Abstract
Should we establish a PMO or should we not establish a PMO within our organization? Is it or is it not worth doing? These questions are being asked in any number of companies trying to realign their organizational structures to support modern-day project management concepts. Some succeed, while others fail. The number of activities treated as projects within organizations increases every year. Nowadays, therefore, professional project management of a single project is not enough. It becomes ever more crucial for an organization to have the ability to simultaneously manage several projects within the company and to fit them into its strategy. This presentation addresses what must be done to successfully establish a PMO and, thereafter, how to manage the ongoing projects within the organization.
PMO Basics and Approach
There are different approaches to project management offices (PMOs) and different definitions of what constitutes a PMO. One could say that each PMO is as unique as the project itself. In A Guide to the Project Management Body of Knowledge (PMBOK® Guide)—Third edition (Project Management Institute PMI, 2004), we can find the following complex definition of a PMO:
“A project management office (PMO) is an organizational unit to centralize and coordinate the management of projects under its domain. A PMO can also be referred to as a ‘program management office,’ ‘project office,’ or ‘program office.’ A PMO oversees the management of projects, programs, or a combination of both. The projects supported or administered by the PMO may not be related other than by being managed together. Some PMOs, however, do coordinate and manage related projects. In many organizations, those projects are indeed grouped or are related in some manner based on the way the PMO will coordinate and manage those projects. The PMO focuses on the coordinated planning, prioritization, and execution of projects and subprojects that are tied to the parent organization's or client's overall business objectives. PMOs can operate on a continuum, from providing project management support functions in the form of training, software, standardized policies, and procedures, to actual direct management and responsibility for achieving the project objectives. A specific PMO can receive delegated authority to act as an integral stakeholder and a key decision-maker during the initiation stage of each project, can have the authority to make recommendations, or can terminate projects to keep the business objectives consistent. In addition, the PMO can be involved in the selection, management, and redeployment, if necessary, of shared project personnel and, where possible, dedicated project personnel.” (PMI, 2004, pp.16–17)
Although this definition is rather lengthy, it shows how flexible the term PMO can be and how many different approaches to a PMO can be taken by a company.
Also PMO SIG in the document PMO Accord (2008) distinguishes among various types of PMOs (Exhibit 1, Exhibit 2).
Exhibit 1: Different types of project office.
Note. From Global Project Management: Communication, Collaboration and Management Across Borders, by J. Binder, 2007, Aldershot, UK: Gower Publishing. Copyright 2007. Adapted by J. Binder in PMO ACCORD paper (July 2008, pp.46)
Exhibit 2: Outsourced PMO.
Note. From Global Project Management: Communication, Collaboration and Management Across Borders, by J. Binder, 2007, Aldershot, UK: Gower Publishing. Copyright 2007. Adapted by J. Binder in PMO ACCORD paper (July 2008, pp.47).
The matter is more complicated when we check the scope of work that can performed by a PMO, which is described in the PMBOK® Guide (2004 p. 18) as:
- Shared and coordinated resources across all projects administered by the PMO
- Identification and development of project management methodology, best practices, and standards
- Clearinghouse and management for project policies, procedures, templates, and other shared documentation
- Centralized configuration management for all projects administered by the PMO
- Centralized repository and management for both shared and unique risks for all projects
- Central office for operation and management of project tools, such as enterprise-wide project management software
- Central coordination of communication management across projects
- A mentoring platform for project managers
- Central monitoring of all PMO project timelines and budgets, usually at the enterprise level
- Coordination of overall project quality standards between the project manager and any internal or external quality personnel or standards organization
The above statement is so impressive that one can be confused as to the complexity of creating a PMO. The question becomes, “How to do it properly?” Which way to choose?
PMO Approach Story
The following case study will aid in understanding how to correctly establish a PMO:
One day, the decision was made to introduce project management principles into the company. An organizational change project was planned and implemented after approval from the board. The primary goals of the project were to align the company's strategic objectives with its operational and financial goals and to take the company from a functional to a composite organization.
An approach to project management was designed during a 6-month planning phase. Actual implementation took only 16 weeks. The PMBOK® Guide (PMI, 2004) was, and still is, the basic set of rules on which the system works. One of the main challenges was to build an IT system that supports work on both a strategic and a day-to-day basis. At present, the company is in the process of improving the system so we can share knowledge from past projects and continuously improve and develop current projects.
The company's new structure is based on portfolio management with PMO principles that provide both support for project managers and strategic direction for the board.
The company now operates in a multiproject environment with different levels of complexity, scope, budget and schedule for each project. This provides the company with substantial hands-on knowledge of the benefits of project management.
It must be said that the benefits have been substantial. By introducing project management principles into the company's organizational culture, the company has seen significant improvements, including:
- A 20% reduction in operational costs.
- A 60% increase in market share.
- An increase in finalized projects to 500 per annum.
- A 30% reduction in the amount of time it takes to run a project.
By building up the company's position in the modern business niche, the company has created a brand image in a potentially lucrative market and undercut its competitors’ share of the industry. It has managed to do this in a short amount of time. The company is also able to exceed clients’ expectations by offering them a more professional, higher-quality product. None of these activities would have been possible without the use of project management principles that now operate within the organization.
Conclusion
Although different approaches to a PMO can be taken, the key consideration when establishing a PMO is: why we are doing this and what we would like to achieve as the final result? Answering this question will lead to the final definition of and approach to the kind of PMO we would like to introduce into our company, and will help determine what its role will be.
