How to Set Up a PMO and Be Successful

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+++ Your Road to Fast PMO Acceptance with the Right Approach and Clever Change Management +++

By Johann Strasser                                                                                                                Read article in German

Are you wondering how to set up a project management office (PMO) at your company?

This article will outline the necessary steps and the success factors that will get your stakeholders on board.

But read for yourself.

Looking for arguments to convince stakeholders of a PMO? Read this article.

Setting Up a PMO – Just Another Project

When you want to establish a project management office (PMO), you are basically initiating a new project. You use the same method as when setting up other projects:

  • First, you analyze the current situation
  • From this, you deduce a tailor-made concept
  • This you proceed to implement before you go live

Across all phases, you rely on smart change management to get your stakeholders on board. This helps ensure user acceptance and the success of the PMO.

A PMO needs to be customized to the current overall conditions and the company’s project management maturity.

Special Download: 10 Reasons why a PMO is important (PDF file)

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When setting up a PMO, your main challenge will be to design it to suit your company. You have to consider the current overall conditions as well as your project management maturity level.

A generic framework can give guidance for establishing a PMO. But there will never be the “one PMO” or the “one right approach”.

How to Set Up a PMO and Be Successful 1

Figure 1: The PMO setup runs through four phases. Change and top management provide support throughout.

Step 1: Current State Analysis

The first step on the road to setting up a PMO is to analyze the current state. We check the PM methods, processes and tools that were used up to now for weaknesses. We do the same with the most important ongoing projects.

Find further tips in our Checklist for PMO Setup outlining 10 Vital Success Factors.

In the beginning, establish what should be considered a project and as such the responsibility of the PMO. And what should remain operation and in the realm of the departments.

A company-specific project-worthiness analysis provides the necessary basis for decisions.

How to Set Up a PMO and Be Successful 2

Figure 2: The project-worthiness analysis helps to distinguish projects from operations

One of the highest goals is to establish a complete, up-to-date, informative project list. In a perfect world it would also be prioritized. This is the only way to find out what people are actually working on.

Of further importance is the control environment. We also need to ask how useful the status updates have been that were delivered up to now. And what effect they have on which audience.

Indispensable at the start: scrutinize existing processes with a current state analysis!

You can scrutinize existing processes in the company’s project management. And it is important to analyze the effectiveness and efficiency of the tools and methods used.

The form of organization (line or matrix) and the area of PM training or career are relevant in this respect.

With the knowledge gained, you can determine the individual PM maturity level of the company. This you should document without fail. Otherwise, the improvements achieved will be difficult to prove later on.

In most cases setting up a PMO is a politically delicate issue. So you will be doubly glad to report positive changes.

Determine the actual goals of the PMO based on this goal. A stakeholder analysis can help. Who are the stakeholders of the new PMO, and what benefits do they aim for?

The stakeholders include management and executives, project managers and controllers as well as staff members. Everyone expects a value proposition which you have to determine beforehand.

The PMO is a service provider whose success depends on the stakeholders’ “customer satisfaction”. So you should involve them early on to define the right goals.

Once you have analyzed the current state and determined the expectations you conduct a gap analysis. It will reveal the gap between the current and the desired state of project management in the company. To define it, you can use a PM maturity model to be introduced step by step.

From there, you should derive recommendations for action including immediate measures. You should deliver these quick wins as early as possible. PMO acceptance will increase through quick initial success.

Tip: Your first quick win could be a prioritized project list – a first simple version with only few columns. This will provide an initial overview of the project portfolio. It would give all stakeholders quick insight regarding which projects are going on where.

Let’s be honest. Do you have a complete project list?

Having this list at your disposal after only a few weeks would be a huge benefit for all parties involved.

Looking to advance acceptance? Learn about 7 Measures to Increase PMO Acceptance.

Step 2: Design Phase Defines Areas of Responsibility and Resource Requirements

What follows is the design phase. You need to define the PMO’s areas of responsibility, hierarchical position and competencies. The PMO has to be clear on its mandate and services.

  • Should it be a mere service unit providing tools for others to use as required?
  • Or is its primary function to train and support project managers and ensure project quality?

A PMO’s areas of responsibility can be diverse. And the stakeholders’ expectations tend to be huge. The list below outlines possible areas of responsibility for the PMO:

  • The new PMO can focus on training and coaching. It will attend to staff development measures for project managers and teams.
  • For project services the main task is operational support. The PMO will, for example, hold workshops. Or it might temporarily take on the work of the project controller.
  • Methods and processes can be the core competency of the PMO. The focus will be on defining these. In addition, it will provide suitable IT tools.
  • Project portfolio controlling monitors project progress and defines steering measures. The PMO will gather and evaluate project information for the decision-making bodies.
  • Strategic project management office (SPMO) takes care of project setups and implementation. The PMO will select projects and prioritize them. It will also conduct cost-benefit analyses and determine the general conditions for managing each project.
How to Set Up a PMO and Be Successful

Figure 3: Possible areas of responsibility for the PMO or Strategic PMO

Further PMO content in our article about the PMO’s Future in Strategic Project Management!

To avoid overload, it is best to start with one or two areas of responsibility. The PMO’s mission should be known to all.

Stakeholders have a tendency to assign too many tasks to a PMO. You should consult all stakeholders and formulate a practical and individual mandate. This would result in realistic areas of responsibility for your PMO.

PMOs are not meant to please everybody. They have a clearly defined mandate.

A newly introduced PMO is almost an alien body within a company. As a rule, there is a long way to go before it is taken for granted.

What is important:

Make sure all employees know about the new PMO and its responsibilities. This will clarify expectations. It will also promote the PMO services and make sure people use them.

Based on the PMO’s range of services you can now determine the required resources.

The qualification and motivation of PMO members is of high importance. They must be service-oriented and yet be able to say no when necessary.

You should put a senior employee in charge of the PMO. This person should have organizational experience as well as many years of project management experience. Good social skills are essential in this position.

Step 3: Implementation Phase Puts Plans into Action

When implementing the PM processes and methods you defined, you proceed step-by-step. You also provide the IT infrastructure.

Now at the latest you should finalize your PMO staff training and prepare them for their future tasks.

Change management should have been part of your activities in previous phases. But now is the time to focus on it. Practicing smart self-marketing is one of the PMO’s most important tasks. You will only achieve acceptance in your company if you clearly stress what benefits you bring.

Find out more about the Importance of Change Management in Project Management.

Make sure you communicate the PMO’s areas of responsibility well.

A PMO homepage in the company intranet can be a great tool for change communication. It should contain information regarding:

  • PMO services
  • Processes in the company’s project management
  • PMO team members

Step 4: Regular Operations Follow the PMO Setup

After the implementation phase the PMO has to assume regular operations. If the PMO was set up by an external consultancy firm, the time has come to hand over all operations. Internal staff will assume full responsibility.

In some cases, it makes sense to keep referring to external consultants for certain isolated issues. You might also consider coaching the internal project managers or even the PMO. But this depends on how far the qualification process has progressed.

Relying on Change Management from Day One

Across all phases, change management and other activities must happen side by side. This means from the current state analysis through to the transition to regular operations. The new PMO has to persuade all stakeholders of the benefits it brings. This should ensue as soon as possible to raise its acceptance.

Find out how to measure a PMO’s value and acceptance with the right KPIs.

This process tends to run through three phases:

Phase 1: If the PMO manages to show quick wins early on this will make stakeholders happy for the moment. At last, somebody is addressing issues that have been neglected for too long. They are open-minded towards the PMO.

Phase 2: A phase of disenchantment usually follows once new structures and competencies have been introduced. With increased transparency people tend to become skeptical. They ask themselves what effect the new PMO and its goals could have on them. And if it might harm them.

Phase 3: But if the introduction is successful, the staff will eventually recognize the PMO’s advantages. The initial skepticism gives way to constructive collaboration. As a result, the PMO can begin to establish a new project management culture and breathe life into it.

How to Set Up a PMO and Be Successful

Figure 4: Change management brings the PMO’s advantages to the fore

The Essential Things: Backing from Management and Change in Company Culture

Make sure you appoint the right person to promote your PMO. In critical situations, they must also follow through with unpleasant changes. You can only establish your PMO long-term with

  • backing from management
  • clearly defined areas of responsibility and
  • clearly defined competencies.

Company culture also figures prominently for a successful new PMO.

What this means:

The PMO needs to establish transparency in the project environment. The attitude towards transparency within a company is also crucial to the success of a new PMO. Is transparency actually desired and pursued by all parties involved?

Changing PMO: What Is the Trend?

One last point is that the PMO is a hub for different stakeholders. It is up against ever higher expectations.

For instance, the trend moves away from PMOs only helping to resolve resource conflicts as moderators. Rather, they are expected to actively control these conflicts in certain areas.

There is also a growing tendency to introduce strategic PMOs that are actively involved in defining and prioritizing the project portfolio. After all, it is important to do the right things before focusing on doing things right.

The 10 most important success factors for PMO setup

1.   Honesty in analyzing PM weaknesses
2.   Complete stakeholder analysis
3.   Clear distinction between project activities and operations
4.   Determining the PM maturity level for progress documentation
5.   Delivering quick wins early on
6.   Clear definition of PMO responsibilities
7.   Refraining from starting with too many areas of responsibility
8.   Comprehensive communication of the PMO’s mandate
9.   Relying on change management from the beginning
10.  Clear backing from management

Conclusion: Successful PMO Setup

Setting up a PMO works like any other project. You start with the initiation. You move through the design and implementation phases. And at the end, you assume regular operations. Besides the right approach, further factors will determine success or failure:

  • clever change management
  • backing by top management
  • desire for more transparency within the company

After all: even the best PMO can only work well if stakeholders recognize the added value of the new organizational unit. They have to actively contribute. Then, and only then, will you have the acceptance required for your success.

What was your experience when setting up your PMO? Are you just getting started? Or is your PMO already actively involved in your company? Please leave a comment below.

Final tip: Subscribe to the TPG Blog Newsletter now and never miss another blog post.

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