Establishing a PMO in 4 simple steps (+download)

Are you thinking about establishing a PMO (project management office) in your company? This article explains how in four simple steps.

In the following sections, you’ll learn about:

• Establishing a PMO – just think of it as a normal project
• Step 1: Current status – analysis & general concept
• Step 2: Preparation and specification
• Step 3: Implementation of the plans
• Step 4: Ensure that the PMO is an integral part of the normal operations
• Change Management – A key success factor right from the start
• Establishing a PMO: Success factors and conclusion

Note: If you wish outside help in establishing a project management office (PMO), you’ll find it here: PMO Consulting. There’s a PMO creation method that helps you reach level 2 of the Gartner PPM Maturity Model in 99 days or less. Here you’ll find information about our two-day PMO seminar.

After discussing the recommended four steps, the article concludes by describing which PMO success factors will help you obtain buy-in from the affected stakeholders.

But let’s get started now…

Establishing a PMO – just think of it as a normal project

Deciding to create a project management office means launching a new project. The methods used are the same as for any other project:

• You start by analyzing the current situation.
• Next, you develop a specific plan.
• Then you implement this plan and integrate it into the normal operations.

Throughout the phases, your smart change management strategy is used to help bring the stakeholders on board. This promotes the project’s acceptance and helps ensure its success.

Please note, however: You’ll need to adapt your strategy for establishing a PMO to the current situation and your company’s level of experience in project management. This is a challenge for every organization, as you’ll soon discover, because there is no one-size-fits-all approach to either the PMO or the process itself.

So, you may find it helpful to use a generic, incremental approach to establishing a PMO as it’ll serve as a point of orientation. The following graphic provides an example.

The four stages of a framework for establishing a PMO

Creating a PMO involves these four steps:

1. Current status – analysis & general concept
2. Preparation and specification
3. PMO implementation
4. PMO normal operations

In addition to these four steps, it helps to have a good change management program for interacting with the people affected. This is because most people, at least initially, are skeptical about any proposed changes. So, be prepared to face resistance to your project again and again. You’ll need to convince these people / stakeholders.

Visible support from top management is essential, so make sure you have it. It often helps convince the other stakeholders.

One more tip: Right from the start, begin collecting proof that establishing a PMO is having a positive effect on the projects. This evidence will help you counter any possible criticism.

Now let’s take a look at the individual steps involved.

Step 1: Current status – analysis &

general concept

Stage one in establishing a PMO involves the preparation and specification

The first step in establishing a PMO is to analyze the current situation. Take a look at the PM methods, processes, and tools used so far. Scrutinize the most important current projects for weaknesses.

In our experience, it’s important to check for these key items in this phase. If you determine that any of these are (still) missing, you can make introducing these the first objective of your newly established PMO.

1. Project-worthiness analysis – What do you consider a “project”?

Start by defining what exactly should be handled as a formal project? Only things clearly defined as a project fall under the jurisdiction of the PMO. Ask yourself: what activities are better handled as part of the normal operations and are therefore under the jurisdiction of the individual departments?

A project-worthiness analysis tailored to your company will help you make this decision.

Our recommendation: Download our free Project-worthiness analysis template (MS Excel) below. You can easily adapt the template to your needs.

2. Prioritized project lists – which projects are currently being pursued?

One of the key objectives is to obtain a complete list of all the projects. It must be up to date, detailed, and ideally also prioritized. Without a complete list, you’ll have no idea what people in the company are really working on.

Let’s be honest: Are you sure that your list is really complete? Our experience has shown that few companies actually have a complete list at this stage. Even if it takes a few weeks to prepare the list, it’ll be well worth the effort and a great help to everyone involved.

Example of a company’s complete project list (TPG PPM Paradise)

The graphic above shows the TPG PPM Paradise. Individual projects are automatically added to the project list.  This list provides the up-to-date and accurate information needed for the portfolio reports management uses to make decisions.

Users of agile methods, please note: Establishing a  PMO is essential if you have multiple projects running concurrently, even in an agile environment. Having a complete, accurate list of all the projects is essential for every decision-maker.

Things to keep in mind for the project list and/or tool used to prepare the list:

• It must accept any number of user-defined fields.
• It must have a function for sorting, filtering, and grouping the entries by field.
• It must provide different views based on user permissions.
• Ideally, it offers workflows for adding new projects.
• It must allow you to configure the links to detailed information.
• The list must be pre-filled with key historical data.
• This historical data must be sufficient to detect future trends.
• This history also serves as evidence of the PMO’s contributions.

Our recommendation: Make sure that every single project is included on your project list. Avoid having any stealth projects that secretly steal your resources. Your primary responsibility as project management officer is to ensure that the list is always complete and up to date!

3. Control environment – Do we have what’s needed to make valid decisions?

Another thing to consider is the control environment. It should include key elements such as:

• Project order (project objective, budget, time frame, etc. with signature)
• Project status report (detailed with traffic light status indicators)
• Final project report (project’s overall result)
• Lessons learned (What went well and what didn’t?)

Our recommendation: In this first phase of establishing a PMO implementation, you need to ask many questions: How helpful have previous project status reports been? What was their intended purpose for each of the stakeholders? What things were able to be optimized?

4. Processes – are they effective and efficient?

Remember to take a close look at your company’s existing project management processes. It’s vital that you check the effectiveness and efficiency of the tools and methods being used.

One important factor is your company’s organizational structure (line / matrix). Take a close look at the training opportunities and career paths available to those involved in project management.

Your findings will help you determine the level of project management expertise in the company. Make sure that you document this.

Not everyone in the company will be enthusiastic about the creation of a PMO, so you’ll need all the good feedback about positive changes that you can get.

Our recommendation: Start your work as project management officer by documenting the company’s level of project management expertise. This can help you achieve some quick wins and later clearly demonstrate the improvements and added value.

5. Stakeholder analysis – what does each person want?

Knowing what everyone wants will help you define the PMO’s goals. The stakeholder analysis is a helpful tool in determining: What are the PMO’s interest groups and what do they hope to gain from the PMO?

Possible stakeholders range from managers and executives as well as decision-makers and team leaders / scrum masters, to project managers / project owners, the controllers and, finally, the employees.

Overview of the PMO stakeholders

The PMO is a service provider whose success depends on the satisfaction of its “customers”, namely, the stakeholders in the project environment. Each of these stakeholders has their own expectations of the PMO.

Our recommendation: Start by doing a good stakeholder analysis to ensure that you have a clear understanding of every stakeholder’s expectations of the PMO. This will let you set the right goals and lead to greater acceptance of your work.

6. Gap analysis – what does the target / actual comparison show?

After you have analyzed the current situation and defined the expectations, it’s time to do the gap analysis. This analysis depicts the gap between the current status and the desired status of project management in the company.

The information can then be used to create a prioritized list of recommended actions. The list should also include measures that can be quickly and easily implemented, so-called “quick wins”.

Here are a few ideas for quick wins when establishing a PMO:

• A clear project-worthiness analysis
• A signed project order for each project
• A prioritized list of projects
• A good stakeholder analysis
• An up-to-date project status report

You can sustainably close some of the gaps defined in your gap analysis by, for example, defining a PM maturity model that can be introduced in stages.

Our recommendation: Complete the quick wins identified on your list as early as possible. These early successes will help boost the PMO’s acceptance.

Step 2: Preparation and specification

Stage 2 in establishing a PMO involves the preparation and specification

The next phase involves developing the concept. Here you define the PMO’s work, its position in the hierarchy, and its competencies. The PMO should have a clear understanding of its mandate and the services it is expected to provide.

The scope of services is often broad and the stakeholder expectations high. Possible PMO services can be seen in the following list.

• If training and coaching are the focus of the newly established PMO, then it will organize professional development activities for the project managers ad project teams.
• The PMO’s project services activities will consist mainly of providing support. For example, it can host workshops or temporarily assume the role of project controller.
• If methods and processes constitute the PMO’s core competencies, then it will focus primarily on these and make suitable IT tools available to those needing them.
• Multi-project management monitors the progress of various projects and defines the control measures. In this case, the PMO gathers project information and prepares this for the decision-making committees.
• The Strategic Project Management Office (sPMO)is responsible for setting up and managing the projects. It chooses the projects and prioritizes them. The PMO also conducts the cost-benefit analyses and defines the overall conditions for the project management.

The possible scope of responsibilities for the PMO and/or strategic PMO

Once you have established a PMO, it’s a good idea to start by focusing on only one or two of these responsibilities. You want to avoid over-burdening the organization. Make sure that everyone is aware of the PMO’s mission.

A newly established PMO is still a “strange newcomer” in their midst. It’ll take a while for everyone to accept it as an integral part of the organization.

Stakeholders often have a tendency to overburden the PMO with activities.

It’s important to remember that the PMO will not be able to please all the people all of the time. It has one key responsibility ‒ the one derived from the stakeholder analysis ‒ and this should always be its primary focus.

Our recommendation: Ensure that the PMO’s mission is one that is both practical and tailored to your organization. Get stakeholder input and agreement on this. Doing so ensures that the PMO’s scope of responsibilities is realistic.

Other key requirements:

• Communication: Make sure that everyone knows that a PMO exists and what its responsibilities are. This ensures that everyone’s expectations are clear.
• Internal marketing: Publicize the PMO’s services so that people actually request and use these services. To be truly accepted as part of the company, the PMO has to offer clear benefits.
• Staffing: The PMO staff must have the necessary qualifications and motivation ‒ this is vital. The employees must be service-oriented and have the required interpersonal skills, but also be able to say No when necessary.

If you’ve already been using change management to facilitate the transition from one phase to another, its role will grow in importance in the next stage of your PMO implementation.

Our recommendation: Ensure that the new PMO’s scope of responsibilities is clearly communicated to all the stakeholders. One idea is to set up a PMO homepage on your company’s intranet with information about the PMO team, its services, and project management workflow processes.

Step 3: Implement the plans

Stage 3 involves implementing the specifications for establishing a PMO

If it hasn’t happened already, this is the stage in establishing a PMO, where the PMO staff receive their final training and are helped to prepare for their duties.

You’ll need their expertise to step by step implement the PM processes and methods defined in the concept phase. This generally includes agile methodology as well as the traditional together with hybrid approaches that combine these two methods.

Our recommendation: Select a senior employee to lead the PMO. Choose someone with good organizational skills and many years of project management experience. Make sure this person also has the truly necessary interpersonal skills.

Project launch – traditional, agile, or hybrid?

One of the PMO’s responsibilities can be to decide whether a project should be handled using agile, traditional, or hybrid methodology. It can define criteria for the degree of uncertainty in the requirements as well as which solution should be used based on this uncertainty. A Stacey Matrix can be helpful here.

The Stacey Matrix for determining project complexity

Please note: Don’t expect your project managers to switch between agile and traditional too often. Our experience has shown that this can jeopardize the satisfaction and process stability.

Methods – which are vital?

Traditional methods that the PMO must use in any case are:

• Project order
• Status report
• Final report with lessons learned

Primary methods of traditional project management

The following graphic shows several other methods common to traditional project environments that the PMO may need to consider. The PMO also provides a suitable IT infrastructure, offers training, and assists users in applying the methods and tools.

Other methods of traditional project management

Processes – at what intervals should these occur?

One of the PMO’s key responsibilities can be summarized as:

The PMO ensures that everyone knows what is important and right.

In traditional as well as agile project environments, the PMO is responsible for ensuring that the required processes are carried out at the right intervals. The right information needs to be made available with a regularity that ensures it is both up to date and reliable enough for good decisions.

The following graphic shows how to collect and disseminate information in such a way that this is shared with the organizational levels involved as often as needed.

Defining the frequency with which information is shared is one of the PMO’s primary responsibilities.

Recommended reading: Agile project management, traditional, or hybrid? (a comparison) – What you should know about how agile differs from traditional and hybrid methods, and how to decide which is best for your needs.

Portfolio meeting – what do you need to keep in mind?

The PMO is responsible for ensuring that the portfolio meeting, whose purpose it is to monitor and manage the multi-project environment, achieves its objectives. The key is to have all the necessary information readily available and up to date. Having this information is a prerequisite, as it enables the decision-making committee to make fast, reliable decisions based on the most current data.

PMO process for preparing, conducting, and doing the follow-up work for a portfolio meeting

To ensure that the project information presented in the portfolio meeting is up to date, a weekly plan can be used, for example. This enables you to remind the project staff and project managers on time to provide the necessary information in accordance with a periodic deadline.

Sample weekly plan showing preparations for the portfolio meeting

Make sure that everyone submits their input before the editorial deadline, 2-4 hours before the meeting begins. This gives you enough time to be well-prepared and avoids any last-minute changes.

What kinds of topics are discussed in a portfolio meeting? Here are a few typical items:

• Project conclusions (final reports, successes, and lessons learned)
• Information on new projects (project orders)
• Information about key projects (status reports, risk analyses, milestone trend analysis [MTA], etc.)
• Upcoming decisions to be made
• Presentation of the resource situation
• Solutions to resource overload / underutilization

Before the portfolio meeting ends, you should discuss and reach an agreement on how the information about the meeting’s key conclusions will be communicated to the staff. This helps ensure that the employees feel well-informed about the decisions that affect them.

The project portfolio meeting is the place to discuss any project problems, such as those showing a red alert. Having the right tools lets you “drill down” from the project portfolio level into the details of any individual project. The PMO is responsible for providing the tools needed to do this.

TPG PPM Paradise provides this capability:

Using the PPM tool to “drill down” from the portfolio level to discover the source of a problem (TPG PPM Paradise)

Resource management – what is everyone working on?

One of the PMO’s key duties is allocating resources to the various projects.

A prerequisite is, therefore, having a complete overview of each employee’s activities – both project-related and non-project-related.

However, don’t make the mistake of being overly detailed in your resource planning. Find the right degree of granularity. For example, you don’t want to make your plans so detailed that one person calling in sick throws off all your plans.

Our recommendation: Aim to make your resource plans as good as necessary for decisions to be made at the portfolio level. More details are unnecessary.

Resource management involves all the levels:

• Decision-makers (which projects are [still]possible, given the resource situation?)
• PMO (prepares the resource utilization overview for that time period so that portfolio decisions can be made)
• Team leaders (schedule the team members and their operational and project-related duties)
• Project managers (work with the team leaders to coordinate the procurement of the resources needed for the projects)
• Team members (report the hours worked, progress, and remaining work to be done)

Resource planning levels within a company

Recommended reading: Resource Planning in Project Management – The benefits, challenges, and the secret of successful rapid implementation

Knowledge sharing is also a key success factor in minimizing the risk of resource bottlenecks and project delays. Avoid having “gurus” ‒ experts who prefer to work alone and not share their knowledge ‒ as these can become a resource bottleneck. The problem here is that the project can come to a standstill if this person is suddenly unavailable.

As project management officer, it’s your responsibility to ensure that this critical knowledge is shared by several people in the team. This helps you avoid any unnecessary downtime in the project.  Make sure that your company’s team leaders understand this as well.

The sharing of knowledge helps avoid bottlenecks and delays in the project.

Step 4: Ensure that the PMO is an integral part of the normal operations

After establishing a PMO, it becomes part of the normal operations. If the PMO was implemented by an external consulting firm, it’s now time to transfer responsibility to company employees.

In some cases, it may be advantageous for the PMO to retain the consulting firm’s services as needed for specific questions. Depending on what progress has been made in developing the necessary expertise, you may want to consider providing coaching for the company’s project managers and possibly also the project management officers.

In this phase, continue to optimize your processes and methods. Good communication, right from the start, is the key to fostering acceptance of the changes.

Another important point to remember when highlighting the advantages of having a PMO: the company’s corporate culture plays a key role in the PMO’s success. Because the PMO is responsible for ensuring transparency in the project environment, its success will also be measured by this benchmark.

Our recommendation: When judging your PMO’s long-term success, ask yourself what degree of transparency the company actually wants and whether everyone involved is really trying to be more open about everything.

Change Management – A key success factor right from the start

Throughout all the phases ‒ from the analysis of the current situation to the transition to the PMO being part of normal operations ‒ change management is done concurrently to all the other work. As explained above: It’s important to demonstrate the benefits of your newly-introduced PMO to all the stakeholders as quickly as possible to convince them of its advantages and thereby gain their acceptance.

This is generally achieved in three phases:

Phase 1: If the PMO can show some quick wins, the stakeholders will initially be happy that someone is finally tackling the issues that need to be taken care of. They’ll then be more willing to accept the PMO.

Phase 2: In this next phase, after the new structures and expertise have been introduced, reality sets in. As everything becomes more transparent, people become more skeptical. They begin wondering what effect the new PMO (and its objectives) will have on them personally and whether any of these effects will be detrimental.

Phase 3: If the implementation is successful, people will eventually recognize the advantages of having the PMO. Their previous skepticism will be transformed into positive collaboration. Now the PMO can gradually introduce a new project management culture within the company and bring it to life.

Change management ensures acceptance of the PMO and highlights its benefits

Establishing a PMO: Success factors and conclusion

This article has helped you understand that establishing a PMO is handled as a project. After the project’s launch comes the planning, the implementation, and then the normal operation. You’ve also learned that there are other factors, beyond simply following the right steps, that can influence the success or failure of your endeavor:

• Carefully-planned change management
• Having the support of top management
• A desire for more transparency within the company

Remember that even the best PMO can’t be successful unless the stakeholders recognize the value of this new organizational entity and are willing to actively cooperate with it. Once you have their recognition and willingness to collaborate, you’ll have the acceptance necessary for the PMO to be successful.

Let’s conclude by reviewing the 10 key success factors for establishing a PMO:

1. Honest analysis of the PM weaknesses
2. Complete stakeholder analysis
3. Clear differentiation between project work and general operations
4. Determination of baseline expertise so that progress can be measured and documented
5. Achievement of quick wins
6. Clear definition of PMO duties and expertise
7. Manageable scope of responsibilities
8. Clear communication of the PMO’s mission
9. Use of change management right from the beginning
10. Visible support from top management

What has been your experience in establishing a PMO? What words of advice would you give someone trying to do so? Please leave us a comment.

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