What is a PMO and how does it add value?
In this post we’ll answer the question ‘What is a PMO’ and help you to understand why it is valuable to have one when you are running projects. We’ve broken the post down into 10 sections, as there is quite a lot of information. Hope you enjoy reading.
#1 What is a PMO?
PMO stands for project management office. A PMO is a team or department set up to support the governance and control of projects and business change. It can be responsible for the governance and control of a singular project or for multiple projects. The PMO is NOT responsible for managing project(s), but is responsible for the mechanisms that control project(s).
Sometimes PMO gets confused with PSO, although they are quite different. A PSO, project support office, is more an administrative support function. A PMO offers experienced and qualified resource.
#2 How does a PMO add value?
The PMO adds value by standardising the governance and control aspects of projects which enables project managers to work efficiently and effectively to successfully deliver projects. The PMO brings expertise in the governance and control elements of projects, and can provide resource to carry out the day-to-day project governance and control tasks.
The PMO will maintain control of plans, budgets, de-risk project work and support strong stakeholder management. It will implement best practice processes from across the organisation to provide a strong project governance and control function.
PMO capability is particularly valuable on projects of significant size or complexity, or where many projects are being run at one time by an organisation. The PMO is a capability that can support the business, change and project work on an ongoing basis to ensure consistency, efficiency and maximum business benefit is achieved.
As many organisations are faced with major change due to internal and external influences, the PMO function is becoming commonplace and, in fact, critical.
#3 What should a PMO NOT be?
The PMO should not be an overbearing, inflexible function that adds time, red-tape and overhead to projects. Run correctly the PMO will be ensure that change within the business aligns with strategy, target operating models and adds value.
#4 What do we mean by standardising project governance and control?
Standardising project governance and control includes providing a standard project management methodology, standardising documentation templates and project management processes. This is useful on a singular project as it allows a project manager to use the same tools time and again, but is even more useful where an organisation is running multiple projects. Standaridsation not only makes the teams more efficient, but allows projects to be measured and reported in the same way. By enabling standard reporting the PMO can provide senior executives with clear dashboards on multiple projects highlighting progress, risks and decisions requiring action.
#5 What other big advantage does the PMO have?
The PMO also has the advantage that it sits outside of the project(s) and can identify best practice across teams. It is a conduit between projects, teams and expertise in the business so is often a good first port of call for project managers wanting to leverage knowledge from other areas. This can be invaluable to projects run by less experienced project managers or those new to a business.
A well developed PMO function in an organisation will strengthen project delivery capability.
#6 Why is it so important to control projects and business change?
Starting a project or business change off in the right way and controlling it throughout is far more likely to lead to successful delivery than crossing your fingers and hoping.
Every project or business change activity should have a clear set of objectives, a plan or timeline, a budget and an understanding of the things that may impact the project along the way such as the risks and dependencies. A PMO will support the start-up of a new project by ensuring all the relevant pieces are in place and the ongoing control throughout.
For more on starting a project you may want to read our blog post on getting a project off the start line.
#7 What mechanisms used to control a project?
We’ve mentioned that the the PMO would provide standard templates and process for the governance and control of projects. Typically there are defined areas which are supported by the PMO, and these vary by organisation. We have listed the common areas that are supported:
Many organisations will employ a standard project management methodology. The methodology defines how a project manager should run the project.
Some organisations employ a waterfall method of managing projects where the project is typically project down into stages. There will be clear deliverables for each stage and stage gates, or a sign-off process, to move from one stage to the next.
Other organisations will follow a more agile approach to delivery, where work is broken down into short, incremental sprints.
Regardless of approach, having a standard methodology followed by all projects will ensure consistency and control. The PMO is responsible for ensuring that the project methodology is:
fit for purpose (i.e. supports the business projects and change)
understood by project managers
The PMO is also responsible for auditing that the methodology is followed and key deliverables are produced, signed-off and distributed to relevant parties. For example, it may check that design documentation is produced during the design stage, or that each stage gate is passed before a project is allowed to move on to the next. The PMO may run the approval meetings for stage gate approval.
Project planning determines the tasks associated with delivering the project, the time each task takes and the order in which they are delivered.
It will normally take into account any dependencies (either on other tasks within the plan or on tasks, resources or activities outside of the project) and imposed timescales. It will also inform the resource plan i.e. the people you need to get your project delivered.
Once again, the PMO would have a standard approach to planning projects. This normally includes standardisation of key milestones, such as major deliverables or stage-end dates. It may also provide a standard layout or template provided that can be populated for each new project. In some organisations the PMO will hold responsibility for the update of project plans and tracking of activities.
The budget is the cost breakdown for the project. Managing the budget involves tracking the cost as the project progresses to ensure that it does not exceed the funds available.
Budgeting for a project and controlling the budget is complex. The PMO may work with the finance department within the organisation to produce a project specific budgeting approach and may support project teams in tracking budget against plan throughout the project. At the very least they will provide standard, best practice processes for financial planning and ongoing budget control.
Project budgeting is also sometimes tied in to the project methodology. In this case funding is released for the first stage of the project and further funding only released when the stage gate for the first stage is passed. This could involve, for example, delivery of a business case and a plan for the next stage. The PMO would support the project manager in getting through the stage gate and securing the next lot of funding. For organisations taking a more Agile approach, funding is usually associated with a sprint, and the PMO should ensure that the correct estimating is in place to support securing funds.
It is good practice to have a RAID log where all risks, assumptions, issues and dependencies are recorded and actively managed. Managing RAIDs helps control possible negative impact to the project. For more on this see our blog post on essential tips for managing project risks and issues.
The RAID log may be a central tool managed by the PMO and populated by individual project managers. Alternatively each project may have a RAID log and report significant RAIDs to the PMO as part of regular status reporting.
The PMO may facilitate RAID meetings for projects or a group of projects where risks have a wider impact.
There is no doubt that keeping stakeholders, the sponsor and potentially end users up-to-date on the project helps with the project’s PR. Regular update reports and summary information presented in dashboards is an essential part of good stakeholder management.
The PMO will have a set of standard reports that it will require each project to complete. This will include information on progress against plan, budget, significant risks and issues. The PMO will provide support to ensure reports are clear and to the right standards. It will also distribute the reports to the relevant interested parties.
Reports should be simple one page summaries stating the key points and action items. At Easyprojecthub we like to use a RAG (red, amber, green) status against some key reporting items such as progress against plan, budget, risk profile.
If there are multiple projects that require reporting to stakeholders, management or executive committees, the PMO will be responsible for collating the relevant information provided by each project manager into dashboards.
Document control & management
Having control over the key documents (such as the business case and design documents) and other products or outputs from your project means that everyone always knows where to go for the information they require.
The PMO can help with managing shared locations for projects, controlling who updates them and ensuring they are properly named and versioned. It’s good practice to have different versions for draft and final documents, as well as names that help people identify your documentation.
As the project progresses it is inevitable that changes to the original scope will be required. Change management is the process of assessing the changes for cost, time and quality impact on the existing design or business. If changes are not controlled, the project can rapidly exceed budget and timescales.
The PMO would normally provide resource and processes to support the management of changes to projects. It is likely that the PMO will run change review sessions if they take place.
Project prioritisation and approval
For organisations where project work is a regular occurrence and multiple projects are being carried out at any one time, the key to success will be in ensuring the right projects are being delivered. Delivering unnecessary or low priority projects can do a business more harm than good. This is an area where the PMO can add immense value by supporting the business and project teams in selecting the right projects for delivery, in other words those that are aligned with strategic direction, have a viable business process and the most beneficial outcome for the business.
If you are setting up a PMO, you shouldn’t be limited by the areas we’ve mentioned in this post. A PMO is in a strong position to support the business in many areas. It will have a wider business view than any individual team and this knowledge can be leveraged to support with delivering efficiencies and strategy formation.
#8 A note on PMO in Agile organisations
Many organisations today run Agile projects and on the face of it the traditional PMO might seem too rigid to support these projects. However, projects should still be run consistently, deliver successfully and to the right quality.
In any organisation the PMO should make project delivery more efficient
There will always be essential governance tasks, such as budgeting, stakeholder management and management reporting. Organisations who predominantly use Agile can really take advantage of a PMO function by farming these tasks out to the PMO in order to keep complete focus on sprint delivery.
#9 Do you need a PMO?
If you are running a large and complex project, or have multiple projects running in your organisation you should be setting up a PMO. You should do so regardless of whether you follow a waterfall or agile methodology.
The PMO will maintain control of plans, budgets, de-risk project work and support strong stakeholder management. It will implement best practice processes from across the organisation to provide a strong project governance and control function. This will enable project managers to work efficiently and effectively to successfully deliver projects.
Remember, run correctly your PMO will be ensure that change within the business aligns with strategy, target operating models and adds value.
A good PMO enhances project delivery capability within an organisation. Successful project delivery translates to business benefit.
#10 Ensure your PMO is adding value
If you are setting up a new PMO in your organisation, have already got a PMO up and running, or want to take it to a new level you should do everything you can to ensure the PMO is adding business value.
The PMO is in the strongest position in the organisation to influence and support change, and to ensure the business is driving forwards.
The PMO shouldn’t just focus on bringing best practice to everyone else but should be measuring their own success and value. A regular customer survey (the customer being the business in this case) is a good way of gauging business opinion of the PMO, and a balanced scored measuring pre-determined criteria can give a good sense of how the PMO is operating over time.
Above all else, ensure that your PMO is responding to the business need.
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