The Project Management Office is a common feature of high-performing project-based businesses. What exactly is a PMO and how does it improve business outcomes?
The concept of the Project Management Office first started to gain traction in the 1980s.
Instead of managing projects in isolation, organizations began to explore a more coordinated and standardized approach to project management. The aim was to improve KPIs - more projects completed on time, on budget and to customer satisfaction - and reduce the risk of project failure.
The PMO was born... and has proved a popular approach to project management ever since.
However, not all PMOs are created equal. A 2022 report from the Project Management Institute - in partnership with PwC - identified the highest PMO performers and compared their business outcomes with others.
They discovered that organizations in the top 10% for PMO maturity reported twice the revenue growth and three times the customer satisfaction compared to other organizations. (PMI and PwC Global Survey on Transformation and Project Management 2021).
With that in mind, how can project-based businesses leverage the benefits of a PMO? Here's an introduction to the purpose, responsibility and structure of Project Management Offices - plus the factors that predict a successful PMO.
A PMO (Project Management Office) is a team responsible for project management governance and quality within an organization. The PMO is responsible for embedding a culture of project management excellence by establishing and standardizing good practice across the organization.
The exact roles and responsibilities of a PMO differ from organization to organization, ranging from the arms-length support to hands-on management and control of projects.
A 'supportive' PMO will share resources, methodologies, tools and techniques to enable project and portfolio managers to achieve high levels of project success. A more 'directive' PMO will take active control of projects and the management.
According to the Project Management Institute, there are three types of PMO. Project Management Offices vary according to the degree of control and influence they have on projects within the organization. If you're thinking of introducing a PMO in your business, it's important to choose the right type for your objectives and organizational culture.
Supportive PMOs provide a consultative role to projects by supplying templates, best practices, training, access to information, and lessons learned from other projects. This type of PMO serves as a repository of project best practice that PMs can tap into when they need it. There is no direct intervention or control from a supportive PMO. This light-touch approach can work if your goal is to empower PMs to level-up their professional practice.
Controlling PMOs provide support but also require compliance. For example:
This type of PMO is appropriate if you want to raise standards and increase control over your projects - without removing control from individual teams and departments.
Directive PMOs take direct control of projects. When a team or department begins a project, they will be assigned a project manager from the PMO. This ensures a high level of expertise, professionalism and standardization across all projects. Another benefit is that it allows businesses to pursue projects without needing to reallocate team members as temporary PMs.
The purpose of a Project Management Office is to raise standards for project management in an organization and - by doing so - deliver customer and business benefits. After all, strong project management can improve forecasting and planning, increase customer satisfaction, and drive revenue growth.
PMO activities may encompass any or all of the following:
The primary function of the PMO is to deliver exceptional project outcomes. One of the main ways they achieve that is through support and structure for PMs. For example:
A PMO is also concerned with implementing, promoting, and monitoring compliance with standardized project management methodology
Capacity planning (looking ahead to see what capacity an organization has to take on new projects) and resource planning (ensuring the organization has the right people to deliver them) are markers of successful project-based businesses. A centralized PMO - with good visibility into the organization's project portfolio and pipeline - is well-placed to perform these processes.
Some PMOs are responsible for portfolio management and ensuring projects align to organizational strategy. They use their cross-departmental oversight of projects to assess, select, and prioritize projects that deliver the most organizational value. A PMO may also have the authority to terminate projects that are failing.
Depending on where they sit on the scale from 'supportive' to 'directive', PMOs may be involved in project planning and execution. A supportive PMO will provide guidance to help individuals plan and manage their own projects. Whilst a directive PMO will provide project managers from a centralized pool, actively managing a project from planning to delivery.
The PMO integrates data and information from projects to evaluate how organizational strategic objectives are being fulfilled.
The first difference between a PMO and a PM is that a PMO is an organizational structure, whereas a project manager is an individual. A PMO team comprises a range of people responsible for project management excellence. This may include PMs - but also other roles in data and reporting, policy development, training, administration and more.
Both a PMO and PM are interested in delivering projects on time, on budget and on brief. But their responsibilities and ways of achieving this are markedly different. A PMO is concerned with developing, embedding and ensuring compliance with a standardized PM methodology across a business. A project manager is concerned with implementing that methodology in their specific projects.
Any organization that delivers a high volume of projects can benefit from a PMO. Research from the Project Management Institute demonstrates how a PMO can improve a wide range of success metrics - from customer satisfaction to revenue growth. So project-based businesses - such as professional service firms - already have a strong business case for implementing a PMO.
However, there are some signs that might suggest your need for a PMO is more urgent than others'. For example:
When deciding whether to implement a PMO, organizations need to carefully consider where they will sit in the organizational structure… PMOs that sit just below the C-suite tend to have top-down strategic alignment and responsibilities, whilst PMOs at a more operational level tend to be more aligned to bottom-up execution priorities.
A Project Management Office can operate at a project, department, or enterprise level.
The individual PMO is responsible for providing support to a specific complex project or program. This type of PMO provides infrastructure, standards, support and supervision - to ensure a project is planned and executed to the highest standard.
A departmental PMO is responsible for projects within their assigned department - like finance or IT. Reporting to the department manager, this PMO is responsible for balancing and managing the needs of different projects within the same business unit.
The enterprise PMO exists in larger scale businesses. They are responsible for creating the standards, processes and methodologies across the entire organization. They help direct strategy and focus on delivering value to the business. According to the PMI, a strategically focused EPMO leads to more projects completed successfully and lower levels of scope creep.
A high performing Project Management Office will - of course - have a successful methodologies that they champion and implement. But that is only part of the story.
A PMO needs to get all colleagues pulling in the same direction for the benefit of the business. This may involve careful change management when the PMO is first introduced, and excellent communication and influencing skills going forward.
Project Management Institute research in 2021 developed the 'PMO maturity index' which benchmarks and assesses the performance of PMOs against five success factors:
They discovered that the buy-in and support from senior management contributes to PMO success. A PMO champion on the C-suite can accelerate organizational acceptance, as can clear alignment with organizational strategy and culture.
People prove a decisive factor in PMO and project management success. After all, it's people who do the work and deliver the projects. High performing organizations are more likely to support staff with in-house training and mentoring, and a culture of continuous learning.
Another predictor of a successful PMO is the use of appropriate software tools. Spreadsheets, CRM systems and siloed departmental data don't provide the visibility and flexibility a PMO needs. Specialist software - for resource management, capacity planning, scenario planning - provides a PMO with the real-time data needed for informed decision-making.
Beyond reporting, high performing PMOs use technology to:
For actionable insights into creating a high performing PMO in your organization, read our top 10+ PMO best practices.
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