A Project Management Office - or PMO - is responsible for project management governance and quality within an organization. Research from the Project Management Institute and PwC proves that high-performing PMOs boost revenue and customer satisfaction.
But not all PMOs deliver.
There is significant variation in the level of compliance with project deadlines, budget, and quality requirements between PMOs. According to a report from The Project Group:
This shows that establishing a PMO is only the first step to achieving better business outcomes. To achieve true transformation, organizations need to create a high-performing PMO - one that is aligned to business strategy and empowered to make change happen.
Fortunately, there has been a lot of research into PMO best practices to help organizations improve PMO performance. We've scoured recommendations from the likes of the PMI, Gartner, and others to bring you the ultimate guide to PMO best practices for 2022.
Before jumping into our list of actionable insights and PMO best practices, you really need to know what a Project Management Office is and does. So skip back to our article - What is a PMO? Project Management Offices Explained - if you need to refresh your memory.
No doubt, the ultimate purpose of a PMO is value creation. By providing a framework for better project management and delivery, they support the strategic objectives of their organization - ensuring projects are aligned to top-level goals, achieve high-quality standards, and are delivered on time and on budget.
The value of a PMO is borne out by data from more than 4,000 project management professionals around the globe. In 2022, the PMI and PwC jointly published research that found that organizations with top-performing PMOs were 2x more likely to report revenue growth and 3x more likely to report customer satisfaction than peers.
As part of their global survey, The Project Management Institute and PwC identified the best practices most frequently followed by Project Management Offices. They classified these into five dimensions and over 20 activities where PMOs can add value to their organization - and called it The PMO Maturity Index.
The top 10% of PMOs performed more of these value-creating activities than comparators. As such, these five dimensions provide a strong framework for Project Management Offices looking to level up their performance.
🏆 Effectively managing governance, risk, and compliance issues
One of the main roles of a PMO is governance and compliance - ensuring standardized frameworks, methodologies, and tools are used across all of an organization’s projects. This helps counter some of the most common problems in project management - like unrealistic budgets and over-ambitious timeframes. By providing the right techniques for PMs to develop accurate project scopes - and the tools to keep project schedules and budgets on track - the PMO reduces an organization’s exposure to risk.
The PMO should also provide a framework for change management across the portfolio. Unmanaged project changes can cause a ripple effect of disruption across multiple projects. With their cross-functional overview, the PMO can make informed decisions for the benefit of the wider business.
🏆 Ensuring project visibility
To make the best decisions for their business, organizations need visibility across their entire project portfolio. Without this insight, it’s impossible to know how individual decisions will impact wider operations.
The PMOs that perform the best make it a priority to achieve oversight of all projects in the organization - to inform capacity and resource planning, recruitment, change management, and more - and to share this information with other stakeholders through status reports, shared dashboards and other communication tools.
It’s an approach made possible by appropriate project and resource management software, which provides access to real-time information about all projects. This makes it quicker and easier to see an overview of all projects at portfolio level, as well as drill down into granular project details.
🏆 Contributing to the development of strategy
PMOs are evolving from an operational function - tasked with improving day-to-day project delivery - to a strategic partner with C-suite representation. The highest performing PMOs support strategy development - providing input into strategic initiatives such as talent development and technology adoption - as well as project management excellence.
89% of the PMI's top performers contribute to strategy development compared to 32% of organizations as a whole. This includes influencing how projects are prioritized, changes managed, and resources allocated to ensure projects deliver the maximum value to the business. The Project Management Institute describes this as ‘a piece of the puzzle that is missing for the majority of PMOs globally’.
🏆 Consistently measuring and regularly reviewing performance
We all know that you can’t manage what you don’t measure. High-performing PMOs track performance against KPIs to make sure they’re fulfilling their purpose.
This operates at two levels. Tracking the performance of projects, portfolios, and programs to ensure they’re delivering to agreed standards - such as compliance with budget, schedule and quality requirements. But also monitoring the performance of the PMO itself, in terms of adding value to the organization.
🏆 Integrating PMO processes across business functions
Projects don’t exist in a vacuum and one of the major roles of the PMO is to maintain a cross-functional overview of projects and their interdependencies. This lets the PMO make decisions that are best for the business rather than individual departments.
It also helps to de-silo business functions so that they can work together in a more coordinated way. Too often, decisions are made in isolation and without an informed understanding of their impact on other teams.
For example, a project may be scheduled on the assumption that a certain number of developers are available. If they aren’t, the project manager may need to hire contractors at a high cost to the project - when some forewarning could have allowed HR to recruit and onboard more staff at a standard rate.
A high-performing PMO - looking at projects across the entire organization - reduces this risk. Meaning less disruption to projects and better outcomes for the business.
🏆 Aligning initiatives and KPIs to the wider organization’s strategic and change goals
This best practice reiterates the importance of strategic alignment with organizational objectives, as well as measuring PMO performance against them. It also nods to another important factor that is often overlooked. Changing priorities.
Business priorities change according to internal and external factors - and the purpose and structure of the PMO need to reflect this.
For example, an economic downturn might force an organization to focus on cost-efficiencies. Whereas a more buoyant economy might encourage them to go for growth. A PMO formed with cost-efficiency as its primary focus may no longer be fit-for-purpose when growth is the new direction of travel.
According to Gartner, PMOs need to be especially mindful of digital transformation, stating ‘the PMO must adapt its service model to support the technological changes at the heart of every growth and innovation-led transformation project.’
🏆 Regularly engaging with senior leaders, communicating the milestones and impact of projects
To ensure PMO initiatives are strategically aligned, PMO leaders need two-way communication with the C-suite. The PMI found that 73% of the top 10%t of PMOs have direct representation on the C-suite, compared to 47% overall. This gives senior leaders more opportunity to act on strategic insights from the PMO - and gives the PMO more visibility and credibility in the business.
If your PMO doesn’t have C-suite representation, Gartner has advice on how to optimize engagement with senior leaders - report on what the business really cares about. Whilst providing visibility into projects and programs is important, it doesn’t communicate the value that the PMO creates. The C-suite also needs to understand how PMO successes translate into business benefits - for example, how improving compliance with project schedules means faster revenue realization.
🏆 Standardizing and documenting PMO structure, policies, procedures, and processes
This best practice is a case of ‘physician, heal thyself’. Standardizing and documenting processes isn’t something that PMOs should just do for other business teams, it is something they need to do internally as well.
To ensure they’re appropriately aligned to business objectives, a PMO needs strong internal governance that establishes their core purpose, their strategic alignment and value creation activities, their KPIS, and how they achieve them.
🏆 Adapting project management tools, methodologies, and practices to different projects and teams
Knowing that PMOs are concerned with standardizing methodologies, it may seem counterintuitive to now introduce the concept of flexing them to the needs of individual projects. But the PMI has found that 92% of PMO top performers continuously adapt tools, methodologies, and practices for different teams.
If a project isn't going to achieve optimum outcomes by adhering rigidly to a standardized framework, it makes for the PMO to apply a more tailored methodology rather than dogmatically apply one that doesn't fit. This more collaborative and supportive approach allows the PMO to maintain control without undermining relationships or results.
🏆 Using tools, methodologies, and practices in alignment with industry standards and best practices
This best practice for PMOs is about keeping up with the latest project management approaches and technology. Nothing stands still, so PMO professionals need to keep their knowledge up-to-date and scan the horizon for new developments and opportunities. For example, new software for resource management and capacity planning, or new methodologies proved to improve project outcomes.
🏆 Driving a benefits management and outcome-driven culture
Project-based businesses have multiple opportunities they could pursue. So they need a way to identify and pursue the ones that will deliver the best outcomes for the business. The PMO is instrumental in this - not least by implementing a benefits realization management (BRM) framework.
A BRM provides an organization with a way to measure how projects and programs create value for the business, and then a roadmap that outlines the activities needed to achieve them. This approach ensures projects and portfolios support an organization’s strategic objectives and that the desired benefits are achieved.
Another way to assess opportunities is through scenario planning, which can compare the outcomes of different project combinations to optimize the project pipeline for maximum business benefit.
🏆 Adopting digital tools that enhance collaboration and communication
Top-performing PMOs are strong adopters of the latest technology to enhance a range of functions such as collaboration, visibility, and knowledge sharing. They also use cloud-based platforms to provide project managers with secure access to project data from anywhere in the world.
🏆 Using data to make evidence-based decisions
Data analytics and automation are helping high-performing PMOs make better business decisions, according to the PMI. 65% of top PMOs use data analytics versus 50% overall. And 59% use automation solutions versus 45% overall.
Using fit-for-purpose data and reporting software frees up project managers from hours of work interrogating spreadsheets and other imperfect data systems, so they have more time to actually act on the insights they’ve gleaned.
When it comes to reporting to senior managers, however, Gartner warns against an ‘the more information the better’ approach. Senior leaders don’t want to be bogged down in detail. They need the ‘bottom line’ that helps them make informed decisions, fast. Using the intuitive dashboards and data reporting tools of new technology, PMOs can present the ‘simple, unambiguous information’ Gartner urges them to provide.
🏆 Developing project managers
Project management isn’t just about frameworks and methodologies. It’s also about the people involved in delivering projects and the skills they bring to the table. The PMI - unsurprisingly - found that developing project managers delivers improved outcomes.
This includes upskilling PMs in personal skills like leadership, collaboration, and relationship building, as well as business acumen that helps them connect the dots between operational delivery and strategic objectives.
PMOs perform best when they:
🏆 Adequately assessing, recognizing, and rewarding the performance of team members
Great people deserve to be recognized and rewarded. And the PMI found that top-performing PMOs do just that. They give PMs KPIs and monitor their performance against them. This provides people with a framework to understand how to succeed within the organization, and opportunities to improve their professional practice within a supportive environment.
This is particularly important at the moment, as the business world adjusts to remote and hybrid working, and 41% of the global workforce is considering changing jobs. Providing the right level of challenge, support and reward can help organizations retain and develop talented staff.
🏆 Improving resource allocation and utilization
The People recommendations from the PMI focus on upskilling project managers. But PMs aren’t the only people involved in successful project delivery. Another important ‘people piece’ is improving how resources are allocated, utilized, and optimized within the organization.
PMOs are often the missing link between the people needed on the ground - and the processes used to get them there.
A PMO needs to have an understanding of the skills and competencies of the talent pool to ensure people are allocated to projects where they can deliver their best work. Also, to make sure the HR department has the information it needs to implement appropriate recruitment and retention strategies through human resource planning.
The PMO can also use data from resource management tools to ensure optimal resource utilization - ensuring employees are being used to capacity without being overworked and burnt out - and that the business maximizes its ROI on headcount costs.
We hope these PMO best practices from industry experts will help you strengthen the performance of your PMO and increase the value it delivers to your organization.
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