As a company grows, managers become less and less equipped to keep projects in line on their own.
Your team may be working hard and with passion, but without intentional leadership that ensures their projects will succeed, the whole office can disintegrate into kindergarten-level chaos.
There’s a reason only 19% of enterprises report that they “mostly” deliver successful projects.
It’s too easy for things to get out of hand.
A project management office (PMO) can help you keep tabs of multiple projects without stretching your staff too thin. It can become the foundation for a better culture of project management.
In this blog, we’ll walk you through the ins and outs of this function, starting with the meaning of PMO.
What is a PMO?
PMO stands for project management office. It’s the office or department responsible for overseeing and managing projects throughout your company.
It can either plan and manage projects directly (often referred to as a directive PMO), or it can operate at a higher level, providing KPIs (Key Performance Indicators) and standardizing PM methods throughout the organization.
A PMO can help reduce executives’ workloads and ensure that more large-scale projects succeed in the long run.
PMOs are most relevant to enterprise organizations managing multiple high-priority projects at any given time.
It might sound like a PMO directly manages projects, but stick with us. That’s typically a project manager’s job, and the project manager is not necessarily part of a PMO.
What is the difference between PMO and project manager?
A PM is an individual responsible for a single project, while a PMO is an office that’s responsible for projects on a larger scale.
A PMO doesn’t always oversee a single project. Often, a PMO’s objects are to help standardize project management practices, improve collaboration, and much more.
The PMO’s role depends on the goals and priorities of the organization. For example, a PMO’s goal might be better integrating technology throughout the company, rather than owning any specific projects.
Let’s go more in depth about the kinds of roles a PMO may take on.
What are the roles of a PMO?
According to the Project Management Institute, the most common function of a PMO is setting and monitoring project KPIs.
But the role of a PMO also extends to standardizing project management methodologies, managing project progress, training and assigning project managers, helping the company scale, managing resource allocation, and tackling portfolio management.
Let’s take a closer look at each of these focuses.
Setting project management KPIs
One way the PMO can improve the project success rate is by setting and monitoring crucial project KPIs and milestones.
Core KPIs often involve comparing the actual project progress with your planned project schedule. Some examples are:
- On-time completion rate
- Planned hours vs. time spent
- Budget variance
- Number of errors
- Milestones completed on time
Another role of the senior management office is to standardize the methodologies, frameworks, and tools used throughout the company.
This kind of standardization makes collaboration between teams smoother and makes it easier for all team members to manage resources.
Project management standards also make transitions across projects and teams easier. If your entire organization uses the same tools, processes, and workflows, it’s much easier for people to adapt to new teams.
3. Overseeing training and providing project managers
A directive PMO will train and assign project managers to manage projects throughout the organization.
Having one source of PM training ensures that all teams are using the standardized methods and tools. It also guarantees that there’s communication between project teams and the main PMO.
Leading the company to maturity
The overarching goal of introducing a PMO is to increase your company’s project management maturity.
By standardizing the tools, setting KPIs, and providing training, a PMO can optimize your entire business process. And that’ll make a big difference for your organization’s performance.Organizations that are more mature in project management processes are 21% more likely to meet project goals and to do so within the original budget.
Managing resource allocation
It can be difficult for smaller teams to coordinate and manage resources like money, talent, locations, and more.
An office that understands the status of all projects can make the right management call every time. By allocating resources where they’re most needed, you can boost project performance without exceeding budgets.
Handling portfolio management
Some PMOs are responsible for managing a portfolio of projects, or even entire sub-companies. This may be referred to as a PPMO (project portfolio management office). For example, the PPMO of an Asian branch may be responsible for the overall business performance in Asia, not just a few projects.
5 main PMO benefits: save money, projects, and more
But what are the concrete benefits that you can expect from a PMO? Where are most companies seeing a return on their investment?
Let’s break down the results from the PM Solutions report above.
1. Cost savings
Companies with a PMO see a 33% increase in projects delivered under budget. The average cost savings per project is $175,000.
A PMO helps speed up projects and better distribute resources, avoiding excess hires or outsourcing.
Those savings could be used to fund anything from a new marketing campaign to a completely new product feature. What could your company do with $200,000+ to reinvest in new projects?
2. Improved productivity
On average, companies with a PMO see a 25% increase in productivity. With better frameworks for managing projects, and KPIs in place to track progress, it’s easier for teams to focus on working.
Instead of non-management professionals trying to reign in a project or team, they can focus their expertise where it adds the most value. That helps move projects forward faster and boosts the overall output.
3. Fewer failed projects
There’s also a 25% decrease in failed projects, which means a lot less wasted time and a general efficiency increase—for a two-fold increase in overall productivity.
By avoiding doomed projects in the planning stage and adjusting the course to avoid unnecessary failures, you can minimize wasted effort.
With a higher rate of successfully completed projects, your company and grow faster than ever before.
4. Better alignment with goals
Companies also saw a 43% improvement in project alignment with strategic objectives.
When unsupervised, smaller project teams may settle for minor improvements or bug fixes. They don’t always have the foresight to prioritize the company vision at every twist and turn.
A PMO acts as a compass, continually guiding all moving parts in the right direction.
Is everyone in your company continually working toward realizing your vision? If they did, how would that change your organization?
5. Increased customer satisfaction
More successful, strategically-aligned projects also benefit the customer. On average, companies saw a 27% improvement in customer satisfaction with a PMO.
With better company efficiency, customers get fewer delays and broken promises, and more updates and UX improvements delivered faster.
What are the types of PMO? From enterprise to department
Project management offices are categorized in 2 different ways
- Enterprise-wise vs. department specific
- Directive vs. controlling vs. supportive
Enterprise-wide vs. department-specific PMO?
The 1st categorization method is based on the structure and position within the organization.
Does the PMO control overarching, enterprise-wide project management strategy and implementation? Or do you have multiple department-specific or region-specific “divisional” PMOs?
A company-wide office is typically called an EPMO (enterprise project management office). They tend to be more focused on overall business strategy and aligning projects with the company vision.
They can also lead large-scale changes like moving to Agile or implementing new technologies.
These smaller PMOs, on the other hand, are often more focused on the direct oversight of projects. That can involve training project managers to oversee projects, monitoring KPIs, and much more.
Essentially, department-specific PMOs make sure all the moving parts in their area are working at max capacity at all times.
Directive, controlling, or supportive?
The 2nd way in which you might categorize a PMO is based on its management approach.
- Supportive PMO: focuses on standardization, high-level guidance, and facilitation
- Controlling PMO: provides project management guidance and ensures standards are implemented
- Directive PMO: actively trains project managers who are then assigned to different projects throughout the company
4 things to consider before starting your first PMO
Now that you’ve learned about all the benefits of having a PMO, you probably want to jump right in.
Not so fast.
Consider these 4 factors first.
1. Are your company projects large enough to justify the investment?
There’s the cost of hiring one full-time project manager, then, there’s the cost of fully implementing a new project management program throughout your company. Add in other team members and surrounding infrastructure, and you’ll start to see the whole picture.
Look at your budgets and make sure the PMO is an investment your company can justify.
2. What are your priorities?
Do you want to standardize your company’s processes, or do you want your PMO branch to act mainly as direct coordinators and supervisors?
The type of PMO you want will impact which roles you need to fill and the overall scale of the office.
3. Is specialist staff spending too much time on PM-related tasks?
Are specialists (like highly-skilled coders and developers) spending a disproportionate amount of time on project management?
Is it slowing down your processes? Will customers see concrete, tangible benefits if you can improve project results?
4. Can you gain the bulk of the benefits by just upgrading tools and processes?
If you’re still using email and spreadsheets, upgrading your project management tools may give you the boost of productivity you need.
Especially for smaller companies or teams, a dedicated PMO can lead to lower productivity with the added hoops.
Establishing a project management office is a significant time and money investment. You may want to start with implementing modern project management tools and processes with a platform like monday.com.
Essential tools for establishing a PMO in your company
If you want your company’s PMO to be effective, it’s not enough to hire the right people.
You also need to use the right set of tools to ensure adoption of the new best practices across your organization.
Note: Even without a dedicated PMO, these tools can help your teams standardize their approaches and better coordinate to boost overall productivity.
Software project documentation
Centralized software project documentation can help you manage all of the documents and assets involved in a project in one place. You can easily track files, task owners, completion status, approval status, and more.
Encouraging teammates to update their own statuses and de-silo document creation increases their accountability and keeps the entire team aligned.
The next piece of the puzzle is to create a project roadmap for every significant project in your company.
Roadmaps help keep the team focused on the company’s overall goals. After starting to work on a specific problem, it can be easy to go down a rabbit hole and tackle every adjacent issue.
But that’s not always what’s best for the team, company, stakeholders, or customers. A roadmap helps teams stay the course.
Of course, a roadmap shouldn’t be completely static. It needs to adapt to changing markets, customer needs, and company goals.
That’s why it’s important to maintain a digital roadmap that your teams can access and edit at any time.
High-level project plans
A successful roadmap is built by effective high-level project plans. The best format for these plans will depend on the overall methodology and the workflow of each project team.
For example, a creative team working on designing a new UX will need a different workflow from a development team focused on bug fixes.
For example, the monday.com R&D team uses the Scrum framework, so we rely on a specific Scrum sprint planning template.
With the right high-level board format, teammates get transparency into who’s working on what, project progress, more productive daily Scrum meetings, and a smoother overall process.
Effective resource management is crucial for tracking and overseeing all of your company resources, from materials to each team member’s time.
Your company can’t afford to waste resources, and decisions are often stronger with collaboration. Enter: a shared resource management table.
Feature or product backlog
If your team uses the Scrum framework or a similar framework to implement Agile, you need to expand on and prioritize your product backlog continually.
Create a board for your backlog of potential features (user stories in Scrum) to plan your most efficient future sprints.
Real-time KPI reports and dashboards
How do you know that a PMO or PMO tools are working? You’ll want to see an improvement in primary deliverables, or monitor key performance indicators (KPIs), for your different projects. If the performance improves across the board, you know that you’re on the right track.
For a sales and marketing team focusing on a new market, the KPI would be leads and sales. Examples of development KPIs could be commitments and customer satisfaction ratings.
Lay the foundation for a successful PMO
A PMO without the right tools will have minimal impact on the rest of your company. The PMO team will become an island, and may even slow down your project progress.
monday.com gives you the foundation to create an interconnected PMO. Our Work OS adds a level of transparency to all projects while giving managers all the functionality they need to maximize efficiency.
Take it for a spin and create your first project roadmap in just a few minutes.