ones are relevant.
Now that you have defined the components required, and areas of intervention, you need to create a step-by-step roadmap for your PMO setup and optimization. It is very common that there will be more than one objective to achieve your goal. You should keep in mind the strategic view of the organization, and prioritize the stakeholders requirements accordingly. Avoid common pitfalls to boost your chances of PMO success like getting buy-in on your execution plan from your team before your start.
While you are defining your roadmap, you also need to spend time on identifying your PMO performance KPIs as well. Make sure that your KPIs are relevant by getting agreement on them from the appropriate stakeholders. PMO KPIs fall into different focus areas like
Proper and timely collection of data is required for analysis and demonstration of performance KPIs.
With all set for take-off, head for the roadmap and plans laid out first. Implementation of a PMO requires diligence and a unique approach. Always keep the goals and objectives in mind with a stern eye not to deviate from the plan. Ideally, the PMO needs to comply with the organization’s standards while helping people with their projects. Achieve small wins as quickly as possible to establish confidence in what a PMO can do by applying Pareto Principle. For example, you can
It is imperative to know that during your PMO implementation, you should communicate your progress and address all possible concerns in a timely and frequent manner. Effective communication makes organizational change a smoother process as well as keeps your stakeholders informed of the progress.
Setting up a PMO is a process but leading and managing one is a different story. To keep your PMO successful, you always need to align with both the short and long-term goals. You need to constantly review, improve on, and exploit opportunities as they become available. Continuous improvements will enhance the growth and maturity of the people’s skills and knowledge, project management processes, as well as the systems and tools. A PMO is not a stagnant entity. It evolves iteratively. You need not only to collect data on projects but also review and improve your PMO performance and KPIs to create and deliver value. Below are some KPI examples:
Always align your PMO to the key drivers of the organization, and update this alignment as the organization shifts its strategies. This will help the PMO to grow and evolve to the extent of its organization’s acceptance; this is something that the PMO leadership must actively work on. The true success of a PMO cannot be measured quantitatively alone – key qualitative assessment is imperative in demonstrating the benefits of the PMO and continuously showcasing its value to the organization.
A project manager works back to back with the PMO. A project manager is concerned with delivering projects with successful results while the PMO is concerned with other functions like standards settings and process management. Although the two work closely together, the structure and experience required in each position is different. About 78% of organizations have a project management team set up before a PMO comes along. They bring in PMOs after laying out the project management procedures. This could explain why PMOs seem like administrative units. Organizations need to understand the difference between a PM and a PMO.
Project Management Office – PMO
Project Manager – PM
Designs project management processes from project initiation to project closure.
Applies project management processes during project lifecycle
|Strives to make required resources available across many projects and programs through forecasting and capacity estimation.
|Makes best utilization of provided resources to achieve successful project delivery.
Provides feedback and status reports to stakeholders and top management.
Executes and sends back feedback and status reports to PMO
Another common mistake organizations do is to mandate the creation of their PMO to their lead project manager. A successful project manager may not be as successful in standards, process design, and management. To succeed in your PMO setup, your PMO leader should be:
The value of a PMO is achieved when projects are delivered within budget, and on schedule and organizations are efficient and effective in their line of operations. Setting up a PMO is most beneficial when done in a way that complements the existing organizational structure. A successful PMO is a catalyst for greater efficiency and allows the performance of quality work with less risk and fewer resources.
While appreciating the benefits PMOs bring to an organization, it is also important to understand the effort and organizational change required to set up one. As such, many organizations would opt to outsource the function to enhance their operational efficiency, focus on project delivery, minimize operational risk, and as a quicker way to create and scale business.