A guide to setting up a project management office (PMO)

Imagine an organization that has multiple projects running where:

• Deliverables of some projects are input to other projects
• One or more project managers handle each project
• Several stakeholders are involved in the project such as department heads, vendors, partner firms, etc.

In such cases, managing projects becomes a complex task. You’ll need kiosks for tracking projects, adherence to standards and best practices, communication between project managers, and visibility for all stakeholders. This is where a project management office (PMO) comes in.

In this article, you’ll learn what a PMO is, its roles and responsibilities, and how you can establish one within your product team.

What is a project management office?

A PMO is a centralized department in an organization that oversees and manages projects via project managers. It provides support, guidance, standards, tools and training to ensure projects are completed on time within budget, adhering to the required quality standards.

Functions of a PMO

A PMO primarily focuses on three key functions:

• Governance — Whether ensuring regulatory compliance, defining standards, creating project policies and procedures, or periodic reviews and audits, the PMO team works with all the project managers to ensure strong governance on projects undertaken by the organization
• Support — A PMO provides support and guidance to project managers and their project teams, develops methodologies and processes, coaches and trains project teams, allocates resources and budget, and procures and adopts tools
• Delivery — The PMO team also focuses on stakeholder management, documentation and delivery, risk management, tracking and collaboration, change management, and ensures smoother execution and delivery

What are the different types of PMOs?

Now that you understand the key functions of a PMO, let’s understand different types of PMO setups you can have within an organization.

Supportive

As the name suggests, the supportive type of PMO is more of a consultative and advisory committee in an organization. A supportive PMO will provide support and guidance to project managers helping them to achieve their project success. This group will not have any direct control over the projects. Some of the key activities of Supportive PMO are:

• Developing templates, providing training and guidance to project managers
• Archiving project artifacts and using them as lessons for upcoming projects
• Providing on-demand expertise and consultation to project managers
• Adopting tools and training to the project managers and their teams
• Creating recommendations for project schedules, delivery, and other project activities

This type of PMO is beneficial to the organizations with a matured project management environment where additional control of projects would be unnecessary. In such an environment, project managers hold strong expertise in project delivery and only would need on-demand consultation for any problems they would face during execution.

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Controlling

As the name suggests, this PMO not only provides support, but also ensures that the project is executed in accordance with defined standards, processes, and policies. A controlling PMO has an equal share of the projects as a project manager. The PMO team here works closely with project managers and guides them towards successful project delivery.

Some of the key activities of a controlling PMO (in addition to support) are:

• Reviewing and approving project plans
• Prioritizing team activities during project execution
• Allocating resources and track performance
• Scheduling and tracking project progress
• Defining and enforcing standards, compliance, and policies

A controlling PMO is best suited in organizations where the project manager and teams are experienced, but need further guidance and supervision to execute the project.

Directive

A directive PMO has complete control over project management and oversees the project manager and project teams in execution of the project. This type of PMO is directly involved in project management and becomes part of the project life cycle. Some of the key activities of directive PMO (in addition to control over project) are:

• Taking part in every discussion and making key/critical project decisions
• Managing resources and budget
• Closely monitoring and tracking each deliverable of the project
• Strategizing project execution
• Controlling the entire project life cycle from initiation, kick-off till delivery, documentation, and closure

Under the directive type of PMO, the project manager works completely under the supervision and direction of the PMO team. A directive PMO is adopted in organizations that have less project management experience. This type of PMO can also be applied in an organization that is undergoing transformation or major change in its business model, products, or services.

What are the different roles within a PMO?

The most common roles within a PMO are:

• PMO director — A PMO director sets the strategic direction and ensures the PMO team is aligned with organizational goals. Even though it is a separate department, a PMO director usually reports to VP of engineering or product and won’t have their own executive hierarchy
• PMO manager — A PMO manager is responsible for working with project managers, providing them guidance and support from the project management office. They oversee daily operations and the PMO staff, develop policies, procedures, and processes, and coordinate between stakeholders
• PMO analyst. These team members collect all the data from a project, whether it be project plans, schedules, status reports, budgets, or priority trends and analyze them. They also track the project progress against the milestones and targets to create detailed project reports
• PMO specialist — This is an on-demand role that you would create according to need. A PMO specialist supports the PMO group as well as project manager by providing consultation, guidance, and support

Benefits of a project management office

Adding a PMO to your product team provides you with important oversight. The following list provides you with some of the key benefits a PMO offers:

• Faster and more informed decision making — Because a PMO serves as a central office for all projects, stakeholders have easy access to information and tend to avoid conflicts or disagreement. This allows for faster implementation
• Expedited procurement, implementation, and adoption — A PMO identifies needs upfront and works with procurement authorities to ensure you remain consistent with project timelines. The way a PMO integrates with stakeholders enables proper training and faster adoption without stalling delivery
• Increased consistency in project execution and delivery — Implementing a PMO helps with defining standard processes, endorsing best practices, and ensuring that every project follows these. This helps you be consistent in your project execution and leads to reduced errors and increased operational efficiency

Common challenges when implementing a PMO

Although PMOs provide benefits, there are a few challenges you should consider prior to adopting one for your product team:

• Added bureaucracy — A PMO can complicate the daily tasks of project managers and teams by adding excessive paperwork. This potentially leads to slowness in project execution and stretches project timelines resulting in financial losses
• Overhead costs — Forming a PMO can be expensive as it adds costs like staff salaries, software and tools, training, and ongoing operational expenses. Smaller organizations should not adopt PMO for this reason and larger organizations should be mindful to keeping costs in check
• Resistance to change — Not all project teams and stakeholders might be adaptable and some might resist adapting the policies, procedures, and templates. Some teams might view a PMO as an intrusion, leading to friction within the organization

How to set up a project management office

Establishing a project management office doesn’t happen overnight. It can take at least a month or two and up to several months or years to establish a strong, mature PMO. To get started, you can follow these step:

1. Define your core business case — Create a case to define the problems that project management is facing and the actual need of a PMO. This document should answer how the organization would benefit from a PMO and outline key objectives
2. Gain buy-in from top management — Present the business case to the management and secure their support, funds, and resources permissions
3. Define the scope. Define the PMO responsibilities and its areas of work. This should include all projects the PMO will manage
4. Define the type of PMO to adapt — Knowing the scope and responsibilities, analyze and decide on which type of PMO will best suit your organization
5. Define the process and methodologies — Develop your initial process, methodology, and best practices to be followed by projects. Create templates for various communications in project management
6. Identify success metrics — Identify the performance indicators that can help measure the success and effectiveness of the PMO
7. Create a PMO charter — The charter is an official document that explains the mission, vision, goals, objectives, and scope of the PMO. It also records detailed processes, operating procedures, and methodologies that the PMO will adapt
8. Acquire resources — Hire and train the PMO staff, procure required tools and technologies, procure project management software, and any other required assets
9. Training and support — Train project managers and project teams on initial processes, methodologies, standards, templates, practices as defined in the charter
10. Implement operating procedures — Work with project managers and teams to implement standards, processes, best practices, tools, and methodologies
11. Monitor and evaluate — Constantly monitor initial project performance and impact due to introduction of the PMO. Evaluate the results and take adequate actions to improvise
12. Communicate the value — Communicate the value of the new PMO to all the stakeholders and explain the new milestones
13. Iterate and improve — Constantly evaluate and improve operating procedures

When you first get started, create a small PMO with one project and a small set of responsibilities. Then you can slowly expand the scope of PMO and include more projects as and when it becomes more mature and established. Seek constant feedback from stakeholders and secure support from senior management by periodically communicating values to them.

Final thoughts

The project management office is a group created within an organization to provide support and guidance to project managers. They empower project managers to execute projects in a well-defined and standardized manner.

The PMO is responsible for defining standards, implementing processes, creating and publishing communication templates, implementing methodologies and best practices, training and coaching teams in project management. PMO operates on three core functions: governance, support, and delivery.

Based on your unique environment you can decide whether to implement a supportive, controlling or directive PMO. No matter which you choose, a PMO will help increase project profitability, transparency to senior management, customer satisfaction, predictable project delivery, and so on. Just remember to start small and work your way up.

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