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Libby Marks

7 Steps to Setting up a Successful PMO

Want to establish a Project Management Office in your professional services business? Here’s how to set up a PMO for maximum success and ROI.

Setting up a Project Management Office can help organizations improve project and business outcomes. A PMO provides centralized support to embed project management excellence. This drives up standards and compliance across all projects within an organization. 

However, simply setting up a Project Management Office isn’t enough to guarantee success. Research from the PMI and other industry experts exposes a high level of variation between PMOs - with top performers driving significant gains in revenue and customer satisfaction, while others fall short.   

If you run a project-based business and want to establish a successful PMO, here are some best practices and actionable steps to set you up for success. 

Is a PMO necessary?

Not all businesses need a PMO. If you don’t manage many projects then a PMO might not deliver enough return on investment. Or if you manage a lot of projects and are happy with their performance, there’s no need to reinvent the wheel.

But if you juggle a lot without seeing the results you’d like, a PMO can improve project outcomes and overall business performance. If you recognize any of the project management problems below, you might benefit from a PMO.

  • Lack of transparency into projects - both in progress and in the pipeline
  • A discrepancy in results between projects - or the inability to compare results between projects
  • Major changes required during project delivery 
  • A high proportion of delayed, canceled or failed projects
  • Poor compliance with budgets and deadlines
  • Poor project outcomes and low customer satisfaction
  • Difficulties predicting capacity and resource needs
  •  Last-minute recruitment / over-reliance on freelancers/contractors

Will a PMO guarantee better project outcomes?

Establishing a strategic PMO provides greater clarity, focus, and coordination across your full portfolio of projects. This doesn’t just improve success rates for individual projects. It results in better resource allocation, strategic alignment, project prioritization, capacity planning, and more. All of which adds up to better business outcomes. 

However, simply implementing a PMO doesn’t guarantee success. Whilst some PMOs add significant value to their organizations, others fail to deliver desired outcomes. This can lead to a spiral of low credibility, lack of compliance, poor project outcomes, and - eventually - the PMO being disbanded. 

This is why it is essential to learn from PMO best practices and set up your PMO for success using the following seven steps.   

7 steps to set up a successful PMO 

1. Understand different PMO structures

If you’re sold on establishing a PMO for your project-based business, first you need to familiarize yourself with different structures and approaches. PMOs vary according to the needs of individual businesses: from tactical to strategic, and from advisory to authoritative. 

There are three widely accepted types of PMO (supportive, controlling, or directive) and they can be positioned at different levels within your organizational structure (project, departmental, or enterprise level). 

Understanding these differences will help you decide which PMO is best for your business challenges, strategy, and direction of travel. 

Read more about different types of PMO in our guide - What is a PMO? Project Management Office Explained.

2. Analyze the current state of project management in your organization 

To decide the structure, role, and responsibilities of your PMO, you need to understand the current state of project management in your organization. 

For example:

  • Do you have standardized project methodologies or does each project manager apply their own preferred practices? What do these look like?
  • Do you maintain an overview of projects in progress and what information do you monitor? 
  • How do you allocate resources and optimize utilization? 
  • How do you manage project changes?
  • How do you analyze project benefits and prioritize which to pursue? 
  • What proportion of projects are delivered on time and on a budget?
  • Do you use standardized metrics that allow project outcomes to be compared? 
  • Do project managers receive any training, KPIs, or feedback on performance? 
  • Do PMs understand how their work contributes to overarching organizational goals?

These questions can help you better understand how project management works - or doesn’t - in your organization. 

You should consult stakeholders at both operational and strategic levels - from team members and project managers to senior management - to capture a holistic view of project performance. Also, try to involve senior stakeholders from other business units - like HR or sales - to understand how project management impacts their activities. This will help with horizontal alignment and start getting buy-in for your PMO initiative. 

3. Define the purpose of your PMO

Equipped with a strong understanding of types of PMO - and the project management challenges you’d like to overcome in your organization - you can begin defining the purpose of your PMO. 

Will your PMO be a supportive PMO that provides tactical advice and guidance at the departmental level? Or will it be a strategic enterprise PMO that actively directs all projects from a senior position in the company structure?  

When defining the purpose of your PMO, think about strategic, operational, and horizontal alignment. 

Top-down strategic alignment

How will your PMO support overarching strategic objectives at this point in time? For example:

Bottom-up and horizontal alignment

What pain points and roadblocks have you identified on the ground - within and between project teams, and with other departments? For example:

Once you’ve defined the purpose of your PMO and the services it will offer, you should document this. You can include:

  • Your objectives and KPIs (see below)
  • Where you sit in the organizational structure
  • How the PMO is structured
  • What services you offer
  • How you engage with stakeholders
  • Your Service Level Agreement 
  • Your reporting responsibilities
  • Key contacts

4. Secure the right people and skills

Knowing the purpose of your PMO and the services you’ll offer, you can start thinking about the people and skills you’ll require. Once your PMO is up-and-running, it may be heavily involved in talent and skills acquisition. But right now, you need to focus on the capacity and capability of the PMO itself.  

A Project Management Office isn’t just made up of Project Managers. Depending on the size of your PMO, it can include a range of job roles - from the PMO manager and administrators, to data specialists and training professionals. 

Their skills can make or break your PMO, so recruit carefully. Look for professionals with relevant technical expertise - like data skills - but also people skills. The PMO needs people to follow its lead and comply with its processes, so skills like emotional intelligence, leadership, and customer focus are important.

Another part of the ‘people’ process is getting buy-in from senior leaders across the organization. Support and input from the C-suite are proven to improve PMO performance. Partly thanks to strategic alignment, but also because it gives the PMO credibility and authority to implement new initiatives. Whether you directly report to the C-suite or not, it’s imperative to have them champion your work. 

5. Establish a work plan and KPIs 

Whilst the PMO will be concerned with improving KPIs from project teams, they also need to have their own. Research from the PMI shows that the best-performing PMOs measure and monitor their own performance. The exact KPIs will depend on the nature and purpose of your PMO, but may relate to: 

  • Implementing and rolling out tools and methodologies to an agreed schedule
  • Establishing reporting mechanisms to improve visibility into the project pipeline
  • Meeting specific metrics for project compliance or customer satisfaction
  • Delivering training and upskilling PMs to an agreed level 
  • Reducing project failures and cancellations 

Tracking performance against KPIs will help keep the PMO accountable and aligned to strategic objectives, which is how they create value for the business. 

Reporting on KPIs is also essential as it reinforces the value of the PMO and maintains its reputation as a strategic partner. Your PMO should aim to report monthly on the status of projects and programs, as well as the contribution of the PMO to business objectives. 

6. Define project governance, methodologies and best practices

Whilst the role of the PMO can vary between businesses, one constant is the provision of project management methodologies and governance. So an essential step to PMO success is to establish how projects are managed, match the approach to current best practices, and cascade this throughout the organization. 

The Project Management Institute publishes the Project Management Body of Knowledge which provides a comprehensive framework for effective project management, covering everything from planning, budgeting, and resourcing, to quality assurance, risk management, and change control. 

Remember this is a change management process - and one that requires compliance - so careful communication is essential. To reduce friction and encourage engagement, try to avoid being overly bureaucratic. And emphasize the individual, team, and business benefits of getting on board.

This stage may also include the selection and introduction of new tools to improve project planning and management, such as resource and capacity planning software

 7. Revisit the purpose of the PMO regularly 

One last tip is to plan to review the purpose of the PMO annually - typically after the C-suite has signed off the overarching business strategy. This provides the opportunity to check your initiatives still align with the overall direction of travel and continue to create value for the business. 

A PMO that was fit-for-purpose when it was established - in a period of economic optimism and business buoyancy - may no longer be suitable in an economic downturn, for example. To ensure the long-term success and viability of your PMO, you need to evolve with your business in response to internal and external change. 

A strategic PMO can improve project success rates, business results and profitability - but only when it sets high standards for its own performance. 

One way to set up your PMO for success is to use software for better decision-making. Runn provides PMOs with invaluable tools to improve their performance including:

  • A bird’s eye overview of all projects and their interdependencies 
  • Granular insights into individual projects and resources
  • The ability to explore different scenarios and their impact on the organization
  • Resource allocation and utilization tools that keep projects and people happy
  • Real-time data for agile and informed decision-making 
  • An intuitive dashboard that makes reporting a breeze

Start your free trial today.  

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