Project Management Office (PMO)
“A Project Management Office (PMO) is described as a centralized, coordinating body within an organization or a project that provides a focal point for the field of project management” (Young, 2009). As such, its key function is to define and address issues that relate to management of projects in order to facilitate success in organizational results for projects.
The establishment of a Project Management Office has several advantages to an organization. As the Project Management Consultant in a company considering establishing a PMO, I would put several aspects into consideration.
However, a PMO has more advantages in running of a company than any potential disadvantages. As the PM Consultant for the company, I wish to mention why a PMO should be adopted. As such, the main benefits of adopting a PMO in a company are as described in the following paragraphs.
Reasons for Adopting the PMO
Many companies across the continent have been struggling to deliver projects within budget, but with minimum success. However, several management challenges faced by these companies have resulted in unsuccessful attempts to meet their targets.
Project success rates have been reported to decrease in the recent years due to failure in management. “As such, there has been a dramatic increase in late and over-budget projects in 2010, as compared to 2009” (Krigsman, 2011). Table 1.0 shows the summary for projects statistics for the years 2009 and 2010.
Table 1.0: Projects Statistics for the year 2009 and 2010. Source: ZDNet (2011).
On the other hand, latest survey from the PM Solutions Research has indicated that PMO has a significant contribution to project success. The detailed results of PMO contribution are as given below (PM Solutions Research, 2010):
- 31 percent reduction in failed project.
- 30 percent of projects delivered under budget.
- 21 percent improvement in productivity.
- 19 percent of projects delivered ahead of schedule.
- 17 percent saving per project has been confirmed.
- A 13 percent increase in resource capacity.
As a result, it is mandatory to implement a PMO in order to experience improved project success rates. However, there are several guidelines to be followed to ensure the PMO benefits are accompanied with high-success rates. Some of the benefits of establishing a PMO in the company are described below (Young, 2009).
- Focus on improvement in project management competency.
- Knowledge and project management skills are improved through training.
- There are increased levels of uniformity and consistency in project delivery.
- There is a reduction in project overruns, hence, improved delivery speeds.
- Customer satisfaction as a result of meeting product requirements.
- There is a common point for the project management service.
- Archiving project operational and performance data.
Steps in Building a Successful Project Management Office (PMO)
Since it is like any other organizational change project, implementation of the Project Management Office will be approached in the same manner (Hill, 2008). There are several steps that need to be followed so that success can be guaranteed. As the PM Consultant for the company, I have identified the following key steps to use for the PMO implementation.
Establishment Role, Scope and Office
The initial set up of the PMO will involve the establishment of the organizational role and scope (power) of the office (Hill, 2008). During the set up process, there are several factors to consider in defining the office and are referred to as PMO evolves.
In collaboration with the company’s executives, these factors can be identified and incorporated as it may be rendered necessary. The following are the most urgent and influential factors that are a must to be considered in establishing a PMO.
First of all, it will be necessary to consider the reporting arrangements because it has a significant influence on the determination of the roles and power of the PMO. In this situation, an independent PMO that reports directly to the executive group is preferred.
This will allow for a greater degree of functionality of the PMO, thus, resulting in better management of project related issues (Steph, 2007). As such, there is no restriction of the PMO’s operation within certain departments alone, but free and independent operations in all departments.
Secondly, the scope of projects that the PMO will assume responsibility has to be identified. Depending on the needs and size of organization, the PMO can assume responsibilities for all the projects or limited to certain projects such as IT.
During the first implementation process, it is essential that the PMO is restricted within the organization. This will enable the company evaluate its performance and define new ways of improving future ventures.
Finally, the PMO can be established as a permanent or temporary office depending on the company’s needs. Temporary PMO offices can be set up for functions such as reflecting on a year’s initiatives. On the other hand, a permanent office will allow for an ongoing assessment of an organization’s projects. Depending on the cost implications, companies usually prefer permanent offices because they are more economical in the long run.
Human Resource Functions
The second stage of setting up the PMO involves taking care of human resource issues such as selection and recruitment, training and certification, and providing resources to projects, among others. These functions are available in both cases where the PMO is independent or directly responsible for projects. The following human resource factors are the most essential in setting up project management offices.
Selection and recruitment of project staff is a responsibility that the PMO can assume when established. This is a necessary step where pertinent professionals such as project managers can be selected and assigned to projects that have been identified (Hill, 2008).
It ensures that the project management culture of the organization is in accordance with the company’s scope. As such, there is a continuous improvement in the organization’s professional project management staff; thus, improved productivity.
The PMO can also take responsibility in administering training the company’s staff. The body can undertake these functions by itself or through other external bodies. The PMO sets up the minimum standards required for selection and promotions to higher project management posts.
This step ensures that recruited members are fit and competent to undertake the project responsibilities set before them (Steph, 2007). As a result, the project managerial skills can be developed and promoted for the organization’s success.
Another important role that PMO’s provides is coordinating the supply of resources to the organization’s projects. This function may involve posting of project managers to projects or even the entire project staff.
However, the growth and expansion of an organization is the factor that will determine the actions to be undertaken. For instance, growth will result in the need to manage projects resources systematically. As such, it may be essential for the PMO to assume the works for allocating resources to projects.
Setting up Project Management Standards
The third step undertaken by the PMO involves the establishment of project management standards. This will provide a backing for which the PMO will use to manage how the company responds to its projects (Hill, 2008). This helps to define the organizational layout for projects and can provide either direct or indirect influence on the projects. The factors handled during this stage are described in the following paragraphs.
The initial and most significant step is to set up the Project Management Methodologies. These may include defining the project life cycle or project execution standards. The former involves defining the sequencing of project activities such as design, building, testing and hand-over.
However, the latter involves determining the parameters for items such as documentation, reporting and issue management. This is a key role in determining how an organization will be responding to its projects needs. Therefore, the role is usually assigned to the PMO to ensure a successful project execution is realized.
Another role that is closely associated with setting up methodologies includes the provision of templates. Provision of templates for project activities has a direct influence on how projects are run.
There are several forms of templates that can be used such as status reporting, risk assessment and budgeting among many others. This is an extremely helpful step for organizations that are new to project management because it allows them to establish standard processes much faster than expected.
Also, it may be necessary for an organization to provide project management tools to assist in the effective management of more complex projects. These tools usually have both direct and indirect impact on the management of organization’s projects. Project management tools may include templates (mentioned above), project management software, and other customized tools (Steph, 2007).
Project Execution Functions
Usually, project execution functions are closely linked to the PMO’s resource ownership relationship. As such, a PMO that owns its resources (project managers or project resource group) has more responsibilities in the management and execution of the projects. The following functions in project executions are handled by the Project Management Office in an organization (Steph, 2007).
A comprehensive risk management function can be assigned to the Project Management Office depending on the need at hand. The functions may vary from the initial setting up of standards and procedures for risk management processes to facilitation of project risk management. Risk and issue management functions are assigned to PMO’s to ensure there is maximum success among handled projects.
Impact and change management functions are well managed by the PMO. As such, the PMO assumes all the responsibilities for measuring project impacts on shareholders, customers, employees and other associates.
The importance of PMO’s functions on impact assessment increases as an organization’s size and project portfolio increases. This helps in the determination of better ways to handle future projects by avoiding possible future problems on similar projects.
Communication is an extremely useful tool required to shape the current and future direction of projects. As such, the PMO should be well exposed to several projects to develop effective ways of managing communication within projects and other areas of a company.
Some of the techniques used to improve communication within projects include the use of direct methods like presentations and newsletters; or the use of indirect methods such as provision of Intranet sites and directories. Large corporations with several projects are suitable for this communication that is aided by PMO’s.
Business Strategy Responsibilities
Several organizations that are constantly improving their technologies and those with large expenditures on their projects require a PMO with increased roles. This is necessary to ensure that such organizations do not make unnecessary losses due to technology lags or overboard project expenditure.
In such situations, the PMO will assume a crucial role in making strategies for such organizations. The following strategic intents can be undertaken by such organizations.
One strategic move by a PMO can involve the gathering of initiative proposals. As mentioned earlier, this may include the submission of guidelines and templates that can be used as aids by people submitting proposals.
Another strategic function may involve the evaluation of projects as a central area for the planning of organization’s projects. This would include proposal evaluations basing on different criteria. Some of the fundamental criteria that are used include resource impacts, costs, risk assessments, schedules, etc.
The PMO may also use project prioritization to categorize the most critical projects. As such, this could be used for identifying which projects to start working on and with what speeds in order to meet their deadlines.
Furthermore, project prioritization can be used to identify projects with the most financial benefits, easier resources availability, and those with minimal risk assessment (Steph, 2007). When accompanied with project planning and scheduling, the PMO delivers quality projects within the allocated time frame.
Associated to project prioritization and scheduling (as mentioned above) is the PMO’s role in project funding and approval. In this strategic move, the PMO ensures that the necessary funding is made available to projects at the most appropriate time so as to allow for maximum productivity. Therefore, all budgets directly relating to projects are handled by the PMO of the organization in order to maintain smooth operations.
Reviewing the PMO
After the establishment of all the five stages described above, the Project Management Office is completed and ready to start offering its services. However, the PMO will need to be constantly reviewed, and modifications made as it serves the organization (Hill, 2008).
Changes resulting from the organization’s growth lead to subsequent changes in the roles and scope of the PMO. Therefore, it is mandatory that the PMO staff work together with the organization’s executive in order to review the PMO’s scope and performance. As a result, the PMO will remain functional and relevant to the changing business needs of the organization.
Conclusion
In this paper, the benefits and essential steps undertaken in setting up a PMO were discussed. The determining factors may vary depending on the size, type, and project portfolio of the organization.
The application of those factors that were discussed will enable an organization to establish methods that will result in maximum productivity. Therefore, it is recommended that organizations looking for project success establish a PMO to manage its internal and external projects.
References
Hill, Gerard (2008) The Complete Project Management Office Handbook (2nd Edition). ESI International.
Krigsman, Michael (2011) 2011 ERP Survey: New IT Failure Research and Statistics. Web. ZDNet.
PM Solutions (2010) The State of the PMO 2010: A PM Solutions Research Report. Web. PM Solutions.
Steph, Brown (2007) How to Design an Effective Project Management Office. Web. Management E-articles.
Young, Michael (2009) Key Steps to Implement a Project Management Office. Web. Project Smart.