The Definitive Guide To PMO (Project Management Office): Know If You Need One

what is Project Management Office

Today almost 85% of Companies have PMO, up from 5% in 2014. The PMO's have become a necessity rather than a luxury in a large organization. (Source)

These statistics show that setting up the Project Management Office (PMO) drastically improved the project’s productivity and clarity.

However, not all organizations need PMO as some have less capital and small projects that project managers can easily manage.

Having a central office that manages the project portfolio can create a solid strategy based on the gathered information of all the completed projects. Hopefully, they can increase project success by a significant percentage in the future by analyzing the data to know what works and what don't.

It is necessary, especially for large organizations whose project costs run over millions. In such cases, project failures can be risky, leading to the loss of significant resource times and low customer satisfaction.

The most famous example of a failed project is Google's Google plus, whose budget crossed the $585 million mark. Google failed miserably to create a rival social media network to Facebook.

The main reason behind the failure of Google plus was less customer satisfaction, data security issues, and design flaws.

Google was able to afford the failure of its Gplus project. The question is, can every organization sail through such a vast project failure. Probably not!

Hence, many large companies worldwide must take an important lesson from Google plus failure and evaluate all the projects' variables before it takes off from the ground.

» What is Project Management Office (PMO)?

Project Management Office (PMO) is a group of individuals or project managers within the organizations, who manage, regulate the project’s standards and protocols.

Consider PMO as a regulatory body that regulates how the project performs in an organization.

Not every organization has PMO, and not everyone will need them. However, you should consider setting up PMO if:

Projects are consistently delivered late or extend the deadline.
The project often exceeds the budget and fails to meet its objective.
You are not able to track the project key performance indicators accurately
There is no consistency in methodology followed during the projects
The stakeholders do not have transparency in the progress of the projects
The number of projects within your organizations is increasing rapidly
Proper resources need to coordinate across various departments.

» What are the roles and responsibilities of a PMO?

A PMO wears many hats. A value-centric PMO will undertake many roles and responsibilities and help you grow your business. It can be a potential game-changer for your organization. But first, let's know the roles and responsibilities of PMO.

› Coaching and Training:

The members of PMO often consist of experts in the project management processes. They have managed numerous amounts of projects and hence know the recipe to make the project successful.

They are perfectly placed in PMO to manage ongoing project developments. They can coach and train the project managers with less experience to handle the project in a conventional way.

› Improve communication:

When the projects are large, the number of people involved in the project is enormous. There may arise conflicts in the thinking pattern leading to confusion among the team members.

PMO, as a central body, acts as a regulator that filters the conflicting messages. It also helps project managers to reduce the overload of communicating with key stakeholders. It ensures that every project manager targets the unique stakeholders so that there are no repetitions in communications.

Their job also involves managing the intranet, internal communication, provide effective newsletters for project managers, and manage the slack channels for effective collaboration.

› Portfolio Management:

Portfolio management is one of the primary and most essential functions of PMO.

A portfolio is a selection of projects and programs. The purpose of managing the portfolio is to ensure that your company is taking on the right projects that align with your organization's strategies, values, and goals.

For instance, let us consider that your company builds and repair commercial buildings and complexes.

The construction of a new multi-story complex would be a project. The repair of the commercial building would another project. These two projects are unlikely to be grouped because of the difference they are not similar.

But if you had to build three separate commercial buildings, there would have been many common factors involved such as:

1. Similar scopes
2. Same resources
3. Similar timelines, and so on.

In this case, a PMO can group the project under a program to get discounts in the material by ordering in bulk, share the resources and assets among the tasks, knowledge, and employ best practices.

Portfolio management would help ensure that your company balances the overall amount and types of projects taken. In the above case, if the capacity of your company is building only three commercial complexes at a time, then PMO will ensure that your company does not exceed the maximum quantity of three projects. It will also help in balancing the project ratio. For example, repairing projects are more likely to be short terms and construction projects long terms.

› Assist with compliance needs:

The project needs to comply with the latest industry standards and according to the organization's needs. The PMO will assist the project teams in complying with standards and serving as a central hub of knowledge.

» What are the advantages of Project Management Office (PMO)?

Now you know what is the PMO is. You might be wondering whether you need another department in your organization. Setting up and getting approval for another department can be daunting. But in the right case, it can be critical to increase the project's success.

Some stakeholders and investors worry that setting up PMO will create additional burdens and processes, which will slow down your operation. That is not the case with PMO.

› Developing Standards:

When we talk of PMO, the first thing that comes to mind is developing protocols and processes that can be consistent across all your projects and follow a corporate strategy suitable for your company.

PMO ensures that proper standards are developed through the collection of data, analysis, reporting, templates, and others,

› Decision Making:

The PMO has access to all the information regarding the company's project portfolio. The immense amount of data combined with the strategy can help in the decision-making process and achieve more success in your project.

› Sharing Expert advice:

The members in PMO will often have experience in managing the technicalities of the project. They have climbed the technical ladder and hence have much more expertise in project management.

PMO will help your organization by providing expert advice that is often time not available with project managers.

› Access and Analyze the data:

The main difference between the independent project managers and PMO is that independent project managers, in most cases, don't look beyond their assigned project.

However, a PMO has the task to analyze all the project portfolios of your company and hence have a considerable amount of data.

This data is analyzed to provide better performance insights and hence increase the chances of project success.

For instance, a PMO might notice that some project managers at better at handling specific projects. It can also help you know the areas where your organization might need improvement.

› Keeps the projects on track:

Often, project managers handle more than one project at a time, and sometimes, they can lose track of the progress of any one of the projects or, in worse condition, all of them.

In other situations, you might have assigned a project manager who is distracted from the goal now and then and tries to change it without thinking of the consequences.

In such cases, PMO will be a total lifesaver. It will help you keep the project on track and support managers in sorting out priorities, which is an essential aspect of project management.

PMO will ensure that your team works on the right projects and follows the corporate strategy best suited for your organization. For example, PMO will help know the realistic deadlines for completing the project, reduce the stress on the employees, and increase their productivity. It will also track the progress of multiple projects.

› Reduction in the costs:

The importance of having a PMO is that it can help save costs. If you look at the statistics, an increase in price or over budgeting is one of the top reasons for project failure.

PMO helps to keep the project under the budget by proper resource allocation across your organization. If you have ever noticed, you might know that budget changes down the road are more expensive than getting them right the first time.

› Assurance of Quality:

A significant worry of every stakeholder is that delivered product quality may not be up to mark.

In such cases, PMO's act as Quality assurance teams. Any business or organization's main objective is to retain customers by providing quality products and increase customer satisfaction.

If the projects are not up to the mark, chances are many customers will leave your brand behind and search for alternatives. PMO's help assures that the delivered project's quality is as high as possible and that the stakeholder is satisfied with the finished product.

Quality assurance also helps PMO know the risk beforehand during the ongoing projects and helps solve them.

» What are the types of project management office?

Project Management office (PMO) is mainly divided into three types: They are

1. Supportive
2. Controlling
3. Directive

1. Supportive PMO:

The supportive PMO provides assistance with expert advice, plans and templates, access to critical information, and best practices for projects. This type of PMO is best suitable for an organization that lacks documentation, processes, and methodologies.

Its main task is to create standard practices for measuring project performance and develop capabilities for understanding the projects' key performances.

This type of PMO is best suitable in an organization where rules are loose and additional control is deemed unnecessary.

2. Controlling PMO:

The primary responsibility of this type of PMO is to check whether the standards. Processes, organizational tools are applied in the projects or not. Corrective actions are taken when the processes go wrong, or the problems in inefficiency or tools arise.

Controlling PMO has a moderate degree of control in the projects and is suitable for balanced matrix organizations.

3. Directive PMO:

As the name suggests, the Directive PMO goes beyond control and takes over the project by providing information and resources required for the project. When the organization starts a new project, highly experienced project managers within the PMO are assigned to the project. This ensures professionalism and a high level of consistency in practice all over the project.

This PMO has the highest level of control in the project among the other types. These PMO's take all the responsibilities for the execution of the projects.

» What is Project Management Office Software?

Any type of repeating work can get out of hand if not managed properly. Many times you may see project team members completing tasks out of order. Or many unfinished tasks that went unnoticed.

PMO teams oversee the standard and protocols followed during the projects. Often, PMO's work is intricate, and hence the Project Management Office Software becomes an integral part of PMO in handling the process.

A PMO software is a set of tools in Project Management software and used by the PMO team to efficiently accomplish all the responsibilities.

PMO software can be of two types:

a) On-Premise
b) Cloud-based

› On-Premise

Before the invention of cloud-based software, On-premise software was the only option for organizations. On-premise software is set up directly on the company's servers.

On-premise software provides more control over customization and security. Companies located in the remote location have on-premise software to tackle the problem of slow internet connection.

The major disadvantage of the On-premise software type is that it requires additional IT support, which may not be possible for some organizations due to lack of capital.

› Cloud-based

Cloud-based software doesn't occupy your company's server. They are located on the external servers and managed by the external provider, which gives relief from additional IT support.

Cloud-based software works on the internet and can be accessed by anyone from anywhere. The significant advantage of cloud-based software is that it provides automatic backups, robust features, and reduced operational expenses.

However, one must be aware that cloud-based software can have security issues as you are handling your data to third-party providers and trusting them to keep your data safe.

The PMO software's main aim is to maintain adherence to the protocols and processes and manage the project about each other to support the company's objectives.

Project Management Office software has the following features

Budget and forecasting
Document sharing
Risk Management
Reporting and dashboards
Interview and calls
Better collaboration
Can work remotely

PMO software is an essential tool for managing your company's project portfolio. It provides an overview of the company's projects and performances using the data you have already entered into the system.

» Conclusion/ Key takeaway

Organizations today can enjoy high levels of project success, thanks to the PMO.

However, it is not always a rosy picture for PMO because they are often seen as overhead expenses in many organizations.

Almost 45% of firms are resistant to changes and are not ready to adopt new Project Managing Methodologies. However, more and more organizations are learning the importance of setting up a PMO, and hence the demand for PMO may increase soon.

The project management field is continually evolving and has undergone many changes in the last decade. New techniques and processes may come and go, and your organization must be ready to adapt to further changes.

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