Best practices for building a successful PMO (Project Management Office)

Building a successful PMO (Project Management Office) is one of the many strategies that organizations can employ to improve their overall performance and to achieve organizational excellence. This podcast episode covers best practices and key building blocks to build a successful PMO. If you already have a PMO then these practices can help you to improve your PMO’s governance and performance.

In this episode, we will cover the key building blocks of an organization’s PMO or Project Management Office. Due to the summarized nature of this session, we won’t be able to cover all those elements but the coverage of the essential building blocks will give you the foundational knowledge to start building a PMO from scratch or to reinforce the one that you already have with best practices. So, let’s get started.

Definition of the PMO

First, let’s revisit the definition of a PMO. A PMO or Project Management Office is a group within an organization or company that manages a group of projects or programs and other initiatives of the organization. PMO can refer to a Project Management Office if it only manages projects or it can also mean a Program Management Office, if the PMO’s scope is large to accommodate programs as well. In some cases, a PMO also refers to the Portfolio Management Office. However, we should note that while the Project and Program Management Office are quite similar in many ways, the Portfolio Management Office is very different. We will attempt to cover some of those differences a bit later in the podcast but for more details and information on Portfolio Management, you should look at other podcasts and articles on CIOtechCentral.com. If you subscribe to the podcasts, you will be able to listen to future episodes on Project and Portfolio Management as well.

Getting back to the PMO. The ‘management’ part of the PMO includes a number of areas. This may range from having little authority over the projects and programs where the PMO simply provides support for those projects and programs to actually having full authority to drive those projects and programs to completion. But regardless, a PMO brings in the use of best practices from the Project Management discipline and provides standardization and at times leadership for the planning, execution, control, and completion of projects and programs.

Next let’s look at Eight Foundation elements of a PMO. Again, [lease note that this is not an exhaustive coverage but these eight elements serve as the foundation for an PMO.

1. Defining the key goals and type of the PMO

The first element that one should address before starting a PMO is to get clear on the goals of the PMO and the drivers behind its establishment within the organization. Even if you already have a PMO and you are looking to improve its performance, you should revisit the goals and objectives of your PMO. More specifically, the idea here is that you should become aware and clear on the business problems that your PMO is meant to solve. This clarity and knowledge is the driver behind the decision regarding the type of a PMO that one aspires for their organization. The PMI defines three types of PMOs. The “supporting PMO”, as the name implies, provides a methodology, tools, and templates support to other departments and groups within the organization that is driving projects. This type of a setup is common in organizations where functional departments take the responsibility of running their own projects and programs but look toward a centralized PMO to provide support to ensure standardization on the use of methodologies, tool support, templates, etc. The supporting PMO, therefore, has limited authority in the running of projects and programs and is not responsible for the delivery outcomes of projects and programs.

The second type of a PMO on the other end of the spectrum is the ‘Directive PMO’. Unlike the supporting PMO, the directive PMO has complete authority on the execution of the projects and programs under its domain and is directly responsible for the delivery of projects and programs and for their outcomes, performance, and delivery of business benefits and value to the organization. In this type of the PMO, the functional organizations maintain a strong process link with the PMO in terms of handing over their requirements to the PMO, setting expectations regarding results and outcomes, etc.

The third type of PMO called the ‘controlling PMO’, falls in between the first two types. This type of a PMO although may not have complete authority on running of the projects and programs but has the authority to enforce standards and methodologies through audits and other measures.

So, getting back to being clear on the objectives of the PMO, depending on the PMO type, you should have clear business objectives behind the need to set up and run your PMO. A note of caution though if you are starting fresh. These objectives sometimes can’t be clarified in one day. It usually takes extensive discussions with your senior management and other stakeholders before the organization comes to a consensus on the type of PMO that can best serve the organization.

One final point before we conclude on the first foundation element. As you start your discussions within the organization to get clarity on the objectives of the PMO, you should keep three points in mind.

As PMOs are usually set up to execute an organization’s projects and programs, they serve as the vehicle to help an organization execute its strategy. PMOs, therefore, should be viewed to bring about strategic change within the organization.
As setting up of a PMO involves time, effort, cost, and resources, it must deliver business value. This can be done by focusing on the delivery of business outcomes and benefits. One way to stay focused on this is by setting the right KPIs, SLAs, targets, and other strategy measurement tools.
Finally, a PMO must be aligned with an organization’s strategy. This means that the projects and programs that a PMO works on must be in alignment with the organization’s strategy. This can also help in keeping management’s attention on the PMO.

2. Document the PMO Charter

Now, let’s move to the second important step when setting up a PMO and that is to document the PMO charter. Even if you have an existing PMO, you should document a charter if you don’t have one. In general, a charter is a mandate for any organization to exist. It provides an organization the authority of rights by the grantor, which in your case may be a senior manager like a CFO, CIO, or some other high level manager. The grantor basically empowers the PMO to operate and formalizes its existence. For example, it is normal for a chief executive of any organization to approve the charter of a department when it is setup. This ensures that the department can operate with certain authority. The same therefore needs to be done for a PMO.

The PMO charter therefore is one of the most important documents because it highlights the mandate given to the PMO by the senior executives. Let’s review the contents of the PMO charter.

First, as mentioned earlier, the PMO charter should clarify the mission of the PMO and document the goals that were identified in the earlier step. Again, as a PMO can potentially exist for many reasons, it is important to document the mission and goals of the PMO to get better clarity and set appropriate expectations. The goals may include ensuring success of the PM function within the organization, training of the organization’s PMs, providing support on methodologies, delivering projects, etc. – all depending on the type of the PMO.

The PMO charter also identifies the key processes that are served or plan to be served by the PMO. As we had discussed earlier, a PMO could exist to serve, projects, programs, or even portfolios. So, the charter clarifies that part of the scope by getting more detailed by identifying the functions and processes that it will be responsible for. It is not necessary to get into the details of each process as that will be done in another step. The PMO charter should simply make high-level references to the processes that the PMO will support during its existence and operations.

The charters also identify the project sponsors (whose projects will be served by the PMO) – This may be people from the LOB, IT, or other organizations.

The charters also identify the key customers and stakeholders.

And the charter also defines the success criteria for a PMO. So, the success could be in driving the use of certain PM methodologies organization-wide or to deliver projects and programs with their specified benefits and outcomes. This should be mentioned in the charter to set expectations with the stakeholders.

So, in summary – the PMO charter justifies the existence of the PMO and sets an expectation with its stakeholders by identifying key functions, processes, and stakeholders.

Once the charter is defined and documented, this should be discussed with stakeholders and the sponsors. Basically, this is needed to ensure that the business value of the PMO is clearly highlighted and discussed with all the stakeholders and that it is understood by them. Once that’s done, it’s also advisable to get their formal approval to ensure there are no surprises later.

3. Hire the right leadership and staff

So far we have covered the first two steps that are important in the setting up of a PMO. They are (1) Identifying the goals of the PMO and deciding on the type of the PMO, and (2) Documenting the PMO charter. This takes us to the third important step in the setup of a PMO and that is to ensure that it is staffed with the right leadership and other PMO staff. This may seem to be a trivial point but it’s common to see many PMOs fail because the leadership either was unable to deliver the business value from its operation or failed to keep the PMO visible within the organization by communicating its value. The choice of the right PMO leader is important for many reasons.

First, it’s important to understand that the leadership establishes the PMO’s influence around the enterprise. So, you need the right leader not just to start and set up the PMO but also for the long-term success of the PMO.

Second, the PMO’s success depends on the right relationships with project and program sponsors and stakeholders. A good PMO leader can help establish and maintain those relationships.

Third, a strong PMO leader is required to keep the PMO focused on its defined mission as opposed to operating the PMO with an open-ended mission in which cases the PMO struggles to demonstrate its value.

Fourth, the right PMO leader is needed to control taking on projects that the PMO can’t deliver based on its capabilities. This is a common problem in some organizations where once a PMO is established, other departments overload the PMO with projects beyond the PMO’s capacity and capability. A PMO leader, therefore, is careful in preventing such situations.

Also, the PMO leader doesn’t hesitate to highlight cases where the projects and programs are not aligned with business strategy and raises any exceptions to senior management. A PMO leader is sometimes able to detect these misalignment anomalies because he or she has exposure to projects and programs from different parts of the organization and the holistic view provides the opportunity to see anomalies that others can’t.

Another reason for taking a strong PMO leader is that a PMO is successful only if it can collaborate with other departments such as IT, LOBs, Vendors, etc. This, therefore, requires strong leadership from the PMO.

Last but not the least, it’s important to remember that when one has the right PMO leadership, they, in turn, hire the right staff, which is vital for the success of the PMO. Let’s review some of the considerations in hiring other staff within the PMO and the types of skills that are needed.

The PMO does need skilled PMs that means that they not only have to have a good PM experience but certifications such as PMBOK and PRINCE2 can also be very helpful. (You can learn more on the changes in the sixth edition of the PMBOK here)
The staff also needs to be skilled on methodologies such as SDLC, Agile, Waterfall, Spiral, and so on depending on the methodologies that you plan to use within the PMO.
Also, although the PMO staff can be resourced from inside or outside the organization, it’s very preferable to staff it with some PMs who understand the organizational culture. It’s also advisable to get PMs who are from the various parts of the business. This is because those relationships can come in handy when working on projects that belong to those organizations from where you have hired staff for your PMO.
Finally, the savvier your PMs are related to your business, the more effective they can be in delivering projects of business value for the organization.

4. Document the PMO processes in detail

Now, we will move to discuss the fourth critical element in the setting of a successful PMO. Earlier in this podcast, we discussed the need to document at a high level your PMO’s processes in the PMO charter. The idea in this step is to take that further and to document them in more detail. Let’s take a look at that further.

The depth of the PMO processes that you institute within your PMO can range widely depending on the goals and objectives of your PMO. For example, a PMO that handles mission-critical systems may require a more comprehensive risk management methodology than in other cases. So, while the PMO charter simply identifies the PMO processes that will be part of the PMO, the extent to which the PMO will institute those processes should be highlighted in this step. As another example, the PMO may limit its procurement activities for certain items related to its operations but may not concern itself with the procurement activities of the projects and programs leaving that activity to the project and program sponsors. So, this step documents those types of details.

You will note that as you start elaborating on the processes that your PMO institutes, you would essentially be creating your PMO’s tailored methodology. It may be a standard methodology such as PMBOK, Scrum, etc. or a hybrid and tailored one suited for your organization’s needs. Regardless, it is advisable to provide the details of the methodology in this step.

5. Defining the Governance of the PMO

The next step in defining a PMO is to delve into the definition and establishment of the relevant governance that will be needed to get things done. Governance is the overall framework in which decisions are made to progress through vital issues within an organization. The PMO governance framework should be set up by considering the various types of projects and programs to ensure that it can support their activities.

The key principles of any type of governance usually include a single point of accountability/decision making, clearly identified criteria for decision making, ownership of responsibilities, segregation of roles and responsibilities, etc.

The governance framework for the PMO can be thought of as having five dimensions and therefore as you set up that governance framework, it is advisable to look at all these five dimensions. Let’s briefly review those.

GOVERNANCE = DECISIONS + PROCESSES + INFORMATION + WORKFLOW + ROLES AND RESPONSIBILITIES

The first dimension is about the DECISIONS that will be made in the PMO. So, as part of establishing the governance framework, it is important to highlight the vital decisions that will be made in the PMO. This may include decisions related to approving projects, decisions related to progress projects and programs through stage gates, project termination decisions, and so on.

The second dimension related to governance is about the PROCESSES. The decisions that are needed part of the PMO governance include approvals for project charters, project deliverables, moving from one stage gate to the next, etc. Although this dimension may seem like the earlier one, where processes were identified and elaborated on, it’s different. For example, there may be multiple decision points related to the process of selecting and starting projects and those decisions will be highlighted for each of the PMO processes.

The third dimension related to governance is that of INFORMATION. This is the information that one needs to make the right decisions. Identifying the types of information that you need to make the right decisions is crucial as this eventually drives and influences the types of reports and dashboards that the PMO will need to create.

The fourth dimension is about designing the right WORKFLOWS. For example, one may need to design a workflow to seek certain kinds of approvals that may need to be routed through various levels of managers.

And then the fifth dimension is about assigning ROLES AND RESPONSIBILITIES. Roles include project sponsor, board member, portfolio executive committees, product owners, project stakeholders, etc.

6. Establishing Reporting Dashboards

Next, let’s look at the sixth element of setting up of the PMO. One of the PMO’s goals is to provide visibility of all the initiatives that are under its umbrella. The topic of visibility is multidimensional and is crucial to help the business and the project teams to make the right decisions. Dashboards are one of the tools that can provide an aggregated and holistic picture of the various data points related to the projects, programs and the general functioning of the PMO. The dashboards, therefore, are a crucial tool for decision making. These dashboards can include information on project performance and KPIs, overall project status, milestones reached, delays, schedule and cost information, risks that the project is facing, ongoing issues, their resolutions, etc.

Since the amount of information that can be presented in dashboards is large, it’s important to only provide relevant details based on the PMO’s and project’s goals and objectives rather than flooding the reports with irrelevant information. By providing timely information on projects and on the right topics enables the PMO to align itself with the business, stakeholder, sponsors, customers, and other key decision makers.

7. Select the Right PMO Tools

PMO tools selection is the seventh step in the setup of the PMO because the right tools at the end will enable and facilitate the execution of your PMO’s functions and processes. If the PMO tool is limited in functionality then that means either you won’t be able to automate certain PMO functions or in some cases, those PMO functions won’t be implemented at all. In both cases, the optimal PMO functionality that an organization plans in its PMO charter won’t be implemented. Acquiring and implementing the right tools, therefore are quite important in the setup of an effective and productive PMO.

In some cases, it’s not uncommon to see organizations that try to get the tool first and then try to design their PMOs around the tool’s functionality. This obviously is a big mistake. As discussed earlier, one should plan a PMO’s functions and processes based on an organization’s strategy and its goals and objectives and not around the functions and features of a Commercial Of The Shelf tool.

After doing a thorough research you may decide on one tool or even a number of tools. In some cases, you may end up deciding on a blend of tools from the market and legacy tools that you have been using in house. There is nothing wrong with such a scenario as long as you do your homework, do the analysis, and decide what’s best for your organization. You can find more information on PMO Tools in other podcast at CIOtechCentral.com.

8. Plan to Capture the Right PMO analytics

The last and eighth element that we will look at in the setup of a PMO has to do with considerations in capturing relevant PMO analytics. One characteristic that mature PMOs have is that they constantly analyze their performance by reviewing various metrics and then use the gained insights to improve their performance. Although such process improvement characteristics are usually found in mature PMOs, I still recommend this for the new PMOs that are being setup. One of the reasons is that most organizations in general have matured in the art and science of data capture and analysis. So, applying the same principles to a new PMO usually is not that difficult. The second reason is that most tools used in the PMO provide a number of packaged metrics and have the ability to store data for historical analysis. So, keeping this in mind can enable one to plan the capture of data related to projects, the performance of projects, resources, etc. so that this data may be analyzed from time to time. You can look for more information on PMO analytics on CIOtechCentral.com.

In conclusion, let’s review the 8 elements behind the starting the PMO once again. They are: