Building a Project Management Office

This blog posting discusses the importance of the Project Management Office (PMO) and the chronological steps necessary for developing the PMO.

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In today’s complex business environment new projects are constantly being developed as organizations seek new ways to reduce costs, improve processes, increase productivity, and build their bottom line. Managing these diverse projects along with their people, resources, technology, and communication is a difficult endeavor for which the risk of failure is often far too high. An effective solution, created to establish a more centralized management structure for large groups of projects, is the Project Management Office (PMO). The PMO provides organizations with an infrastructure of people, procedures, and tools to achieve effective project management by leveraging project management standards, allocating resources, establishing consistent performance measures, and reducing duplication of efforts.

There are many benefits to establishing an effective PMO. First, the PMO provides a framework for consistently managing projects through a standard methodology while ensuring the projects are aligned with corporate goals and strategies. Project managers have clear lines of responsibility while coordinating people, processes, and tools with one another and by doing so, avoid both gaps and overlaps between projects and reduce or eliminate duplication of effort. Standardization and repeatability afford an organization better communication, reduced project cost, improved resource management, more accountability, improved quality, better forecasting, and less overhead associated with project managers.

Enlist Executive and Management Support

The first step in establishing a PMO is gaining executive and management support. This step relies heavily on organizational change management (OCM) as it requires a potentially significant shift in organizational culture as well as roles and responsibilities. Regardless of the difficulties and resistance to change, this step is the foundation upon which a successful PMO must be built. As with any shift in organizational structure, policy, or procedure, favor must be gained through justification for the changes in terms of cost benefit and return on investment (ROI).

Determine the Structure and Build the Team

The next step in building a PMO is to determine the structure and develop the team. There is no defined template for PMO structure as every organization brings its own variables to consider. Some manage all aspects of the projects assigned under them like scheduling, budgets, resourcing, human capital, oversight, and communication. Others may strictly coordinate these functions with most of the support coming from adjacent departments. The keys to determining the right structure and team members for the PMO are understanding the most effective way they can co-exist within the organization and finding the right balance between the PMO, organizational culture, roles and responsibilities, and management style. Some things to consider in establishing the structure and building the PMO team include: availability of resources; existing project management standards and methodologies; current roles and responsibilities; the politics of the organization; project size and volume; and current project management problems.

Establish Authority for the PMO

Just as a project manager needs to be given authority for a project, authority needs to be given (and recognized) for Project Management Office. How you structure your project management office depends on your organizational structure and size of your organization. Smaller organizations with may choose to have a project manager take lead of the PMO. However, as your organization increases in size and complexity you’ll want to assign a dedicated person to run your PMO and establish authority within the organization. This person would typically be at the Director/Vice President level with the authority within the organization which comes at that level.

Develop and Document Standards

Once the structure and team members have been determined, it is time to develop and document the PMO standards, practices, and methodologies for project management. These standards will allow for consistency across the organization and its portfolio of projects. They will also comprise a large portion of the training that projects managers and staff will receive in the next step. Standardization is also an important part of allowing an organization to compare various projects and allocate resources where and when they are necessary.

Identify Skills and Train the Staff

Once the development of project management standards and methodologies is complete, the PMO must identify the proficiency levels and skill sets of it project managers and staff in order to determine what training is necessary. Some of this information will be evident as a result of reviewing the statuses of current projects. Much of the training content can also be based on the standards, practices, and methodologies that were defined in step #3. The PMO should also establish an ongoing training program. In a PMO it is inevitable that staff members will come and go and organizational standards will change and evolve. A training program will ensure that all new employees receive training on those standards and existing employees remain aware of any changes.

Measure Success and Continuously Improve

Now that the PMO structure is finalized, project management standards are established and communicated, and personnel are trained, the focus of the PMO must shift to assessing and measuring success. This point in time marks the initiation of progress and performance reporting based on standardized tools, templates, and methodologies. However, it also marks the beginning of a continuous process improvement cycle and a transition from PMO deployment to operational sustainment. As the PMO evolves, project team members must maintain an awareness of the metrics by which their projects are measured as well as how process effectiveness is determined. There must be a concerted effort to identify processes which require improvement. Once identified, improvement measures must be developed and implemented.

The establishment of an effective PMO is beneficial to any organization which manages a portfolio of projects. When planning and building a PMO it is imperative that it is done in a manner which compliments the existing structure or the organization. This will allow the company to gain maximum benefit and to do otherwise would be counter-productive. Since every organization is different, the optimal structure for the PMO must be designed based on many considerations and variables. The ability of a PMO to manage projects through consistent and repeatable standards and methodologies brings many benefits. It provides the organization with accountability, continuity, simplified oversight, and the ability to measure project success more effectively. An effective PMO is a catalyst for greater efficiency as it allows an organization to do more quality work with fewer resources and less risk. The result of these benefits is an organization that will significantly improve its project success rate.