What Is a Project Management Office (PMO) and Why Do I Need It?

Good Reasons for a Project Management Office

“Another department? Is that really necessary?“ is what most colleagues and decision makers ask when it comes to the introduction of a Project Management Office (PMO). In many organizations, PMOs first fight for their raison d’être, and then for acceptance. Stakeholders often consider the PMO to be “unnecessary effort” and “a waste of resources” or are unsure about yet another party getting mixed up in projects. Bottom line: the benefits of a PMO often go unrecognized. We, however, have a completely different opinion!

In larger organizations with an increasing number of projects and increasing project complexity, there are many good reasons for the introduction of a PMO. Ultimately, there needs to be someone in the organization that has an overview of all processes, changes, conflicts and risks, and can prepare decisions. So who is taking care of the big picture? A well-situated PMO ultimately makes sure that an organization is in the position to make decisions – regardless of how complex or dynamic everything is. A PMO has the bird’s eye view: they have the right data, tool and processes to efficiently prepare decisions around projects and capacities.

Contents:

• What are the tasks of a PMO?
• What benefits do PMOs bring to their companies?
• Where is a PMO located?
• How does a PMO work?
• How can a PMO best be established?

Generally, a PMO has an overview of projects, know the business strategy and makes sure that these two go hand in hand. The specific applications of a PMO can vary greatly from company to company. “Classic” PMO tasks don’t really exist, but many possibilities are listed here:

• Overseeing the project portfolio
• The selection and prioritization of projects based on the business strategy
• Preparing the basis of decisions and relieving some stress from the decision-making process from the portfolio board
• Introducing or carrying out a structured decision-making process
• Planning resources on the portfolio level, optimizing the organization of resources and solving resource conflicts as they come up
• Collecting new trends, feedback, ideas and requirements in order to develop concrete courses of action
• Standardizing project management methods and processes
• Selecting and introducing the relevant tools and software, including  training employees
• Creating transparency of current and planned projects by providing reliable and up-to-date data
• Supporting the flow of information and communication (for example, by introducing regular meetings)
• Creating a knowledge base with lessons learned and best practices from previous projects, so that previously made mistakes can be avoided
• Managing current employee data, especially capacities, project allocations and skills
• Supervising project steps and steering dependencies that have an effect on resources, budgets and timing – in other words, project portfolio controlling
• Training and coaching project managers and participants
• Administrative and operative support for project managers and project teams (for example, conflict management, workshop moderation, supervision…)

You Can Count on These Outcomes

Provided that your project management office is run by the right people, has a sufficient budget and recognition and is aware of its concrete tasks and powers, the introduction of a PMO can only have a positive effect on your project landscape. We consider the following to number among the upsides (among others):

• a promising project portfolio, that is primarily aligned with resource availability and corporate strategy (“doing the right things right”)
• Project teams that work on the right company priorities – with the know-how and tools that allow them to be as successful as possible
• relieved project managers and project team members, that can now spend more time and energy on important operative tasks
• improved internal and cross-project communication
• an effective knowledge transfer that minimizes mistakes and uses Best Practices
• minimized project risks

In summary, this means that with a PMO, you can bring projects to fruition that truly align with your organization’s goals. You can implement these projects under cost and with the available resource capacity with the help of a PMO. This means that the cost per project sinks, and fewer projects flounder. Sounds good, right?

The first part of this blog post familiarized you with the possible activities and positives of a PMO. Now, you may be asking yourself where the PMO is best situated in an organizational hierarchy, and how could it fit into your situation? Read on to find out!

In the past, many PMOs have supported themselves with rigid structures and complex processes. However, now we understand that there is no one-size-fits-all approach, and simplicity wins. In order to be able to react to influencing factors in an agile manner, PMOs have to adapt to the company’s needs. Although no two PMOs are exactly the same, they all have the same purpose: the realization of business strategy through planning- the prioritization and management of projects. This is done, in most cases quite traditionally, through the process of project portfolio management, or PPM. 

As the strategic tasks of a PMO increase in the project management landscape, PMOs usually situate themselves on the same level as operational planning, and directly below management. The proximity to management makes sense – the PMO ultimately primately implements the company’s strategies and goals as derived from the vision and mission, thus building the central hub between company management and everyone else.

The Right Projects at the Right Time

Good PMOs understand that it’s not about implementing as many projects as possible. It’s about implementing the projects that will move the organization forward. In order to be able to deliver results now, we cannot avoid a process. Our experience has shown that this process doesn’t need to be complicated. Finally, so that PMOs can implement corporate strategy in dynamic times, they must be able to act quickly and efficiently. These are two things that cannot be achieved with lengthy processes. For this reason, we’ve developed Lean Project Portfolio Management (Lean PPM) for PMOs.

Lean PPM is a framework to deliver reliable results and to help you achieve more agility, speed and success with your decisions. Yet, Lean PPM is limited to just the essentials. It’s always about the big picture. The goal is the ability to keep up with dynamic changes to the market, and not to create abstract annual plans that suddenly don’t make sense by Q2. The PMO process is divided into four continuously running phases in Lean PPM:

• Strategize – Translating the specific corporate strategy into objective criteria
• Collect – Collecting and improving new project initiatives
• Decide – Deciding about new project initiatives and solving conflicts in the portfolio
• Execute – Putting decisions into action

In the four phases of Lean PPM, employees on all levels of an organization, both in and outside of the PMO, participate. While Lean PPM makes use of a host of roles, some are central to operations:

• Portfolio Coordinator – Generally, the portfolio coordinator is also the manager of the PMO. A member of the PMO team, a member of management or a program manager can also be the portfolio coordinator. They are responsible for the entire or a part of the project portfolio and guide the other roles through the entire process. By doing so, they translate the corporate strategy into criteria for prioritizing projects.
• Initiator – An initiator can be anyone in an organization who suggests new project initiatives.
• Member of the Pipeline Review Committee – The Pipeline Review Committee is responsible for rating new project initiatives and prioritizing them before they are approved.
• Member of the Portfolio Board – The portfolio board is the decision-making body in Lean PPM. Its members are responsible for reaching decisions about the current and future status of the portfolio.

Lean PPM – the Lean PMO Process

Although a PMO can’t function without processes, this doesn’t mean that more processes are automatically better. The ability to make decisions faster with Lean PPM allows organizations to take advantage of new opportunities, and avoid pitfalls when adapting to changing market conditions before it’s too late. Regardless of if your PMO is well-established, or if you’re only thinking about introducing a PMO in your business now, hopefully, this has given you a good overview of how a PMO and its roles in an organization can function. If you would like to learn more about Lean PPM, we recommend our Lean PPM Templates.

Maybe you’ve been convinced by the first two parts of this blogpost that a PMO has its advantages. Maybe your PMO is already staffed, tasked, and has even had its first eventful weeks of work.

However, how can you establish your PMO for the long term in your organization? How can you ensure that everyone accepts your PMO?

Start with Quick Wins

If your PMO is able to achieve a few quick wins at the beginning, you can generate enthusiasm. Employees and stakeholders are open to the PMO and now firmly believe that, from now on, everything will be better. This is because someone is finally thinking about long-overlooked tasks. Quick wins help immensely in the initial phases so that the PMO is not met with skepticism, or worse – rejection.

Quick Wins for PMOs Can Be:

• Do away with spreadsheets and implement a Lean PPM tool. The effects are immediately visible: more transparency, better workload, and a reduction in employee overload, as well as a strategic view of the project pipeline.
• Meet with project managers for kick-off meetings, where you clarify the contribution of the project to the corporate strategy and explain the expected results. Reaffirm to project managers how important their projects are by highlighting their strategic fit, expected ROI, or the like.
• Look at what problems project teams are currently confronted with. Ask yourself, which issues you can help with. Is a project team overwhelmed, and you can adapt project plans in order to give them some breathing room?
• Promote strategically important projects in a targeted way. A sufficient amount of employees makes projects feasible and easier to manage.

However, don’t focus solely on the goal of scoring some quick wins. A PMO should try to achieve a sustainable value for the organization, which requires extensive change management.

Communicate the Goal of the PMO

PMOs have the reputation of being a department for micromanagement. Additionally, the idea that PMOs tell employees what to do and how to do it has become more and more entrenched. Of course, that is totally unfounded. In reality, successful PMOs only have one goal: to help employees. Of course, PMOs have many other jobs and responsibilities. However, at its core, a PMO is supposed to ensure the success of the company by supporting projects and employees. When the PMO is viewed in this light, employees won’t be distrustful of the PMO, and will instead actually ask for its help and support. So, stay strong and clearly communicate the goal of your PMO.

Start Small and Adjust Your PMO

Many organizations make the mistake of building a large PMO from the start. Our experience has shown us that succesful PMOs that become permanent usually start out small  – for example in a department or at a specific branch. When you start small, the PMO can more flexibly adapt to the demands of the organization. Maybe your company first needs help with resource planning and needs less of a focus on the project intake process? Or maybe your teams complete projects successfully, but these projects aren’t aligned with the organizational strategy? When you can adapt the PMO at your organization,  you yield better results.

Now you can see that it’s not possible to successfully introduce PMO overnight. However, keeping things lean and as simple as possible in the beginning will enable you to overcome hurdles. There is no question that the upcoming changes are worth the improvement of your project management landscape in the long run.