Almost anyone can come up with ideas when needed. However, not every idea presented to an organization is a good one with feasible returns. So as the Harvard Business Review put it, “Creativity is not enough”. Do you own or work in an enterprise/business? Have you experienced the falling through of a mismanaged project? If yes was your reply to any of these questions, then the PMOs were developed with you in mind. Are you wondering what a PMO is? In the course of this article, we will answer that and other questions including why a PMO is a must-have, what the services of a PMO would cost you, and some divisions of PMOs.
What Is PMO?
The acronym PMO stands for Project Management Office. Project management offices first saw light in the 1800s and have evolved to become what we know today. The expression project management office, however, first appeared in 1939. The aim behind the development of this team was to bring better control over project/program management. At times, however, a PMO could represent a Portfolio Management Office or a Program Management Office.
Types Of Project Management Offices
Although there is no clear line of division showing where the functions of one form of PMO end and where those of another begin, here are some types of PMO;
Divisional PMO– This type of PMO works on projects related to specific units in the organization. Their functions include project coordination, training, portfolio management, and resource allocation/planning.
Enterprise PMO– Unlike other PMOs that are more or less department-centered, the enterprise PMO has a broad reach of influence. This enhances corporate support and yields a better impact on strategy execution. Enterprise-wide PMOs do better than departmental PMOs because although departmental PMOs are effective, their activities are not recognized outside their department. In essence, they are limited in influence across the organization. In terms of hierarchy, the departmental PMOs report to the enterprise PMO in large organizations where these two coexist.
Project PMO– The project PMO can be established solely to work on an immediate project. In other words, this office can be formed and last for the period of one large-scale project. They function in monitoring, reporting, controlling, and administrative support.
Project Management Excellence Center– The project management CoE (Center of excellence) sets the standards of project management, project managing procedures, tools, and methods to support other teams in the organization. Their functions include training, administrative services, tools, and methodology.
Remember, a project management office can take on almost any role possible, however, the extent of influence depends on the structure of the office within the enterprise. The roles of project management offices fall into three major ones. They are the supportive, directive, and controlling roles.
Supportive; that is as a consultant.
Controlling; for example, the team requests for the compliance of other departments, teams, or individuals.
Directive; Overseeing the progress of projects; controlling and supervising the projects.
Why Should You Get A PMO?
In 2017, 71% of organizations had hired the services of an office to manage projects. However, in 2007, the percentage of companies that had a PMO was 61%. Why did these business owners decide to get a PMO and by extension, why should your business hire a PMO? Here are a few functions of a PMO:
Cost Control– A big role that the Project Management Team plays is cost control. Rather than throw several dollars into a project you “believe” will be a success and provide great returns, the PMO surveys and budgets. The office handles tasks that involve the preparation for potential risks in projects.
Coaching– Team leaders and other involved staff receive training and mentoring from the project management office. Together, the team’s skills increase in value and this reflects in all project management practices being observed in the organization.
Governance– The PMO also serves to set standards for project management across the various departments in an organization.
Strategic Planning– The PMO analyses the enterprise's needs and identifies project management strategies that are most suitable and tailored to the company's requirements. By carefully reviewing data from past projects, the PMO develops methods to yield better work output.
What Would A Project Management Team Cost You?
As we have seen, there are various types of PMOs with varying functions. Apart from functional differences, the location of your business also affects how much a project management office would cost. Overall, there is no fixed amount to how much you will pay for the services of a project management office.
Working With a PMO
When you decide to hire and work with a project management office, you must note the following;
The roles you expect the project management office to play must be clearly stated. Proper communication is key to avoiding mistakes in the end. If you do not properly communicate their duties to the team, there will be no telling who is to blame when results are not met by the project managers.
There are several roles that project management offices can play. However, do not decide to assign all of these tasks to your PMO. Assign only roles that are necessary to the long & short-term objectives of your enterprise.
The authority and voice of the project management office must be established immediately. This is necessary for the directives from the PMO to be accepted across the enterprise.
The key point indicators that will be used to measure the performance of the PMO must also be decided upon beforehand.
Benefits Of A PMO
Here are 4 major benefits of implementing the services of a PMO:
1. Project management offices eliminate the communication barrier that usually exists between different departments relevant to tasks. The flow of information becomes better streamlined when the PMOs operate at the enterprise level. In the end, this increased collaboration equals better work output.
2. With a clear-cut team to carry out project management, there are visible standards on the use of software and tools that are needed for the execution of tasks. This way, available resources can be moved between projects smoothly. Transitioning to a new set of tools every time there is a new project brings about diverging work approaches and that hinders work progress.
3. By introducing scalable processes that can be repeated, there will be increased rate of efficiency & consistency. When these methods can be shared across the organization, teams will be equipped to complete tasks on time, without exceeding the budget, and of course, deliver quality results.
4. On average, 9.9% of every one dollar invested in projects surmounting nearly 2 trillion USD is lost annually due to poor management. This might not seem like much of a deal, but it makes a difference when resourcefully reallocated. Such losses can be reduced with aid from a project managing office.
Is Your Project Management Office Effective?
How can you tell if your business's PMO is delivering results? At the start of a work period, you can set at least three major key performance indicators (KPIs) that you would like to see at the end of a working period. Here are 5 examples of KPIs one can choose from;
Percentage output; By finding the ratio of completed tasks to tasks that were left incomplete/abandoned, you can monitor the performance of the PMO in terms of contributed output.
Resource Management; As project expense budgeting is one major role of a PMO, comparing the estimated cost of projects with how much was spent eventually will determine how well financial resources were managed by the team. You should also calculate to ensure that resources were properly allocated by the project managers.
Annual performance analysis; Analyzing the time taken to complete tasks on a year-by-year basis will give you an idea of the PMO's annual performance. However, ensure that the tasks used in the comparison are of similar sizes.
ROI; Your company's return on investment is one vital way to measure the effectiveness of your project managers. Compare the ROI for PMO-involved projects against those without the involvement of the PMO. Doing so would either validate the current PMO framework or outline where necessary adjustments should be made.
With the responsibility to coach others working on projects with them, the PMO's efficiency can be measured by how much those under them learned.
Final Thoughts
If your business is just starting, you probably do not need a PMO as there are not many projects to handle. As your business grows, though, the question of the relevance of a PMO becomes valid. However, there are now 90% enterprises, 88% medium-sized companies, and 61% small-sized businesses with a PMO. So, the size of your business should not hinder you from giving the PMO service a try. It would cost you, but it would save your business the risk of falling under due to improper project management. If your project managers find that the risks of a project outweigh the good, you probably should not go for that project. This way, you can channel your resources into more stable projects.
The relevance and effectiveness of project management offices become evident in the rising number of businesses adopting their services. However, only with proper planning can you avoid setting up/hiring a project management office that sets your enterprise aback rather than bringing improvements. Essentially, do not be a part of the 15.7% of businesses that are yet to have a project management office. Do not hesitate to employ the services of this bridge between project planning and execution that is the PMO.