What is PMO? Types, Functions, Benefits & How to Start

The art of project management can be a tricky one and with constant development in market trends, needs, organizational goals, and strategies, there is a lot more to the foundation of a project than only managing it. Often in project management, the stance demands an entity that standardizes, plans, and monitors the processes in a project. From setting up a system to resource allocation and management, there are many layers that traverse beyond the scope of project management. That is when the project management office comes into the picture.

PMO is the department that improves project management by standardizing the processes and improves efficiency. PMO managers overlook the projects and make sure that they are completed on time and in budget. You can aim for the position of a PMO manager by taking the courses for Project Managers and becoming future-ready and boost your career.

What is PMO (Project Management Office)?

A project management office (PMO) refers to a department or a group that determines and maintains the project management standards within an organization, business, or government agency. The PMO can either be external or internal and is often referred to as a project portfolio management office or program management office.

PMO keeps track of the documentation and metrics that are deployed to project execution. It is focused on making sure the timely delivery of the project is within budget. It primarily aims at setting standards for projects and following management processes and methods. PMOs ideally imbibe the organization’s values, culture, goals, and strategies. It is different from project management as it is a group of business professionals monitoring and controlling projects. On the other hand, a project manager is the one who manages the project and is responsible for its progression.

What Does a Project Management Officer Do?

Now that you know what PMO means, let’s take a look at their role in an organization:

• Standardize Project Management Process: The main objective of PMOs is all about standardizing and following various methods, processes, and tools. A PMO is responsible for creating processes and strategies and teaching others how to follow them. It is to be noted that these tools, processes, and plans are to be followed by everyone in a project team.
• Provide a Clear View of the Projects: The management must know the whereabouts of the project in order to make decisions. A PMO consolidates everything into a report, classifying various areas (challenges, milestones, etc.) and offering a straightforward view of the journey of a project.
• Manage Project Portfolio: The PMO is responsible for managing the organization's project portfolio, ensuring that resources are being utilized efficiently and that projects align with the organization's strategic goals.
• Manage Resources: The PMO also manages the organization's project resources, from staffing to training and development. This includes making sure that the right people with the right skills are assigned to the right projects.
• Monitor and Report: Monitoring the progress of all projects within the organization and reporting the status to senior management is one of the most important responsibilities of a PMO. This includes identifying potential risks and issues and providing recommendations to mitigate them.

Types of PMO?

There are several types of Project Management Offices (PMOs) that can exist within an organization. The type of PMO that an organization chooses to establish depends on its goals, culture, and management style. Let us take a look at the major ones:

1. Supportive PMO

A supportive PMO offers support and guidance to project managers as well as teams. However, it doesn’t exercise direct control over the projects. The main focus of a supportive PMO lies in the standardization of project management practices, providing training and mentoring to project managers in the team, and maintaining project management processes, templates, and tools.

2. Controlling PMO

A controlling PMO works on establishing and enforcing project management policies as well as procedures. It typically has direct control over project budgets, schedules, and resources and may act as a central decision-making body for all projects within the organization.

3. Directive PMO

This type of PMO takes an active role in managing projects and may even lead some projects directly. Its main focus is on achieving specific project outcomes and delivering them within budget and on time.

Each type of PMO has its strengths and weaknesses, and organizations should carefully consider their needs before deciding which type of PMO to implement. If you are planning to go for the role of a PMP and take your project management goals to the next level, go for accredited PMP online courses and boost your chances of landing a lucrative role in the leading companies.

Project Management Office Functions?

Initially, the project management office was intended for strategic planning and setup of project management. The functions of modern PMOs span functions beyond that. The most eminent functions of a PMO are:

1. Governance: Playing an active role in the execution of a project is one of the most important PMO functions. It facilitates insights and support for the project team. PMOs also have to give directions to the team to keep the pace of the project steady and within budget.

2. Transparency: One of the most crucial project management office functions is maintaining transparency among all the divisions of a project team as well as with the senior management. A PMO is responsible for displaying useful insights and performing analysis on the progression of projects, and thus, it is necessary to set up consistent communication channels. This function is intended for effective decision-making.

3. Reusability: When it comes to the project management office functions, resource management highlights as the critical one. From budgeting for resources to allocation, modern PMOs actively participate in and determine the scope for reusability of the templates and tools used in previous projects.

4. Delivery Support: While the prominent role of a project management office is setting up a plan, standardizing procedures, and allocating resources, modern PMOs are also active in providing support at the time of delivery of a project, be it any unforeseen change of plan or monitoring the operation.

5. Traceability: The role of PMO involves keeping and maintaining a complete track record of all the projects, including their history, challenges, tools, templates used, resources, and timelines.

How Popular are PMOs?

Over the last few years, the project management office has gained tremendous momentum in terms of popularity and adoption. According to a research, 89% of the organizations globally have one or more PMOs, which is increasing after 71% in 2016. 29% of these organizations are only a couple of years old. These organizations reported having a PMO to undertake activities like project status reporting, maintaining project portfolio and methodology, and providing project approval. The research also concluded the rise in the PMO headcount to 59% after 2017. Moreover, the scope and responsibilities of a PMO will increase to 72%.

Benefits of a Good Project Management Office (PMO)?

Now let us delve into the benefits of a good Project Management Office (PMO):

1. Timely Project Delivery: A PMO can establish standardized project management methodologies and processes that can be applied across all projects. This can help ensure consistency in project delivery and improve the quality of the end product.

2. Better Resource Allocation: With a PMO in place, the organization can better allocate resources across projects based on their priority and criticality. This can help prevent resource conflicts and optimize the use of the organization's resources.

3. Enhanced Communication: A PMO can help improve communication across teams and stakeholders, ensuring that everyone is on the same page regarding project goals, timelines, and progress.

4. Risk Management: A PMO can help identify and mitigate potential risks that could impact project success. This can include developing risk management plans, conducting risk assessments, and implementing risk mitigation strategies.

5. Increased Efficiency: By providing guidance and support to project teams, a PMO can help streamline project delivery and increase overall efficiency.

6. Improved Decision Making: With a PMO in place, the organization can make better decisions based on consistent, reliable data and metrics. This can help improve project outcomes and support the achievement of organizational goals.

When an Organization Needs a PMO?

This question is worth considering for all the good reasons. There are several occasions when a project turns haywire. It could be a result of various underlying problems that seem too trivial to attend to. Here are the important signs that your organization needs a PMO:

1. Organization Needs Standardization

If your organization has multiple projects running concurrently, there may be inconsistencies in the way projects are managed. This can result in confusion, duplication of effort, and potential risks to the organization. A PMO can help you standardize project management practices and ensure consistency across all projects.

2. Poor Project Management

If an organization consistently experiences project failures or delays, it may be an indication that there are underlying issues in the project management processes. A PMO can help identify these issues and develop strategies to improve project performance.
Limited Resource Utilization: If an organization has limited visibility into resource utilization across projects, it can be challenging to allocate resources effectively. A PMO can provide resource management support and help ensure that resources are consistently utilized in an efficient manner.

3. Limited Project Management Expertise

If your organization lacks experienced project managers or has limited project management expertise, it can be challenging to manage projects effectively. A PMO can provide project management support, guidance, and training to help develop the necessary skills and expertise within the organization.

4. Lack of Communication and Collaboration

If there is limited communication and collaboration among project teams and stakeholders, it can lead to misunderstandings, delays, and potential conflicts. A PMO can help facilitate communication and collaboration among project teams and stakeholders.

5. Lack of Alignment Between Strategy and Goals

If your business strategy is not on terms with your business model and goals, then all your efforts are clearly going into vain. The lack of alignment is the result of confusion around the undertaking of the projects. PMOs can resolve this problem by eradicating redundant projects, filtering the project portfolio, and making your upcoming projects work in sync with your business strategy.

6. Complex Projects

If your organization is undertaking complex projects that require coordination across multiple teams and stakeholders, a PMO can help provide the necessary oversight and governance to ensure that the project is executed successfully.

How to Start Project Management Office (PMO)?

To set up a project management office in project management, one needs to define goals, identify the scope, and consider various tools and techniques that align with organizational goals. Here is a step-by-step guide to starting a PMO:

1. Bring your goals and ideas to the paper

The very first step to setting up a PMO project management office is to understand the purpose for which you expect your PMO to work. You can do this by considering the following questions:

• What will be the roles and responsibilities of your PMO?
• How will your PMO contribute to the organization's budget?
• Who will lead the PMO?
• Why is the PMO required for your organization?

2. Build a team

If not a team, you will need to get an experienced project manager on board. They will help set up the project management office. Once you have decided what PMO will do for your project, you will be able to move on to the stage of hiring more human resources. Staffing for PMO in large organizations is set up in a hierarchical structure that includes a director, program managers, and many support roles.

Keep your hiring decisions focused on the achievement of your PMO objectives. Moreover, you will also need to plan training programs in order to ensure that there is no gap in skills and knowledge in the way of a new role. There are various comprehensive project management and the best PRINCE2 online course that can help project managers and professionals ace their careers by taking their knowledge base a notch up.

3. Set up rules, metrics, and budget

It is time to think about the PMO setup from a business perspective. At this stage, you will be defining the metrics to classify your projects. These metrics will enable you to assign the work and allocate projects in a more organized fashion. Some of the most common metrics in this realm are project timeline, risk factor, impact, and budget size.

When it comes to budget size can determine your entire PMO structure to a significant level. After all, a project with a higher budget needs to be monitored and managed more carefully compared to one with a minimal budget. Defining rules for your projects is also an imperative step in the process. You must ensure that everything is clear and straightforward in the team and everyone follows a pattern.

4. Execute the plan

Once you have defined all about PMO goals, objectives, and metrics, it is time to work toward making it work. Consolidate everything that you have planned and decided into a comprehensive system that includes training manuals and guides. Doing this will help you make sure that your project management office team has all that they need to turn your vision into reality.

5. Check up on procedures and tools

Defining the reporting, processes, and tools for your PMO is the most vital step to make after you are through with the planning and hiring. The project tools depend on your plans, structure, and of course, the procedures. Moreover, you may want to opt for manual reporting if your PMO team is small and manageable. You can also take a hand from reporting dashboards to fulfill this process.

PMO Challenges

The journey of a project management office is not an easy one. The market evolves, objectives tweak, and processes change. Then there are roadblocks in day-to-day operations that can determine the next direction of the project if not addressed timely. Let’s look at the common challenges faced by a PMO:

1. Resource Management

Resource management is arguably the most critical aspect of Project Management Offices. It could mean unrealistic budgets and timelines, poor time management, and inconsistent resource allocations. Weak resource management can result in the failure of the project and needs to be carried out with intricate planning. The PMO must be clear with its vision of the strategic goals of the organization. Moreover, it is also vital to lead effective communication with the senior management in order to keep the project portfolio in sync with the strategic plans.

2. Changes in Project Portfolio

In any project, no matter the size and complexity level, change management comes out as a major factor. Changes are often unforeseen and play the trick at the most unexpected moments, which becomes a bottleneck for PMOs. Whether it is due to the change in the organization’s objectives, or the evolving demands of the market, things can unfold on a more challenging note for a PMO. It gets difficult to manage these changes along with the ongoing project processes, and as a result of that, a PMO may end up failing at the reallocation of resources or the successful execution of projects.

A PMO must always have proper communication with the senior management to make sure that planning is being adjusted as and when the portfolio demands change. Apart from that, they should also monitor the teams involved in the project and ensure a consistent and agile way of working to prevent any backlogs.

3. Communication

Effective communication is an important component of any project. Often this aspect remains unattended in the face of ongoing operations, which leads to a hassle for the PMO. They must ensure complete transparency and constant communication with the management and teams in order to move with the strategies and project portfolio execution.

Conclusion

After all the PMO information and insights discussed in the article, it is safe to say that this concept is the backbone of a project and organizational goals. Whether it is planning and executing or managing changes and reporting - the PMO is the need of the hour, given the rise in the project management field. If you want to power your project management knowledge and skills, then explore KnowledgeHut Project Management trainings and certifications. Since project management jobs are at their peak, you can gather valuable takeaways from these courses and increase your chances of cracking a dream job.