What Is PMO in Project Management?

Updated Aug 3, 2022.
pmo-in-project-management

Managing multiple projects successfully is an arduous task for many organizations, especially in big companies where employees are not in close proximity. To break this barrier, a professional team responsible for overseeing all project management activities needs to be established.

Project management offices (PMO) make it easier to complete tasks and projects. Although many companies use a project management office, only a small minority are satisfied with their PMO. Setting up a PMO to operate is not an automatic key for project success.

If your company does not operate with a project management office, you are missing out on several benefits. However, to convince the key decision-makers in the organizations on the need for PMO, you need to make clear arguments about its proposed benefits. 

In this article, you will learn how to set up and improve a project management office, including the roles and responsibilities PMOs play in organizations.

Let’s get started.

What is a PMO?

PMO is an acronym for project management office. The project management office establishes and manages standards for project management within an organization, whether it is a business, political office, or enterprise. PMO exists to provide standards and monitor the efficiency of project management across an organization. 

As part of their responsibilities, project management offices can also help in prioritizing projects, providing guidance, and reporting the progress of projects to key business executives.

At the project level, PMO has to ensure that everything runs smoothly and in compliance with stakeholder goals. On an organizational level, standards and methods are owned and maintained by the PMO. They come up with efficient processes, document processes, and record progress reports to determine what projects are worth investing in. 

A PMO can be created with either internal or external personnel. Another name for a project management office is a program or project portfolio management office.

Percentage of Firms with PMOs
Source: Workamajig

Project Management Office Roles and Responsibilities

Project management office services as a regulatory commission that aims to standardize project execution to ensure productivity is at its best. A PMO offers guidance to project managers and helps develop project key metrics for effective project management.

Already different project management offices have slightly different roles and operations, they share some common roles and responsibilities.

1. Oversee All Company Projects

Executives can maintain some personal relationships with the project team if the project team and their operations are small.

However, In large corporations where executives cannot keep an eye on the many simultaneous projects that may be going on in the organization, a project management office acts as the link between the executives and project teams. The presence of PMO will ensure quicker decision making in a large organization.

2. Project Consultation and Standardization

A project management office is not just a watch eye for executives. Part of its duties includes providing consistent project management guidance to project teams and creating a blueprint of methods and tools for consistent project results across the organization.

PMO enhances project deliverables by ensuring that all business change in an organization is managed professionally. To achieve this, there will be several experts in the PMO that support project managers and their teams.

3. Improve the Success Rate of Projects

The main reason for creating a PMO is to guarantee a very high rate of project success. If after a while, a consistent project outcome has not been guaranteed, you need to overhaul the PMO team.

PMO Types

When establishing a project management office, you have to consider what type of PMO is required in your establishment. Broadly speaking, there are three types of project management offices.

1. Divisional PMOs

Divisional PMOs serve as support hubs for specific projects and provide support to project teams when needed. Their functions include providing templates and information on previous projects and including lessons learned. 

If your organization is one where projects can be done in a loosely defined control environment and additional hands-on management is not required, then a supportive PMO office is what you need.

2. Project Management Center of Excellence (PMCoE)

The project management center of excellence defines project management standards and procedures to support teams in their projects. Establishing a project management center of excellence for your organization will assist projects to fit within their constraints and reach their objectives.

3. Enterprise PMOs

Enterprise PMOs manage and exercise high levels of control over projects. They are usually headed by a company executive so this type of office goes beyond control and manages the projects. 

Since all project managers are selected by and report back to the PMO, this adds a great deal of professionalism to the projects, resulting in a high level of consistency across all projects.

4. Project PMOs

Project PMOs are created for the period of a large project or program. This PMO includes administrative support, monitoring, controlling, and reporting.

established for the duration of a single large project or program; includes administrative support, controlling, reporting, and monitoring.

Project Management Office
Source: Researchgate

Project Management Office Functions

Sometimes, in the early stages of setting up a PMO, it may be difficult to assign functions to the department. The functions of the department depend on whether it is a supportive, controlling, or directive office.

1. Monitoring and Reporting on Active Projects

The main reason for setting up PMOs is to improve the quality and time of project execution. PMOs oversee the delivery cycle for projects to ensure that they stay on schedule, within budget, and in line with the company’s standards to achieve optimum performance.

2. Project Documentation and Portfolio Management

Project management offices function as a repository of projects. Documents of each project have to be carefully managed. 

Possessing portfolio management expertise is an important requirement of the PMO. Portfolio management expertise can help your organization select the right tool, assess configuration requirements, implement the tool, and ensure easy assimilation by users.

3. Resource Management

PMOs must effectively manage and allocate resources across all projects based on the project needs, budgets, and prioritization.

4. Project Coaching and Training

As part of their responsibilities to educate personnel on project practices, the PMO is responsible for the continuous training of workers. Providing orientation for new members and holding meetings at the start of new projects is important.

What is PMO Software?

PMO software is a computer program created for use by the project management office (PMO) to manage the operational and financial aspects of all its projects by complying with standardized processes. 

The project management office can use the PMO software to improve the efficiency of the process of organizing a project. By using PMO software, the PMO ensures that the appropriate project is delivered at the right time with solutions that improve cost and time efficiencies.

There are many functions that PMO software can perform in project management. The main function of PMO software is to ensure that all projects align with the organization's standards. An effective PMO software will include features like project templates and workflows.

You can plan, analyze and track project progress while delivering reports on the project to help prevent productivity bottlenecks with the PMO software. A good project management software for PMO offers cloud-based solutions for very large organizations that have extensive branches and remote workers.

How Does a Project Management Office Benefit Your Business?

There are many benefits that the project management office can offer your business. The project management office contributes to the efficient running and success of your projects.

1. Standardization

The job of the PMO is to oversee all projects in an organization. An organization's project approach can be standardized by establishing rules for the way it completes tasks. 

PTOs can help by standardizing methods and processes. Having a set of principles guiding projects will ensure an understanding of company objectives. The project management office can reject a project if it believes the completion of the project will not advance the organization's objectives.

2. Improves Cost and Production Efficiency, and Removes Bottlenecks

Making crucial decisions regarding projects and improving the performance of the enterprise can be aided by data collected from PMO systems. 

When the cost, time, and material needs of a project are accurately estimated, it reduces the possibility of mid-project modifications, which could lead to unforeseen increases in costs.

3. Aids Decision Making on Future Projects

The PMO retains records of projects carried out under its watch to improve resource allocation, budget estimation. During the project initiation phase, the PMO identifies any potential problems based on the analysis that is drawn from previous experiences or projects that have been conducted. They foster better communication between all departments and provide support on projects.

In addition to providing information on various levels such as planning and control, the project management office provides support to high-level executives throughout the project. 

Support from the project management office allows project managers and teams to focus on executing the plans, completing deliverables, and meeting milestones. The PMO takes on the tasks of leaving the job of documenting, reporting, communicating, and analyzing the project.

4. Functions as a Knowledge Hub and Stores Data

The PMO will function as the hub of knowledge and can also serve as a center of coordination for all projects. Through its role as a coordinator, the PMO may be able to identify similarities between projects within different departments and share knowledge with them.

5. Makes it Easier to Track and Analyze Project Performance

By tracking the performance of project teams, the PMO can decide which individuals can be considered for leadership roles in future projects and can be mentored. 

With the help of the PMO, an organization can determine which project manager is best suited to each project by analyzing the skills of the existing project managers.

How to Set Up a Project or Program Management Office

Setting up a project management office is a deliberate task that can take a lot of time to plan. Having the support of your top management is critical, as it makes it easier to persuade other stakeholders. To achieve this, here are six important steps to follow when establishing a project management office.

1. Preliminary Preparations

The first part of setting up a project management office is to present justifiable reasons for creating the office. Analyze the current state of affairs to determine whether the benefits of setting up a PMO will outweigh the potential costs. 

Consider the methods of project management currently being used and assess any weaknesses. If sufficient evidence arises that a PMO is needed, then you can proceed.

2. Identify the Goals of the PMO

Define the nature and objectives of the department. Creating a PMO that is capable of delivering the objectives of the PMO can be tricky. Senior management will not invest in resources until the value has been demonstrated. 

The objectives of a PMO will define what standards and methods are required, as well as what key performance indicators (KPIs). Properly understand the objectives of the PMO so that the PMO you build meets the expectations of the sponsor. Otherwise, you may spend a lot of time and energy on something that does not meet the required standards.

3. Setting up a Team

Assemble a team of professionals competent enough to achieve the goals of the PMO. Key members of a PMO team often include:

  • PMO director
  • Project and program managers
  • Project controllers

You do not need to have all members of the project management office (PMO) locked in from the onset. While outside hires are predominant in key positions, existing members of the organization can also fill these positions if sufficiently qualified and experienced. 

The PMO director oversees projects in virtually all areas of the organization. He or she manages enterprise-level projects and distributes and allocates resources across all projects.

4. Standardize Methods and Rules of Approach

A key part of setting up a PMO is to define useful metrics to categorize projects. Metrics are a quick way to classify different types of projects, which ultimately makes setting up specific rules for each category easier. 

An example of an important metric is project impact. Project impact determines how many departments will be affected by the success or failure of a project. A failed project can do serious harm depending on the level of impact. 

Other metrics include expected duration and risk factors. Consider what high-level functions the PMO will need to perform, and then provide more details at lower levels in each function, where necessary, based on the agreed objectives.

5. Training and Engaging with the Organization's Personnel

After assembling the team, educating staff members is very important. The degree to which you believe the company's project managers and its project management officers have developed the necessary expertise may determine whether or not you provide coaching. 

Make a list of all stakeholders and people you need to train so you can put the new project management process in place. After setting the ground rules for project management, it is time to get everyone on the same page. This will explain how the PMO fits in and relates to other departments in the organization.

6. Executing Your Plans

Implementing PMO routines is essential. PMOs will be frequently asked to submit reports so it is imperative to get these routines up and running as soon as possible. A strong start is very important in convincing stakeholders and management that a PMO is worth having.

Anastasia Belyh

Editor at FounderJar

Anastasia has been a professional blogger and researcher since 2014. She loves to perform in-depth software reviews to help software buyers make informed decisions when choosing project management software, CRM tools, website builders, and everything around growing a startup business.

Anastasia worked in management consulting and tech startups, so she has lots of experience in helping professionals choosing the right business software.