Should Your Organization Have a Project Management Office?

Do you have the time and resources to sit down and look at the big picture regarding how your portfolio of projects is managed? Not every organization needs a project management office. But those that do are missing out on some tangible benefits if they fail to put a PMO in place.

PMO vs. PMO

First, it’s important to note that the acronym PMO is often used to refer to a program management office. To find out the difference between project and program management, go here. If you’ve got program management established in your organization, you’ve already reached the level of complexity where a PMO is essential. So, in this post, we’ll just use the term PMO to refer to a project rather than a program management office.

IT Leads the Way In PMOs

Information technology is one of the most common areas where a PMO is implemented. The term “office” in this context refers to a function rather than a physical place (although a location may be set aside as a headquarters for this purpose if needed). The responsibilities of a PMO include:

  • Developing and administering project management policies, processes, and principles
  • Providing a centralized view of the full portfolio of projects (past, present, and proposed)
  • Planning strategically to ensure the highest rate of success for all projects
  • Determining how to handle resources to serve the needs of multiple, concurrent projects
  • Assisting, facilitating, and mentoring individual project managers/teams as needed
  • Collecting and reviewing knowledge gained from each project (managing lessons learned knowledge base)
  • Analyzing all data to discover areas for improvement in project processes

Who Needs It?

For an organization that only handles one project at a time, having a separate individual or team fulfill the role of the PMO may not be necessary. A project manager could work in concert with upper management (or a consultant) to ensure all the functions listed above are taken care of.

However, organizations that juggle multiple projects should consider creating a PMO. Otherwise, there is a risk that PMs who are better at negotiating for the resources they need will have success while those with less skill/experience will fail. A PMO plays the role of a neutral third party with the final say in determining how projects are administered.

The Numbers Don’t Lie

Research from the Gartner Group indicates that businesses that establish organization-wide project management standards and a PMO might cut project cost overruns by 50%. According to a survey from PricewaterhouseCoopers, it’s hard to pin an exact dollar amount on how much money is saved by having better control and more in-depth information. However, of those companies surveyed, the ones that had their PMO in place the longest tended to report much better rates of success for their projects (a 65% improvement for organizations with a PMO that had been in place for 4 years of more). Since an enormous percentage of projects in the IT industry experience cost and schedule overruns, instituting a long term solution such as a PMO can make good business sense.

Project Management in a Troubled Economy

With the economic changes that have occurred over the past year it’s not surprising that project managers might be asked to tighten their budgets and try to get work done more quickly with fewer resources. It has never been more important in project management to avoid costly delays and cut costs wherever possible.

One thing the project manager will have to decide on is where cuts should be made. Most often these cuts should occur across the board so that no single phase of the project is hit too hard. If everyone shares a little in the burden it’s less likely to have a major impact on operations. Focus on needs and eliminate wants.

It’s also important not to sacrifice quality in the final product for the sake of saving money. Figure out what can be trimmed down without affecting productivity.

The project manager must, during difficult times, run a very tight ship. Deadlines must be met and delays must be avoided. By paying close attention to details, problems can be identified early and dealt with expeditiously thereby avoiding irreparable damage to the project’s bottom line.

Choose projects carefully and only take on what can be handled monetarily. Know when to say no to projects that probably won’t have a good return on investment and focus on projects that have more promise. It might also be a good time to invest in project management training which can help promote better performance when the economy takes a turn for the better.