Project management is a discipline loaded with acronyms — PMP, PRINCE2, CPM, WBS, PMBOK, and PMI to name a few. Whether or not you're a project manager by title, one acronym you're sure to hear often is PMO.
"What is PMO?" you might ask. PMO stands for "project management office." Project management offices have exploded in popularity over the last decade. According to the State of Project Management Survey 2020, UK: Wellingtone PPM, the number of PMOs within companies has continued to rise.
But what is the role of a PMO, and what purpose does it serve in project management and business?
Definition of PMO
A PMO (project management office) is an internal or external group that defines and maintains project management standards across an organization. PMOs are responsible for maintaining best practices and documenting project status and strategy in one place.
The PMO is the keeper of documentation, guidance, and metrics for project execution, ensuring projects are completed on time and within budget.
What is the role of a PMO?
A small company may be able to scrape by without having a PMO. But if your organization has numerous cross-functional projects operating simultaneously, having a PMO should certainly be on your priorities list. Depending on the size and scope of projects, a successful PMO would be an ideal mix of people, tools, and processes. So, what is the role of a PMO? Here are some of the responsibilities of a PMO.
- Select the right projects: A PMO is often in charge of choosing the right blend of projects for the organization. These projects should align with wider organizational goals. This involves creating policies, processes, and workflows to define and manage all projects.
- Champions project management: It's the role of a PMO to keep employees updated with regular communication and training. This includes maintaining a shared project culture, uniform work techniques, and defining project metrics and KPIs.
- Perform effective resource management: A PMO should define roles and responsibilities and manage priorities based on budgets and timelines. They will also train and coach employees to ensure project management happens in a streamlined and uniform manner across the organization.
- Mobilize project tools: PMOs curate work management tools, templates, and software to create a reliable repository of project data that results in better decision-making.
What is the difference between a PMO and a project manager?
Even though they are functionally related, a project manager and a PMO are different. While a project manager is an individual taking care of a particular project from start to finish, a PMO is a team of specialists who work at an organizational level.
A project manager’s duties include defining project goals, data gathering, task scheduling, and managing the project’s costs, budgets, and resources.
The PMO is bigger in scope and implementation. It is a multidisciplinary team of IT, planning, finance, risk management, and resourcing specialists who collaborate to ensure that all organizational projects are delivered with high quality and achieve their defined outcomes. This is achieved by mapping out project goals, and defining processes, workflows, methodologies, resource constraints, and project scope.
Who needs a PMO?
Not every company has a PMO, nor does every company need a PMO. However, PMOs are beneficial as the number of projects grows in an organization, which increases the risk of failure as resources get stretched, and competing priorities arise. A PMO plays conductor, understanding how each proposed project fits into the wider business strategy. The PMO helps to ensure resources are appropriately allocated to minimize project failure.
You may need a PMO if:
- Projects repeatedly finish later than planned or over budget
- Projects are not correctly aligned with business goals
- Your stakeholders do not have visibility into project progress
- You do not have a standardized process for initiating and executing projects
- You are not able to track project success accurately
How popular are PMOs?
PMOs are becoming increasingly popular for organizations of all sizes. In 2000, just 47% of organizations had a PMO. In 2020, 89% reported having a PMO (with 50% having more than one). For companies with revenue over $1B, that number climbs to 95%. Only 9.9% of firms stated that they do not have a PMO at all. Meanwhile, a quarter of PMOs are relatively new, having been set up in or after 2018.
Who staffs the PMO?
PMO staff are highly experienced professionals, averaging at least 10 years in the workforce. Besides, 45% have a PMP (Project Management Professional) certification. The average PMO has nine staff members.
PMOs operate according to the organization's needs and goals, so each PMO is structured differently. Nearly half (49%) of PMOs report directly to C-level executives, while the vast majority of PMOs report to a vice president or higher.
The PMO director
Some 85% of PMOs have a PMO director or manager to oversee projects across the entire organization. Here, the PMO director maintains project management methodologies and standards, establishes the organization's approach to the full life cycle of projects, and manages resource distribution and allocation on all projects.
Project and program managers
Project and program managers are increasingly reporting to the PMO. The percentage of project managers who report to the PMO increased from 42% in 2012 to 52% in 2016. Also, 29% of organizations say 100% of their project managers report to the PMO.
PMOs often include supporting roles to assist project and program managers with gathering accurate data. These roles include:
- Project schedulers
- Project planners
- Project controllers
- Administrative staff
PMO trainers and coaches
Training plays a large role in the PMO. More than half (60%) of PMOs have a project management training program in place (up from 49% in 2014). On average, PMOs provide five days of training for their staff. High-performing PMOs train the project management team in the following areas:
- 79%: Project management software tool training
- 76%: Project management basics
- 67%: Advanced PM skills development
- 61%: Leadership training
- 48%: Business alignment training
- 48%: PMP preparation
- 42%: PM certificate
- 33%: Agile project management
Benefits of a good PMO
PMOs are often perceived as an unnecessary cost, but they provide value when deployed correctly. PMOs create value by:
- Delivering projects under budget
- Increasing customer satisfaction
- Improving productivity
- Improving the alignment of projects with the company's objective
- Decreasing the number of failed projects
According to PM Solutions Research, a project management consulting firm, the chart below provides a quantifiable PMO benefits breakdown.
Although the benefits of a PMO are clear, PMO processes are often seen as overhead. Demonstrating added value can be difficult for the PMO, and the change management processes they seek to implement are sometimes met with resistance.
To overcome these obstacles, PMOs should focus on measuring and reporting the top PMO benefits outlined in the previous section. Demonstrating quantifiable impact across productivity, cost savings, customer satisfaction, and other KPIs proves the value of a PMO and increases trust across the organization.
How to manage your project with a PMO template
If you're unsure of where to begin with creating a PMO from scratch, using a template to automate some of the work involved can make the process much clearer. A PMO template allows you to see exactly how your portfolio should be organized, and to customize it to your own standards.
Using a PMO template, like this one found in Wrike, makes structuring your PMO easy. Wrike's template gives PMOs the tools they need to hit the ground running with every new project, such as request forms, customizable dashboards to keep stakeholders informed, project templates for your preferred methodology, and RAID log monitoring to keep risks to a minimum.
Future of PMO
PMO popularity is increasing, though what PMOs will look like in the future is uncertain. Emerging technologies like smart machines, AI (Artificial Intelligence), and the Internet of Things (IoT) could eliminate many of the PMO’s roles and day-to-day functions.
"PMO leaders must re-evaluate and likely adjust their staff competencies, disciplines, metrics, and tools to enable enterprise transformation in the digital era," according to a Gartner report. (Gartner, PMO Transformation Primer for 2018, Robert A. Handler, Joanne Kopcho, 1 February 2018). "PMOs failing to adapt face being pigeonholed into cost management or obsolescence."
PMOs can continue to show value in the face of change in the following ways:
- Identify and align with their organizations' values better. If their organizations seek enhanced agility, PMOs must be ready to shift how they work to accommodate.
- Use metrics and dashboards to demonstrate the value of the projects and programs they touch, as well as the PMO itself
- Balance the need for innovation with the need for stability
- Not only provide strategy but understand how to execute on it
- Understand how new technologies and systems like AI and the IoT will affect how work gets done
The bottom line for the project management office
The PMO remains an increasingly essential part of a successful organization. And as new technology emerges and companies seek innovation, PMOs must evolve to stay relevant and valuable.
In this rapidly evolving business scenario, PMOs also need to move with agility. With Wrike’s solution, PMOs can set projects up for success using simple-to-use time cards, smarter budgeting, and precise cost assessments. Seamlessly drive digital transformation across your organization by breaking down silos coupled with smooth and consistent execution.
Adapt faster to changing business needs with a portfolio that’s optimized in real-time. Use Wrike’s portfolio health dashboards, scenario planning, and comparison charts, and custom collaboration capabilities such as templates, workflows, and personalized automation to consistently invest in the right projects.
Start a free trial of Wrike and learn how we can help your PMO drive greater results.
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