Seventy percent of organizations had a project management office (PMO) in 2013, according to PMI's Pulse of the Profession™ In-Depth Report: The Impact of PMOs on Strategy Implementation. That compares to 61 percent in 2006. Despite the increasing number of PMOs, many of them still fail. The first step in effectively establishing a PMO is figuring out if your organization even needs one. Only then can you ask, How can we establish one successfully?
Part of determining if a PMO would be a good fit for your organization is knowing what a PMO's functions are. A PMO is an organizational structure, like a department or group, responsible for helping the enterprise achieve its strategic goals through effective project management results. Therefore, a PMO usually delivers three main objectives:
- Efficient projects: better results
- Reporting: information to support decision-making
- Standardizing: consistent and repeatable results
Obviously, implementing and sustaining a PMO is not cheap. Usually, there is some capital investment in setting up a PMO, particularly because it will add management overhead in addition to existing projects' costs. For a company whose core business involves only a few projects, if any, it might not make sense to implement a PMO. And while there's no formula to determine when organizations need a PMO, most do when they have:
- A large number of projects -- a PMO manages interdependencies, resources and provides standardization
- Very big projects -- they usually bring high complexity, which requires coordination and integration
- Strategy that depends heavily on new projects -- a PMO in this instance provides strategic alignment, prioritization and selection.
So let's say it's been determined that your company needs a PMO. How do you lay the foundation to establish it effectively? First, it is important to know that there are different types of PMOs. These include but are not limited to:
- Project office: Planning, monitoring and control functions for large and complex individual projects or programs
- Departmental PMO: Integrating projects into one or more portfolios of projects, managing a shared pool of resources and providing consolidated reports
- Enterprise PMO: Ensuring strategic alignment by selection and prioritization of projects, programs and portfolios. (Read more on PMI® Thought Leadership Series: Strategic Initiative Management - The PMO Imperative.)
Keep in mind that implementing a PMO involves a lot of change management, because it entails a new organizational structure, which affects the balance of power and culture in an organization. I recommend organizations invest more in change management tools or talent.
Finally, to tailor the best PMO for your organization from the start, I recommend following these key steps:
- Define a mission. What does your PMO do?
- Define a vision. How do you want it to grow?
- Identify key stakeholders. Who are your clients?
- Select core functions and services. How does your PMO add value to stakeholders?
- Create proper metrics and key performance indicators (KPIs). How do you know your PMO is doing OK?
- Continuous improvement. Develop action plans based on metrics and KPIs
- Focus and value. Keep it lean. It is common for PMOs to start adding more services, processes and features. Sometimes they are only wasting resources because the organization doesn't need that.
In my next post, I'll outline a plan to implement a PMO. We will also talk about maintaining a PMO and continuous improvement to keep it sustainable.
Do you have advice for determining if your organization needs a PMO or basic tips for establishing a strong, sustainable PMO?