What Is a PMO and Why Do I Need It? (PMO Part 1)

Reasons Your Company Needs a Project Management Office

A project management office has many benefits

The PMO Series in the Meisterplan Blog

If you are considering a Project Management Office (PMO) for the first time, then you may be thinking: “Another department? Is this really necessary?” It is a struggle in many companies to get a PMO approved and then, once approved, for it to be accepted. Some stakeholders worry that having a PMO that oversees projects will unnecessarily slow down the process. Bottom line: The benefits of a PMO are often unrecognized.

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There are many good reasons for the introduction of a PMO, especially in larger companies with increasing project volume and complexity. Someone in the company needs to keep track of all the processes, changes, conflicts, risks and make decisions. Senior management and department heads usually have other, equally important things to do. And the project managers take care of their own projects by definition. So who should take care of the not so little task of multi-project management?

In this first post of our four-part series about the Project Management Office, we will look at what a PMO actually does and what benefits it brings. In the following posts, we will discuss how the PMO is anchored in the company, how you can best implement a PMO and how to measure the success.

Definition of a PMO

While each PMO is different, has different powers, responsibilities and focus depending on the company, in general a PMO is defined as: a permanent organizational unit responsible for the centralized and coordinated management of all projects. Possible tasks include the planning of the project portfolio, the development of project standards and PM strategies, the training of the project staff as well as the monitoring and direct support of individual projects.

What Exactly Does a PMO Do?

A PMO maintains an overview of projects, knows the company strategy, and ensures that both go hand in hand. However, the specific application areas of a PMO vary greatly from company to company. There are no “classic” PMO task fields, but only many possibilities:

  • Compile the project portfolio by classifying, selecting and prioritizing projects based on the company strategy and available resources, preparing decision-making and facilitating decision-making for the portfolio board

  • Plan resources at the portfolio-level, optimize the use of resources and solve resource conflicts

  • Maintain current employee data, especially in terms of capacity, project allocations and skills

  • Standardize methods and processes in project management

  • Select, implement and train employees on applicable tools and software

  • Increase transparency of current and planned projects through up-to-date, reliable project data

  • Promote information flow and communication

  • Create a knowledge base with Lessons Learned and Best Practices from past projects to avoid repeat errors

  • Monitor project progress and control the dependencies that affect resources, budgets, and schedules (project portfolio tracking)

  • Train and coach project leaders and stakeholders

  • Administrative and operational support for project managers and project teams (e.g., conflict management, workshop moderation, etc.)

(Source: PMI)

There are good reasons to have a Project Management Office (PMO) in your company.

You Can Count on These Benefits

Provided your PMO is staffed with the right people, has enough budget and recognition, and is aware of its specific tasks and responsibilities (see the upcoming Part 2 of this series), the introduction of a PMO can only have a positive impact on your project landscape. The benefits include:

  • a successful project portfolio that focuses on resource availability and corporate strategy (“doing the right things the right way“)

  • unified project methods and a company-wide standardized usage of software

  • freeing up the time and energy of project leaders and project teams, so they can concentrate on important operational tasks

  • improved communication across projects and across the entire organization

  • effective transfer of knowledge, applying best practices and minimizing errors

  • 0ptimized project efficiency, increased project quality and reduced project risk

(Source: CIO)

With a PMO you can align more projects to the corporate objectives. With the help of a PMO, these projects can be implemented within budget and using available resource capacity. This means that the costs per project decrease and fewer projects fail. Which, of course, improves your customer satisfaction. Sounds good, right?

The success of a PMO is not always immediately visible or even measurable. However, the medium to long-term value of established, high-functioning PMOs has been confirmed by many studies (Source: PwC).

In the coming weeks, we will continue to discuss PMOs. In Part 2 of this series, you will learn how a PMO acts as a central hub and a point of contact between different business units and stakeholders. Part 3 of this series then discusses how you can optimally implement a PMO in your company. The fourth and final part of the series, we will take a look at the KPIs of a Project Management Office.

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By |2019-08-14T07:59:56+00:00June 22nd, 2017|Categories: Project Portfolio Management|

About the Author: Annegret Widmer

Annegret Widmer has ended her years-long love-hate relationship with Excel as a PPM and RM tool for an agency and now helps companies and organizations discover Meisterplan and best practices for resource planning and project portfolio management. When she’s not moving pixels or resources as marketing manager at Meisterplan, she’s moving game pieces across one board or another.