Monday, April 19, 2010

The Importance of a PMO

Project Managers are common across organizations all over the planet and their work function is well understood. However, what about a Project Management Office and its relevance to the organization? In most of my experiences with PMOs, there is a great disparage in the way PMOs are set up in organizations which results in confusion and lack of standardization across the industry.

There are two basic ways a Project Management Office can be setup in an organization. The first way is to set it up as a sort of super manager of the project managers and perform project portfolio management and task delegation functions for the entire Project Management function of the organization. Secondly, the PMO could be set up in a consulting capacity where it provides meaningful, training guidance and process improvement capabilities. There are pros and cons to each approach as is the difference in investment cost and return on investment in each case.

The main tasks that a PMO is expected to perform are:

  • Project support: Provide project management guidance to project managers in the organization.

  • Project management process/methodology: Develop and implement a consistent and standardized process and ensure that it is followed by the staff in the organization.
    Training: Conduct training programs as needed.

  • Department for project managers: Maintain a centralized office from which project managers are loaned out to work on projects. This may not be performed if the PMO is being done on a consulting model.

  • Internal consulting and mentoring: Advise employees about best practices.
    Project management software tools: Select and maintain project management tools for use by employees.

  • Portfolio management: Establish a staff of program managers who can manage multiple projects that are related and allocate resources accordingly.

The trick really is to determine at the beginning what kind of PMO would best fit the needs and culture of the organization. The next trick is for the PMO to not get involved in everything right at the beginning but to grow its role and responsibility incrementally. A major risk that PMO’s face is that direct metrics to determine their effectiveness tend to be difficult to set up and there is a grey area regarding their value and effectiveness to the organization. This could lead to a situation where the PMO is under-utilized by staff because they do not have quantifiable proof of the benefits provided. All this must be planned for and thought through as early as possible.

My personal view is that all organizations should have a PMO: the only difference being how much they are involved in the organizations project management activities. If nothing else, there is value in having a body that standardizes processes and methodologies for the organization.

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