The Project Management Office (PMO) basically always has the same task: it oversees the entire project portfolio. It maintains an overall view of all projects. At the end of the day, and whilst there is much more to it, PMO tasks often culminate in a centralized reporting to the C-Level. When is it worthwhile setting up a PMO and what exactly does it do? This is what you will learn in this article:
A Few Facts About The Allmighty PMO
- PMO stands for Project Management Office.
- The PMO is usually organized as a central and cross-company staff unit which supports the management of various projects in the company.
- A PMO has a cross-sectional function for projects, which is particularly useful when several projects are running simultaneously, or several sub-areas are relevant in a project. Especially if they compete for the same set of ressources.
- PMO employees provide strategic and operational support for all projects in order to increase efficiency and quality assurance through cross-project knowledge and resource management.
- PMOs work methodically and structured. They also provide all participants a proven system for the management of their projects.
- All relevant information converges in the PMO and is made available in a uniform reporting system to the managing director and all the other stakeholders of the company.
Is the PMO old news?
Not really. Google Trends shows us that the topic is of constant interest:
Guess what? The topic at hand has a peculiar sense of seasonality. Towards the end of the year, projects hit the brakes. And just when the financial statements drop, bam! The pressure is back on like it's training for a marathon. No surprise there – enter the Project Management Office search queries.
But in contrast to the well-established PMO, project management methods - like Agile and Scrum (highlighted in the graph with red and yellow) - appear to be of much greater interest. Why is that? The main reason is certainly rooted in the fact that agile methods are well-suited for complex projects in turbulent environments (e.g., software projects and other digitization initiatives) - the demand to lead projects of this kind is on the rise! This is especially true for corporate transformations. When it comes to an overall company transformation, the PMO is often referred to as the TMO (Transformation Management Office). However, the tasks and roles remain the same.
The PMO, unlike Scrum, is not a framework. It's more like an organ - and it definitely does not engage in project management itself. It oversees the entire project portfolio and conducts Project Portfolio Management (PPM). One of its crucial tasks is to ensure that projects contribute to strategic goals. This requires an overview of the entire project landscape. To make this work, the PMO sits above all projects and acts as a service provider for the company (more on the core tasks below). However, the experience with a PMO can be both good and bad. A quick survey in our office already reveals some pros and cons listed by our employees:
- Can make projects more efficient and thus save money and time
- Can bring projects into a standard form and therefore create comparability
- Could generate impulses as well as identify and communicate problems centrally
- Can make decisions centrally and quickly
- Can keep the governance of the company alive
PMO sets an example for the governance
An absolutely central task of the PMO is to establish and live project governance, a set of rules and processes that make all projects run smoothly and uniformly to a certain extent. Governance is especially important in transformation situations. It determines what is relevant, at what level of detail work is done, how reporting works and much more. The absolute core elements of governance including best practice can be found here:
- Often costs money and time
- Sometimes more administrative effort than benefit
- Can make processes in the project management slow
- Often only equipped with little content expertise
This small list shows the main problem. Can. Could. Sometimes. PMOs can make sense - but sometimes they also put a spanner in the works and hinder processes instead of supporting them. Traditional, rigid top-down project management often culminates in a PMO that often restricts projects, innovation, and creativity more than driving them forward. But this does not have to be the case. You can manage projects agilely and light-footedly - despite or even because of a PMO.
The advantages of using a PMO
- Supporting the project team in planning and tracking projects and measures
- Developing and establishing a consistent governance
- Maintaining a regular and strict reporting cycle
- Supporting the prioritization and redevelopment of projects and measures
- Holistic and regular reporting to all relevant stakeholders and teams
- Maintaining project momentum even in tricky situations
- Creating reusable standards and resources
When do we need a PMO?
Size and Complexity Demand It
First and foremost, PMOs make sense when the transformation or project portfolio of the company is "big enough". In a project with two participants and a four-week duration, you simply don't need a department with three employees. However, keeping track of one or more projects scattered throughout the company is a bit trickier without a central hub. This is especially true when projects from different corners of the company contribute to the same goal. This is typically the case in transformations, restructuring, and other strategic ventures.
More Ideas than Budget
The role of the PMO becomes particularly critical when there are more project ideas on the table than there is budget. In such cases, it becomes essential to regularly determine which projects align with strategic goals and which do not. Prioritizing and deprioritizing entire projects can only come to sensible results if at least one entity has a central overview of the entire project landscape.
Aggregated Reporting is in Demand
Companies can also benefit from a PMO when each project is influenced by a new team configuration. To avoid investing valuable resources each time in choosing a suitable project management method, developing a control and reporting system, a Project Management Office can save time with standard procedures and document templates. This is especially true when a uniform reporting system is needed across the entire project portfolio - for example, for the management or other stakeholders.
Administrative Team Relief is Necessary
In projects where team members juggle project tasks alongside their daily responsibilities but are indispensable for project success due to their expertise, PMO staff can provide relief and support. They take on time-consuming tasks in planning, organization, coordination, reporting, and impact measurement, allowing project participants embedded in daily operations to focus on those project tasks that need their attention most.
Relevance of Overall Goal Requires Close Tracking
Team relief becomes even more critical when the overall goal of the project portfolio is so crucial that difficulties must be addressed immediately. To make this work smoothly, an entity is needed that not only maintains an overview but also helps ensure that projects can be serviced alongside daily operations and that challenges and risks come to light. Because nothing is worse than high-stakes projects dozing off. Therefore, a central task of the PMO is to define and maintain a strict reporting cycle, keeping it simple enough to function with minimal administrative effort.
What Makes a Good PMO?
The Right Team
Good Project Management Offices stand out because their team members are deeply involved in the entire project portfolio while maintaining a certain level of independence. Therefore, a good PMO is typically composed of employees capable of handling all PMO tasks:
- Employees from controlling with experience in planning, organization, and impact assessment
- Employees from strategy and business development departments with experience in projects and corporate alignment
- Experts with experience in the specific project domain
Official Mandates Support the PMO
For a Project Management Office to operate effectively, it also needs an official mandate. It may make sense for the executive management to directly issue and communicate this mandate or even - in special circumstances - be a direct member of the PMO. However, it is even better when project participants understand the PMO for what it truly is: a crucial point of contact for problems, decision-making, and most importantly, ideas.
A Good Position in the Organizational Chart
Many companies position the PMO relatively high as a staff unit in the organizational chart, often as the last node before the executive management. This placement can become particularly relevant in challenging situations, such as when projects are at risk of stagnation. It is absolutely essential to give the PMO a suitable mandate and some pull-through.
The Right PPM Tool
Ideally, the PMO serves as a project portfolio service provider. It ensures that the company's strategy aligns well with the entire project landscape, supporting and managing both administrative and informative tasks. A good PMO provides flexibility and space for both the project team's main goal - leading individual projects to success - and for the company's overall objective: successfully implementing the strategy. This requires a lot of work and can quickly become a bottleneck for some projects. Therefore, project portfolio management often benefits from a good PPM/PMO software.
Have You Heard About Our PPM Software Falcon?
Our PPM Software Falcon assists you in implementing your strategy and transformation projects. Gain a simple, digital overview of your entire project portfolio, your individual goals, and the development, establishing clear responsibilities. This saves you a lot of time in planning, managing, and reporting across your multiple projects. Your colleagues can find all the necessary information in one place, finally allowing them to focus on their tasks.