PMO PRACTICE

Many companies have created project management offices (PMOs) in an effort to improve the execution of strategic initiatives as they face intense competitive pressures. There is widespread consensus that PMOs can help organizations deliver their projects on time and on budget. But project management offices are not a magic solution to project challenges. A 2016 report by the Project Management Institute found that only 53 percent of projects were completed within their original budget and only 49 percent were done on time. While 16 percent of projects were deemed failures.

So why do some project management offices yield game-changing ROI and some don’t? To answer this question, we asked leading PMO executives to identify the most important best practices. In this article, we’ll share their insights and look at the definition, history, functions, and challenges of PMOs. There are also tips on everything from managing scope to cultivating PMO talent.

The Origins of Today’s Project Management Office

The modern project management office appeared in the 20th century and took shape as a concept that’s similar to today’s PMO in the 1950s thanks to efforts by the U.S. government to manage giant defense projects. PMOs began to proliferate rapidly in the late 1990s, often as a response to rapidly evolving technology and the need to better manage IT projects in enterprises.

A quick note on terminology: project management office or PMO is the leading term to describe this business function, but others include program management office, project support office, and project office center of excellence. In addition, the acronym PMO has other meanings, such as prime minister’s office, product management office, and planned maintenance outage, but we won’t be covering those here.

Whatever you call it, the PMO has become ubiquitous. A survey by PM Solutions found that 85 percent of companies had a project management office in 2016, up from 47 percent in 2000. This included 95 percent of firms with annual revenues of more than $1 billion, 83 percent of those with revenues of $100 million to $1 billion and 75 percent of businesses with revenues under $100 million.

Project management offices can have different structures, styles, and operating methods, but their ways is generally the same: To help the organization deliver its projects in the most strategic and efficient way by standardizing policies and following project management methodologies.

The jobs and functions of the PMO vary with the type of organizational structure, but the common areas of responsibility include:

Define and implement a project management process or methodology

• Provide training to the organization on project management

• Serve as a base for project managers who are loaned to business units for their projects

• Consult on or run the organization’s projects, ensuring consistency and best practice

• Select and maintain project management technology such as software and applications

• Manage the organization’s portfolio of projects

• Perform resource allocation and budgeting for projects

• Handle project scheduling

• Maintain information resources and templates for project workflows

• Track and analyze project performance and PMO effectiveness

• Governance and decision support for projects

• Identify and evaluate risks

• Ensure quality and consistency in projects

• Support and coach project teams

• Communicate with stakeholders and participants

• Monitor supplier performance