PMO: Things You Need to Consider in Building the Best One

When your business is handling multiple important projects every single day, it’s easy for details to slip through the cracks. That’s where a project management office (PMO) comes in. PMO is responsible for ensuring that all projects are completed successfully and on time. 

With a PMO, your business can enjoy the many benefits of successful project management, such as reduced costs, increased efficiency, and improved customer satisfaction.

To create a Project Management Office that’s effective for your business, there are a few key things to keep in mind. In this article, we’ll discuss what those things are and how you can go about building your own PMO.

We’ll be covering the following topics:

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What is a PMO?

In the 1930s, and potentially even earlier in the century, the concept of Project Management Office was coined by the US Air Corps. They wanted to optimize their project delivery process and manage risks related to individual projects. Fast-forward a few decades, and the PMO has become an essential organizational function in most industries.

A PMO is a centralized management unit that oversees one or more projects or programs. It provides standard processes, templates, tools, and reporting mechanisms to ensure projects are delivered on time, within budget, and to the required quality standards.

The Project Management Office also provides guidance and support to project managers and team members and helps ensure that all stakeholders are aligned with the organization’s overall objectives.

four people sitting on the bleachers while having a pmo meeting

Characteristics of a good PMO

While every project management office will differ depending on the organization’s needs, some general characteristics are found across most effective PMOs:

  1. Transparency. Projects cannot be managed effectively unless there is total transparency between team members and key stakeholders. The PMO should be able to provide timely updates on project status, risks, and issues so that everyone is kept in the loop.
  2. Clear roles and responsibilities. Every member of a project team should know their specific role and what is expected of them. This clarity reduces confusion and helps ensure that tasks are completed efficiently.
  3. Processes and procedures. Standardized processes and procedures help ensure that all projects are managed consistently, regardless of who is working on them. This also makes it easier to track and compare project performance over time.
  4. Resources. A good Project Management Office should have the resources it needs to do its job effectively, including access to appropriate software and tools, as well as a team of qualified project managers.
  5. Support from senior management. Senior management must be on board with the PMO and provide the necessary resources and backing for it to be successful.

If your organization is looking to establish or improve its Project Management Office, these are some of the key characteristics to keep in mind.

Do you need a PMO?

Some businesses, especially the smaller varieties, may find that there is no sufficient need to warrant the creation of a PMO. After all, project management can be handled by the team leads and other managers without any additional overhead. But as businesses grow and become more complex, the need for a Project Management Office typically increases as well.

There are several factors to consider when determining if you need a PMO:

  • The size and complexity of your business. Have you outgrown your current project management processes? With growth comes greater complexity, and it may be necessary to implement a more formalized strategy.
  • The number of projects. Are there too many projects for team leads to manage effectively on their own? If not, is there a lack of coordination between projects? A PMO can help to ensure that all projects are running smoothly and on schedule.
  • The need for governance. A PMO can provide standardized processes and templates, helping to ensure that projects are executed consistently and within agreed-upon parameters.
  • The need for reporting. A Project Management Office can produce detailed reports on project status, budget, and other metrics, providing critical insights to management.
  • The need for training and development. A PMO can provide essential training and development for project managers and team members, ensuring that everyone has the necessary skills to manage projects successfully.

If your business meets most or all of these criteria, then it is likely that you need a PMO.

Building the best PMO for your business

Now, let’s get down to the practical; how do you go about building the best PMO for your business? There are a number of key steps to follow, as we’ll outline below.

1. Define the PMO’s purpose

As with any new business endeavor or shift in structure, it’s crucial to have a clear purpose established for your Project Management Office right from the outset. What are you hoping to achieve with a PMO in place? This will help inform all subsequent decisions about structure, staffing, and operations.

For example, are you looking to improve project delivery and efficiency? Reduce costs and risks? Increase stakeholder satisfaction? The answers to these questions will help shape the type of Project Management Office you need.

a person discussing PMO with her team

To draft your PMO’s purpose, you’ll also want to take a look at your organization’s overall business strategy and objectives. What role do projects and project management play in achieving these? How can the PMO help support and align with them?

Here’s an example of a PMO purpose statement:

The primary purpose of the Project Management Office is to improve project delivery and efficiency, reduce costs and risks, and increase stakeholder satisfaction. The PMO will accomplish this by providing standardized processes, templates, reporting, and governance structures that facilitate successful project execution.

You should also take some time to set out specific goals and objectives for the PMO. These could include things like reducing the average project duration by X%, increasing project success rates to Y%, or achieving Z% cost savings on projects.

2. Assess your needs

Once you have a sense of what you’re hoping to achieve with your Project Management Office, it’s time to assess your needs. This will help you determine the specific functions and services the PMO should provide.

Some key considerations include:

  • The maturity of your organization’s project management practices 
  • The size and complexity of your projects 
  • The number of projects and project teams in operation 
  • The skills and experience of your project managers 
  • The availability of resources (people, budget, technology)

But how do these needs inform the actual structure and function of the PMO? That’s where things can start to get a little more specific.

3. Determine the structure of your PMO

There are a few different structures that can be effective for a Project Management Office, but no one-size-fits-all solution exists. It’s important to tailor the structure to your specific needs and culture. 

a person using a whiteboard while two people are watching

The three most common structures are:

A centralized PMO – This type of PMO is responsible for all projects and project management activities within the organization. It typically has a broad mandate to provide guidance, standards, and tools across all phases of the project life cycle.

A decentralized PMO – With this structure, individual business units or projects have their own PMO, which provides support and guidance specific to their needs. This can be a good option for organizations with a lot of decentralized decision-making or those that have very complex projects.

A hybrid PMO – A hybrid PMO is exactly what it sounds like: a mix of centralized and decentralized structures. This can be a good option for organizations that have a mix of simple and complex projects, or for those that want the benefits of both centralized and decentralized PMOs.

The best structure for your PMO will depend on your specific needs and culture. But before you make a final decision, it’s important to consider the following factors:

  • The level of standardization and process control needed 
  • The need for coordination and communication between projects 
  • How much authority the PMO should have over project decisions 
  • The level of integration required with other organizational functions 

4. Build the right team

Staffing is critical to the success of your PMO. It’s important to have the right people in place with the necessary skills and experience to carry out the PMO’s functions.

Ideally, your team will include individuals with expertise in project management, business analysis, process improvement, and change management. It’s also important to have a good mix of skills and experience so that the team can work collaboratively and effectively across different areas of the business.

You’ll also need to assign individuals to specific roles within the PMO, such as:

  • Project manager. This individual is responsible for planning, executing, and monitoring projects.
  • Business analyst. The analyst gathers and documents business requirements, evaluates solutions, and assists in project planning.
  • Process improvement specialist. This person is responsible for improving process efficiency and effectiveness.
  • Change management specialist. This individual oversees changes to business processes and systems.
four people gathered around a wooden table to discuss their pmo

Keep in mind that certain individuals may wear multiple hats within the PMO, depending on their skills and experience. If you are a small business, for example, you may need to have someone with project management skills also serve as the business analyst and process improvement specialist.

5. Define and implement processes and procedures

Once your team is in place, it’s time to define and implement the processes and procedures that will support their work. This includes everything from standard operating procedures for project management to communication protocols, change management practices, and more.

It’s important to ensure that all processes and procedures are clearly documented and easy to follow. This will help ensure consistency and efficiency across the PMO team.

6. Manage expectations.

One of the key challenges facing any PMO is managing stakeholder expectations. You must set the right tone from the outset and make it clear what the PMO can and cannot deliver.

It’s also critical to be realistic about the timeframe for implementing changes and delivering results. Stakeholders need to be kept informed of progress and any delays or setbacks along the way.

7. Keep up with changes

The business world is constantly evolving, and the PMO must keep up with changes in order to remain effective. This means staying on top of new trends and developments in project management practices, as well as keeping tabs on the ever-changing needs of your organization.

The PMO must also be prepared to adapt as the business changes. This could mean adjusting the structure and staffing of the PMO or refining the processes and procedures it uses to support project management.

a person leaning down to show his notebook to another person sitting down

Building an effective PMO can be a daunting task, but following these key steps will help you get started on the right foot. With the right structure, team, and processes in place, your PMO can be a valuable asset to your organization.

Maintaining an effective PMO

Once you’ve built your team and set up the processes and tools they need, it’s important to keep the PMO running smoothly. Here are some tips:

  • Keep your PMO tools up to date. This includes the project management software you’re using, as well as templates and checklists.
  • Make sure your team is properly trained on how to use the tools and processes.
  • Encourage your team to feedback on any suggestions for improving the PMO process.
  • Regularly review and update your PMO policies and procedures.
  • Frequently assess the effectiveness of your PMO, and make changes as needed.

Building and maintaining an effective PMO can be a lot of work, but it’s worth it in the end. With a well-functioning PMO, your team will be able to effectively manage projects and deliver on goals.

Final thoughts on building the best PMO

With an effective PMO in place, you’ll be amazed at how smoothly projects run and how effectively your team can collaborate to achieve common goals. But don’t take our word for it – try building your own PMO and see the results for yourself!

Remember: no team is perfect, so don’t be discouraged if your PMO doesn’t quite hit the mark right away. Continuous improvement is key to success, so keep tweaking and adjusting until you find the right formula for your team.