Why Have a PMO? Definition, Advantages and Added Value of a Project Management Office (Update 2021)

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Many companies operate a project management office (abbreviation PMO) already. Yet, only very few of them have reached a state with which they are satisfied. No wonder, since merely setting up a PMO and letting it operate will not lead to sustained success.

On the other hand, the companies without a project management office are wondering about the benefits of a PMO or are looking for clear arguments to convince decision-makers. This series of articles is meant for both groups, with and (still) without a PMO. In this series including many practical tips, you will learn what you should know about setting up and improving a project management office.

This is the first page of a series of articles. If you are new to the topic, it will provide you with the PMO definition and a few basic answers to these frequently asked questions:

At the end of the article, you will find links to further articles in the PMO series.

Let us begin with the definition and the distinction from the Project Office etc. After all, there is a lot of confusion about these.

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PMO Definition

A PMO is a centralized, permanent organizational unit that is responsible for handling multiple projects (multi-project management) for an entire company or department within the company. Its responsibilities may include, for example, training, project services, methodology, processes, and PM tools. It may also have strategic duties, such as providing assistance in project portfolio management.

Distinction of PMO from Project Office, Program Office, and Project Assistance

Responsibilities Lifetime
Project Management Office
(PMO / sPMO)
Entire multi-project environment of a company or a department within the company
Strategic PMO (sPMO) helps with the control of the portfolio, prioritization and strategy
Designed for the long term
Project Office (PO) Implementation of ONE big project
Corresponds to a slightly more developed project assistance
Only for the duration of the project
Program Office (PrgO) Optimization of a program consisting of several projects dedicated to a common program objective Only for the duration of the program
Project assistance Support with operational and administrative tasks to reduce the workload of PMO, PO, PrgO Dependent on assignment

 

Positioning of a PMO, project office, and program office

Several PMOs, POs and PrgOs – enterprise-wide, department-wide and for individual projects and programs

Companies running multiple projects involving various departments having interdependencies often have several PMOs (see graphic). Each project management office is responsible for the project management methodology and processes in their respective department.

  • A PMO is traditionally part of an R&D department. Its goal is to better manage the development projects.
  • IT departments often have a PMO as well, and this project management office works to ensure the success of IT projects.
  • In sales and marketing departments, you will find project management offices more rarely. Often elements of projects vital to the company’s mission, such as R&D projects or IT projects, are handled here.
  • In addition, there is sometimes also a strategic PMO with cross-departmental responsibilities. This project management office is linked to top management and may have broader responsibilities, such as those involving portfolio management and strategic implementations.

Why Have a Project Management Office? When Does a PMO Make Sense?

Experience has shown that having a centralized project management office is especially helpful in situations where:

  • You need to manage numerous projects
  • You have to coordinate resources involving various departments
  • Reliable and up-to-date information is what you require for making decisions
  • Your projects are happening in a variety of departments, but are interdependent and possibly have an international setup
  • You need their ability to make decisions quickly because you are working in a dynamic environment
  • Your reporting requirements are constantly growing because increasingly more people want more specific information
  • Project expenses are becoming a more critical issue
  • You need to determine the projects’ priorities and strategic contribution and take these into account

A project management office should be positioned in the company’s upper echelons. This has several advantages, among them that the right project-related information reaches top management and the key decision-makers.

Vice versa, it also helps ensure that the demands of the key decision-makers are communicated to everyone involved in, and affected by, the projects.

The appropriate roles, processes, and tools must be implemented to ensure that this happens.

PMO Project Management Office

The project management office ensures that the processes for obtaining information in the multi-project environment function properly

The number of team members work in the project management office depends on the size of the project environment and the scope of its activities.

What Added Value Does a PMO Provide?

The PMO’s mission is to improve the processes in a multi-project environment. However, what is actually considered an improvement varies from company to company. So, the benefit of having a project management office is best described as:

The project management office thereby provides a degree of satisfaction in the multi-project landscape that would not exist without its efforts.

Here is a list of the possible arguments for having a PMO and the added value it provides. These give the stakeholders confidence in the success of the projects.

  • Every project has a strategic focus (prerequisite: the project management office has a say in strategic issues related to the project)
  • Every project is managed successfully (a legitimate demand, but one that is not always possible for every project)
  • A greater degree of maturity in the company’s project management (through various measures for everyone involved in projects)
  • Maximized project performance (i.e. R&D projects completed in a short time frame, which can provide a clear competitive advantage in many industries)
  • Optimized use of resources (making the best possible use of the available staff resources when resources are scarce)
  • Fewer missed deadlines, cost overruns, and excessive use of resources (for example, by providing the project manager with support in the form of training and methodology)
  • Fewer project risks (for example, through lessons learned and a greater awareness of project risk management)
  • Maximizing the company’s success via its ongoing projects

What Constitutes a Good Project Management Office?

A good project management office ensures that projects in a multi-project environment run as smoothly as possible. PMOs that can be classed as top performers are much better at providing the necessary framework for projects than low performers. This means they manage to meet deadlines, budgets and quality requirements much more often.

The PMO Study 2020 conducted and published by TPG in the German-speaking countries revealed that top performers, by comparison, have significantly fewer problems with:

  • Clear definition of scope and objectives
  • Effort estimation
  • Qualifications of employees
  • Suppliers
  • Projects that are destined to fail from the start

On the other hand, the first two points are the main reasons for unsuccessful projects for both low and high performers (see chart below).

Reasons for unsuccessful projects – important for the PMO (project management office)

Reasons for unsuccessful projects by top, high and low performers (source: PMO Study 2020 by TPG, n=330)

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

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Note: If you are looking for external support, you will find PMO consulting here as well as a method for PMO setup in 99 days.

Conclusion and Additional Articles Related to the Project Management Office

You are now familiar with the definition of project management office and know where the differences to other entities lie, e.g. project office, program office or project assistance. Furthermore, you have learned when and why you would need a project management office and what added value it can provide. You also know what distinguishes a good PMO, i.e. a top performer, from one at a lower development level.

Now, it is time to delve into the complementary subject areas. For this purpose, you will find links to the other articles in our series below.

What are the reasons why you are still without a project management office or why the latter is not working as well as you would imagine? We look forward to receiving your comment below.


Johann Strasser ertified engineer, has been a managing partner at TPG The Project Group since 2001

After many years as a development engineer in the automotive and energy sectors, Johann Strasser spent a decade as an independent trainer and consultant in the field of project management. During his tenure, he also served as project manager for software projects in the construction industry and provided scheduling and cost management support for large-scale construction projects. At TPG, he applies his expertise in product development and consulting services for international clients. His special focus is on PMO, project portfolios, hybrid project management, and resource management. For many years now, he has shared his knowledge through presentations, seminars, articles, and webinars.

Read more about Johann Strasser on LinkedIn and XING.


Achim Schmidt-Sibeth_Projektmanagement in KrisenzeitenAchim Schmidt-Sibeth Senior Marketing Manager

 

After earning his engineering degree in environmental technology, he gained many years of experience in project management through his work at an engineering office, an equipment manufacturer, and a multimedia agency. Achim Schmidt-Sibeth and his team have been responsible for marketing and communication at TPG The Project Group for many years now.

Read more about Achim Schmidt-Sibeth on LinkedIn or XING

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