Practical Guide for Setting up a successful Project Management Office (PMO)

A distant relative of mine who worked in a reputed company once told me that he knew of several companies who didn’t even have a dedicated HR department. That was unthinkable for me even back then when I had just started my corporate career. Down the lane, I have encountered several such instances till date when companies don’t see the need to establish certain key departments like HR or a Project Management Office (PMO). 

I had the privilege of setting up a Project Management Office also known as PMO few years ago and can vouch for its importance in any organization that achieves its strategic and continuous improvement initiatives via projects. Do take note that in some organizations, PMO could also stand for Program Management Office (or PgMO) or Portfolio Management Office (or PfMO). 

A PMO is a strategic center within the organization which establishes and maintains all the standards that go on into every project undertaken by the company or organization. This helps in leveraging resources and avoiding duplication of work. 

In view of the current global business scenario where digitization has taken over the reins and employees no more work from the office alone, project and program management have gained new significance. Project managers have to adopt increasingly agile delivery mechanisms and approaches. PM is now more strategic than tactical. 

A KPMG study published in 2019 highlights the increasing importance of the PMO while also shedding light on the fact that 30% of organizations disestablished the PMO in the past 2 years. It is seen in the fact that 28% of surveyed organizations rated a strong PMO as extremely significant to delivery. 

Consider a company like Microsoft that has offices spread across the world and which works on several products at the same time. Now one can’t even imagine all these offices with its thousands of employees working on parallel projects, seamlessly integrating to achieve the organizational goals. In the absence of a strong PMO, these projects will simply exist, eat away company resources and churn output that no one can map against any metrics. 

It has been seen that several IT companies are simply doing away with having a PMO because there are several digital tools available to track progress of diverse projects running parallel to each other. 

A PMO ensures the organization’s procedures, practices and operations are in sync and utilize optimum budget, time and efforts from the company. Companies that establish a successful PMO are better equipped to get more out of the same resources and strategy than those that don’t. They are also better able to handle more number of projects successfully because there is a system in place that monitors the whole machinery. The very premise of responsibility and accountability brings in a lot of agility within the system. Project leaders and team members immensely benefit from having someone who can be approached while they are focused on delivering results. 

Establishing a successful PMO

If your company has never had a PMO and wants to establish one, be sure that it is on the path to success already. The realization that a PMO will be needed is the first step towards making it successful. Next step is to understand what kind of PMO is needed. Generally, there are three kinds of PMOs:

    1. Supportive PMO: One that is always there but rarely intervenes in the functioning of projects. It lets you know it’s there, now it’s up to you to consult it or not. Doesn’t quite make a difference. 
    2. Directing PMO: Which provides templates and guidelines and is in complete control of the project, though not in a dominating sense. 
    3. Controlling PMO: This leaves no room for project leaders for any autonomy. You just listen and follow instructions and that’s about it. 

Once you realize the significance of establishing a PMO, you need to focus on the following five key phases to ensure you are doing it right:

  1. Assessing the PMO: In this phase, you would assess how significant the work of the PMO will be in the company / organization, When multiple projects are being executed, the outputs and outcomes of these projects and their need to always align with business goals and their respective strategic initiatives etc. Apart from the projects and the company systems, the PMO will need to have its own systems in place.
  2. Initiating the PMO: This phase consists of defining the objectives of why you’re establishing one. Knowing the why’s always helps in designing the how’s. What kind of a project management office do you feel will work best in your organization? Most companies opt for the hybrid model where the PMO does provide the necessary framework and guidance and stays on the periphery without much interference or asking for reports.
  3. Establish the PMO: During this phase, the procedures, processes are defined, the various tools, and systems that would be handy in implementing and coordinating several projects with the company are acquired/developed. Plan for people who would work there. Prior experience in working or managing a PMO is always an added advantage. Setting up reporting structures, timelines, change control, communication, documentation are some of the tasks of the PMO.
  4. Implement PMO: Once the office is established, it has its work cut out clearly. Let the members of the PMO be well versed with the projects running. Monitoring projects, providing key inputs, streamlining progress, leveraging resources becomes a day’s work. Know how reporting structures are established and ensure they are followed to the T. This makes the work of the PMO all the easier.
  5. Improving the PMO: As with every other system, the PMO is also subject to constant and continuous improvement. Especially in the initial days when there is less experience, the PMO may learn to pitch in, to optimize allocations and to mitigate loss/ wastage of time, money, and human resources. Seek feedback from project leaders and team members as well as the management about the effectiveness of the functioning of the PMO. This helps in course correction and establishes PMO credibility. 

As businesses continue to expand on their transformation journey, they will certainly undertake projects in large numbers. These will often overlap or depend on each other. It becomes paramount on how the projects are governed, managed, and executed. Setting up an effective project management office is just the key recipe for success. 

For further reading, check out the following articles that elaborate on each of the above mentioned five phases in detail. 

Phase 1 – Project Management Office (PMO) Setup: Assessment and Strategy

Phase 2 – Project Management Office (PMO) Setup: Initiation

Phase 3 – Project Management Office (PMO) Setup: Establish the PMO

Phase 4 – Project Management Office (PMO) Setup: Implementing the PMO

Phase 5 – Project Management Office (PMO) Setup: Improving the PMO

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