All You Need to Know About PMO (Project Management Office)

What is a PMO?

A PMO (Project Management Office) is a department within a company that extensively deals with projects, project portfolios, and project governance. The primary role of the Project Management Office (PMO) is to strive for standardising project execution in order to maintain productivity, guide project managers, and develop performance metrics for project management across the company.

A PMO is intended to function as a centralising and coordinating hub for all projects, aiming to create efficiency among projects and define standards in the project management process. The main objective of a PMO is, therefore, to achieve benefits by standardising and adhering to project management processes, standards, policies, and methodologies.

PMOs are sometimes external, but whether they are internal or external, the project management office should embody the organisation's culture and strategy to be most effective.

What does a PMO do?

A PMO manages project documentation and provides guidance and crucial metrics in the execution of projects under its governance. Through guidance, a PMO helps your organisation realise returns on investments and add value to stakeholders through projects, programs, and portfolios. This is often facilitated by PMO software, which provides data and insights into projects and programs.

Your PMO also strategically assists the organisation with project management by facilitating, or even owning, the project portfolio management process. In this capacity, the PMO can monitor and report on active projects and portfolios to management and promote strategic decision-making.

The operational project management approach is often of the same type when an organisation executes projects (project management methodology). It can involve agile project management, waterfall, Scrum, or Six Sigma.

The way projects are governed typically aligns with the company's governance model and is also reflected in the organisation's PMO: An agile organisation often has agile projects, an agile corporate culture, and an agile (yet mindful of standards) PMO.

Having a PMO in place is particularly important when projects are frequently of a larger scale, and the overall business relies on the execution of a significant number of projects managed within various project portfolios. Fundamentally, it is about the organisation ensuring that they undertake the right projects and that these projects are carried out in the right way.

What different types of PMO are there?

PMO stands for Project Management Office. A PMO is often referred to as 'Project Management Office,' 'Program Management Office,' or 'Project Portfolio Management Office'.

• Project Management Office: Provides administrative support to the project management team and standardises project-related management processes.
• Program Management Office: Manages the governance process for the program and coordinates efforts from the program management team.
• Portfolio Management Office: The Portfolio Management Office oversees all projects and programs within an organisation and supports project and program management offices.

Responsibilities of a PMO

A PMO is responsible for ensuring projects are delivered on time and within budget but is typically divided into areas of responsibility based on purpose and size.

Strategic Planning and Project Governance: This involves defining project criteria, selecting projects aligned with business goals, and advising management through cost-benefit analysis.

Defining Project Management Methodology: Defining the project management methodology to be used in a project, such as waterfall or agile methodology.

Best practices: This involves standardising and consolidating best practices and processes across departments to manage and deliver projects.

Creating a common corporate culture: Here, the project management office establishes a common project culture through communication and training in techniques, methods, and best practices.

Resource Management: The project management office handles and allocates resources across projects based on priorities, schedules, budgets, and more.

Creating project archives and managing tools: The PMO provides administrative support and invests in templates, tools, and software.

PMO, ATO, and TO - What is the future of PMO?

McKinsey advocates for agile transformation to enable faster decision-making and suggests that an Agile Transformation Office (ATO) can increase the chances of creating value.

Fundamentally, 'agile' at the organisational level involves moving strategy, structure, processes, people, and technology towards a new operating model. This is achieved by rebuilding an organisation around self-directed, high-performing teams and changing the organisational culture.

An ATO's mission differs from a traditional PMO in crucial ways, according to McKinsey:

• Driving the transformation plan to scale agility across the entire organisation.
• Building capabilities, including hiring and upskilling talent.
• Functioning as a culture and change leader.
• Coaching senior leaders.
• Managing dependencies and serving as the final escalation point for critical decisions.
• Creating and refining best practices.

This clearly steps beyond the role of a PMO and may, in some cases, work better with a 'tech transformation' approach and a Transformation Office.

Gartner predicts that "By 2023, agile program and product management will replace Project Management as the dominant approach for effective enterprise change and outcomes."

Others argue that 'agile' as a methodology and set of values has been diluted and that McKinsey's "rebranding" of PMO as a concept is unnecessary and goes against the principles of the agile manifesto (which is rooted in software development).

It may be helpful to differentiate between concepts, responsibilities, and roles. When Project Management becomes business development or Change Management, it may no longer be Project Management.

However, McKinsey's underlying idea can be considered logical. A more agile and adaptable organisation that seeks to make quick decisions may not fit well with long project cycles.

Tip: Value creation, digitalisation, and continuous change are often the keys to understanding what your organisation needs in the future of project management.

4 Different Types of PMO

Gartner pondered upon which type of PMO an organisation should have and found that "the best kind of project management office is one that is tailored to what the company needs in a way the company can understand and benefit from."

Examples of 4 types of PMOs that deliver value:

Activist PMO

Activist PMOs are popular in organisations with distributed and business-centric project ownership. Typically, the Activist PMO has an overview of incoming project needs and supports decision-makers by analysing cases and project proposals for alignment and risk management. Less focus is placed on control.

This broad perspective provides an overview of the project portfolio and the status of all projects it encompasses and maintains, providing oversight so that when projects in the overview enter a danger zone, an employee or software can propose solutions.

Delivery PMO

Delivery PMO, also known as project delivery PMO, is the most commonly seen style according to Gartner. Delivery PMOs are responsible for planning and controlling the tactical execution of projects according to the company's expectations.

Project managers are encouraged to manage their projects, make proactive decisions, and escalate issues. The goal is also to build repeatable processes and techniques that will contribute to building a results-focused culture.

Compliance PMO

Compliance PMO is often the most suitable style for organisations where documentation, processes, procedures, and methods are lacking or inconsistent. In this scenario, the Compliance PMO tends to be tasked with establishing standard practices for measuring project performance and driving the development of the capability to understand the status of key initiatives.

Centralised PMO

When the maturity levels for Project Portfolio Management (PPM) are low, organisations rely on the skills and capabilities of key employees to get the work done. At higher levels, efficiency is key, and management seeks to reduce this dependency and establish reliable processes for project monitoring and reporting.

In a centralised PMO, representatives from various project support organisations come together to share their practices in consultation and create a space where newly hired employees can quickly familiarise themselves with the best ways to work on projects within the organisation.

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