Why a PMO Is Important (Arguments for a Project Management Office)

0

+++ How to Easily Convince Your Decision-Makers of a PMO +++ And Why this Will Bring Your Company Forward +++

By Johann Strasser                                                                                                               Read article in German

This article will tell you why we regard a PMO as important. Important for companies applying project, portfolio and resource management (PPM). You will learn:

  • the benefits of a PMO
  • what types of PMO there are
  • what a PMO’s responsibilities can be

If your present challenge is to convince your decision-makers of a PMO, this is the right article for you. It will provide you with strong arguments. This is a good starting position to make your decision-makers see reason and invest in a PMO.

A step ahead already? Learn how to set up a PMO and be successful.

The “PPM Paradise” needs a PMO

At TPG, we have formed an opinion. Different stakeholders tend to have very different requirements concerning the PMO. Project stakeholders include:

  • decision-makers
  • project managers
  • department heads
  • the controlling department

There is no such thing as the one PMO.

PMO tasks can vary from company to company. But, at the bottom, the goal is always the same. The PMO is expected to bring about savings by more efficient and successful project handling.

Sense and purpose of a PMO: more efficient and successful project implementation.

The Project Management Office (PMO) is increasingly becoming the central hub of the enterprise. Among other things, its tasks can include the direct support of project managers. Or building central competencies, methods, processes, and in-house standards. In the future, its focus could also lie in strategic project management.

An important task of the PMO is to provide the right tools for project, portfolio and resource management (PPM). Due to our many years of experience, we have a specific idea of how such a PPM solution should be. What is more, we believe that such an environment cannot be introduced without a PMO. Nor could it be kept running.

Struggling to increase PMO acceptance? Check out our 7 measures!

You Need a PPM Solution if:

  • There are many projects to control.
  • You need to coordinate resources from different departments
  • Decisions need to be made based on well-founded and current data
  • Projects are dispersed over various departments; they are interdependent and possible transcend national boundaries
  • You require fast decisions, as your environment is dynamic
  • The requirements for your reports are increasing, as more and more people ask for more precise information
  • Project costs gain in importance
  • You need to determine or consider priorities and strategic contributions
Why a PMO Is Important 1

Figure 1: The “PPM Paradise” for project, portfolio and resource management

If you are looking for such a “PPM Paradise”, you will need an organizational unit looking after it. This distinct position is called Project Management Office (PMO).

A PMO should be as high up as possible in the organizational hierarchy. Among other things, it ensures that top management and important decision-makers receive the right information from the projects. Conversely, the PMO ensures that their directives for projects reach all affected and involved parties. To this end, roles, processes and tools ensuring this have to be implemented.

Why a PMO is important 2

Figure 3: The three types of PMOs – enterprise-wide, department-wide and only for a single project

How many team members work in the PMO depends on two things:

  • the size of your environment
  • what needs to be done there

There Are Three Types of PMO:

  1. A Project Office (PO) first and foremost takes on the control of a very large project.
  2. The classic: A Project Management Office (PMO) looks after the multitude of projects. It takes on the coordination in certain areas and department and sets standards.
  3. A strategic Project Portfolio Management Office (SPMO) intervenes in the control of projects. It also plays a part in the prioritization and the strategy.
Why a PMO is important 3

Figure 3: The three types of PMOs – enterprise-wide, department-wide and only for a single project

Hence, Possible Responsibilities of the PMO Are:

  • Strategic project management: Alignment to company strategy by the classification, selection and prioritization of projects
  • Classical project portfolio controlling: Control at the multi-project level, i.e. of a variety of projects, and control of the dependencies affecting resources, budgets etc.
  • Training and coaching: Training and supporting project managers and those involved in the processes
  • Project services: This regards operational support of those executing PM tasks in projects (e.g. workshop moderation, temporary provision of a project controller). For this purpose, there can also be a pool of full-time project managers.
  • Methods and processes: Customizing and selecting PM methods and processes for all involved
  • Tools: Selection and introduction of suitable tools for the different roles in PPM

PPM Processes and the PMO

Why a PMO is important 4

Figure 4: An example of a PPM process

At the outset, there are the project initiation and the ensuing phase of planning and controlling. The roles involved in the PPM process are:

  • the PMO
  • project managers
  • team leaders
  • team members
  • possibly also the controlling department

The number of roles can be individually adapted to your company.

Another interesting read: Introducing resource management fast and well

The process: The initial task is to create projects. At the start, rough planning is sufficient. The projects need an effort and cost estimation.

What follows is the prioritization and selection of the projects. Is the project important? Can it be implemented? Once the project has been commissioned, the project managers transform the rough planning into detailed planning.

Next, skills or team members have to be requested and committed by the team leaders. During the project implementation, it is necessary to capture or report the status. This applies to team members and project managers but also to the controlling / accounting department.

As a rule, the roles involved in the PPM process are:

  • the PMO
  • project managers
  • team leaders
  • team members
  • possibly also the controlling department

The principal task of the project managers is to regularly compare the target states with the planning for the remaining effort. This ensures that the project information is up to date and adverse developments are corrected in good time.

The PMO makes sure that status reports have the necessary quality and contents. This is the only way to ensure optimal preparation for decisions.

What Makes a PMO Important

The PMO is a central coordinator. It is important to involve:

  • decision-makers
  • project managers
  • department heads
  • the controlling department

The PMO is the central hub. It ensures that all involved have their needs, wishes and requirements regarding projects satisfied. Through the PMO, the information flow between the four main stakeholders is kept up.

Why a PMO is important 5

Figure 5: The PMO as the central hub to ensure the regular information flow

As a hub for the information flow at the company, your PMO will have to meet the requirements of the different stakeholders. These are outlined below.

Decision-Makers Have the Following Expectations of a PMO:

  • They desire steering boards with reliable and well-edited data. But they do not want to gather those data themselves.
  • Smaller resource conflicts should be resolved directly.
  • Greater budget and resource conflicts have to be prepared for decisions – including viable options for resolving them
  • Assessed risks should be visible in the status reports
  • The remaining effort should be comparable to the results still outstanding.
  • Reviewing all projects over time is important.

A Project Manager Would Appreciate the Following:

  • A clear project order
  • Planning support including best practices of past projects
  • Timely approval of changes
  • The commitment of resources and budgets
  • Support with dependencies with other projects
  • Suitable tools for the various types of projects
  • Training regarding the processes, methods and tools
  • Coaching in difficult situations

Department Heads Have Yet Another Focus. This Is What They Wish for:

  • Foremost, a process for controlling resource requests and commitments
  • The communication of the actual project availability rather than the capacity;. this is about the transparency desired by many
  • Project prioritization in line with corporate objectives to permit deploying the best resources in the most important projects
  • Information on the pipeline/roadmap in order to control the provision or training of resources in the medium and long term.

And Finally the Controlling Department Hopes For:

  • A process for requesting and committing budgets
  • Current planning information for the projection (payment milestones, acceptances etc.)
  • Project prioritization in line with the corporate objectives to reserve the the greatest share of the budget for the most important projects
  • Information on the pipeline / roadmap in order to control the provision of budgets in the medium and long term

Important: Optimizing the Toolchain

In its role as a coordinator, the PMO usually takes on the optimization of the relevant PPM tools. The point is to achieve an interplay between strategic planning and team and budget planning.

This will show:

  • which new projects there are
  • whether these can be implemented accordingly or not

By linking to the ERP system, you arrive at a complete toolchain. It will allow you to skim off your benefits in recurring processes.

See below what a classical PPM tool chain could look like:

Why a PMO is important 6

Figure 6: Optimizing the toolchain is part of the PMO’s responsibilities

What Benefits You Can Achieve with a PMO

There is not the one PMO, as mentioned above. You will always have to adapt the responsibilities to the requirements at your company. Overall, however, the benefits of the PMO could be summed up as follows:

  • It supports the roles involved (project manager, department head etc.) and thereby saves time.
  • It directs the initiation of projects to ensure that only the important projects are started. And in the right way.
  • The resource utilization is optimized leading to fewer resource conflicts.
  • The reliability of decisions is improved by ensuring the reports’:
    – currency
    – completeness
    – plausibility
  • It establishes processes and methods to optimize the collaboration and minimize communication conflicts.
  • Project managers are trained. This ensures that they apply experience and avoid known mistakes.
  • It takes on, or influences, the introduction of PPM tools in order to be able to put the requirements into practice or automate them in the best possible way.

What This Means in Practice:

  • By developing your own standards at your company, you can reduce the overall effort for project, program, portfolio and resource management. This starts with the definition of when a project begins to be called a project. It helps to avoid misunderstandings.
  • What is more, standards lead to a better comparability and controllability of projects, e.g. through standardized project reports.
  • The PMO can prepare the decision-making bases and prioritization. This can help to align the project portfolio to company strategy. Good preparation will make the goal-oriented and situation-dependent decision-making easier.
  • One of the trickiest issues is optimizing the resource utilization. The PMO provides essential support in this. For the information flow between project managers and team leaders is better to control with relevant factual contents and arguments. This improves the allocation.
  • A PMO can support project managers in executing administrative tasks. This makes the PMO a friend of the stakeholders. The latter can look after more important things, which cannot be delegated in the context of the project.
  • Creating more favorable circumstances for the communication in the project environment could be one of the most important PMO tasks. This regards the introduction of regular meetings clarifying who needs to talk to whom about what. And when.
  • A knowledgebase of experiences made and best practices could have an effect. Users might learn from the successes and mistakes of the past. The PMO could be the central place where such data and project documentation could be retrieved in a simple and reusable way.
  • A PMO can help to ensure that projects run well and decisions are implemented more quickly. Moreover, costs could be decreased while quality is increased.
  • Process reliability and support for projects will increase. An essential reason for project success could be that quicker decisions based on current and well-prepared data will save time in dynamic markets.

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

Please fill in the form.

Even the Future Speaks for a PMO

The number of projects will increase in the future. This is also because projects are realized in more and more areas. At the same time, projects are becoming increasingly international. For example, we have many customers at TPG that have bought, or been bought by, other companies. In both cases, their headquarters are now in other countries.

Increased cost transparency is also in demand. You will have to know exactly what you are using your budget for. Dependencies (between projects) are on the increase, too. If you have projects in different departments of the company, these will be increasingly interrelated.

At the same time, we can observe that the PM maturity in companies has increased considerably. Nowadays, there are many certified project managers, (e.g. certified by PMI or IPMA).

Resource scarcity is one of the most important drivers for more transparency and control in the project business. A functioning PMO is crucial for this.

Furthermore, there is an ongoing trend towards demanding more results in less and less time. But, at the same time, the work resources are ever decreasing, too. This resource scarcity is the number one reason why our customers desire more transparency and control. That means: There is more project business whereas routine business and operations are decreasing. Yet another reason for introducing a smooth-running PMO.

Would you like to know more about the future of the PMO? Read our related blog post!

Conclusion – Why a PMO Is Important and the Chief Benefits for Convincing your Decision-Makers

Why is a PMO important? We started with a brief outline of the cases in which you require a “PPM Paradise” for project, portfolio and resource management. The goal-oriented introduction of this complex of challenging tasks, cyclical processes, and support tools will only work under one condition. You need a central organizational unit responsible for it – the PMO. Otherwise, you will also struggle to keep it alive.

With its activities, the PMO contributes to increasing the maturity level of your company’s project management. Processes run more smoothly. And the likelihood of successful project completion increases.

If you plan to set up a PMO, you should point out the following benefits to your decision-makers:

  • cost reduction
  • increase in quality and process reliability

Have you gathered experience with a PMO? Please, share those experiences in a short comment below. Or feel free to ask any questions you may have.

Find more information by TPG The Project Group on various topics of project, portfolio and resource management on this blog.

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

 

print this article

Share.

Leave A Reply