Senior management has asked you to set up a Project Management Office (PMO) to manage one or more projects or programmes. So, what do you do first?
The whole process of designing and establishing a PMO can seem daunting, even unachievable. This is especially true if a PMO is a new concept or if you have no experience setting one up or working in one.
However, setting up a PMO (even if you’ve not done it before) does not have to be hard or complex. This article helps by breaking down the process of setting up a PMO into simple steps.
Overview of project management office (PMO)?
PMO, which stands for Project Management Office, is one of the most popular acronyms in project management. It is a centralised team or department within an organisation that oversees and supports the management of projects.
Its main goal is to increase the likelihood of project success through planned coordination.
What Is the timeline for establishing a PMO?
The timeline for establishing a PMO varies depending on the organisation’s size, the complexity of the PMO, the resources available, and the maturity of the organisation’s project management processes. However, it generally takes about 12 months or more.
Planning and assessment usually take the first 1-2 months. Design and development take 2-3 months, and implementation and full rollout take another 3-6 months. Then, continuous refinement and improvement over time will help the PMO reach its full potential.
How does a PMO differ from a project manager?
A PMO is an entity within an organisation that provides standardisation, support, and oversight for projects across the organisation. It focuses on process, project governance, and alignment with strategic goals.
However, a project manager is an individual leader in an organisation who is responsible for managing a specific project and ensuring that it is executed successfully, meeting time, cost, and quality parameters.
PMO
Project Manager
Scope of responsibility
Multi-project management – responsible for overseeing and supporting the management of projects at an organisational level.
Responsible for leading and managing a specific project.
Level of authority
Operates at an organisational level, setting guidelines, standards, and policies that govern how projects are executed across the organisation
Operates at the operational level, focusing on the day-to-day management of a specific project from initiation through to project planning, execution, and all the way to completion
Role in project execution
Focused on supporting and improving the processes used for managing projects. They provide standards, train project managers, and provide resources such as templates, tools, and reporting systems.
Day-to-day leader of the project and team. They make decisions on execution, schedule management, resource allocation, and issue resolutions specific to their project.
Thus, while a PMO sets the stage for successful project execution, a Project Manager takes the lead in delivering individual projects. And project managers report directly to the PMO.
How to set up a PMO
Below are seven steps that will help you to define and implement a PMO in your organisation:
Step 1: Define the objective(s) of the PMO
Without a clear purpose, a PMO could easily lose direction, resulting in efforts not aligned with the organisation’s overall strategic goals. For this reason, the first step in setting up a PMO is to define its objectives.
There are three different types of PMO (Administrative, Pro-active, and Hybrid), and objectives will differ depending on the type of PMO you are setting up. For example, what needs to be established for a reporting PMO is a lot less than for a Pro-active PMO.
It is important that you are clear on the objectives so that the PMO you implement is aligned with the sponsor’s expectations. If not, you may invest a lot of time and effort, and the end result may not meet the objectives. This will result in an unhappy sponsor (and probably not good for career progression).
Aim to capture the PMO’s objectives in a number of small bullet points that make it easy to articulate and agree with sponsors and stakeholders.
You may want to consider capturing these in a clear vision and mission statement. The statement should clearly articulate the PMO’s aims so that it is easy for everyone to understand. As stakeholders review it, make adjustments until you reach the desired level of consensus.
This is a good exercise as it also helps to clearly define what needs to be achieved.
Step 2: Sponsorship
PMO sponsorship is vital for success. This step is an absolute ‘must have.’ Without senior/executive sponsorship mandating the requirement of a PMO, you will find it very difficult, even impossible, to implement. Without this mandate, you will find that project managers and teams will resist. The reason is that a PMO will provide transparency of project progress, including where projects are not going well. Some project managers will be uncomfortable with this as they lose some control over controlling the message flow on project status.
You should capture the objectives of the PMO as defined in Step 1 and then agree on them with the PMO sponsor. You should then get the PMO sponsor to communicate that a PMO is going to be formed, as well as the objectives of the PMO, and to confirm that you have the mandate to set up the PMO.
This communication should, at minimum, be a clear and concise email sent to all relevant resources. It would be even better if the sponsor provided the mandate in meetings, town halls, etc.
This step will help remove a lot of barriers and pushback, which in turn will save time.
Step 3: Define PMO tools and processes
Based on the agreed objectives, list the functions that the PMO will need to support. Again, to make it easy, consider what high-level functions are required, and then go into more detail at lower levels, where necessary.
The Project Management Institute Book of Knowledge (PMBOK) provides a very good basis for the required functions. These are generic and should be part of every PMO.
All these are part of project methodology and tools/processes (including supporting project management software).
Step 4: PMO organisation
After you have worked out what tools and processes need to be established, you can then think about how many and what type (skills) of resources you need for the PMO.
Again, it is important to build a PMO that can deliver its objectives. This step can be tricky because senior management is usually reluctant to invest in resources until the value has been demonstrated.
It is a good exercise to map out the PMO organisation in an organisation diagram. This will help you think through the structure and how it will support and engage with stakeholders. It will also provide a very useful document that you can share with project teams and other stakeholders when they ask how the PMO supports and engages within the organisation.
To overcome this barrier, it is worth reminding the sponsor that the purpose of the PMO is to provide transparency through accurate reporting for the early identification of issues/risks that will impact successful delivery. The upfront cost saves a higher long-term cost when dates are missed and benefits fail to materialise.
Step 5: Engage and communicate
This is a very important step. You need to identify the key stakeholders of the PMO, especially those responsible for managing the projects and programmes. Ensure they understand what you aim to do, what is expected from them, and, most importantly, how you will help them.
Remember, communication is two-way. Just because you have delivered a message does not mean it has been received, understood, or accepted. Make sure you gain positive confirmation.
A good way to do this is to follow up with stakeholders and ask if they have any questions or would like further information. This has the added benefit of allowing you to engage with them and build working relationships.
Tip: If the information flow is one-way, with the PMO demanding information (usually by threats or shaming), you will not get the required level of engagement, and you will fail.
The most successful PMOs I have built are where a PMO provides support to the project managers and becomes a partner, fostering an environment of trust.
In these situations, the project managers will be honest and tell you about their problems, and then you can work with them to help them solve the problems. This means more projects stay on track and everyone is happy (especially you as leader of the PMO, as you can demonstrate the value of the service).
Step 6: Monthly PMO routines
Quickly implement the PMO routines.
Each month or more frequently, the PMO will be expected to provide status updates on the projects and programmes. Therefore, it is important to get these routines up and running as quickly as possible. Even if you have not built out all the tools and processes, you should aim to get the reporting routine up and running as quickly as possible. This is a quick win and will give senior management confidence that you have everything under control.
Document and communicate the routines to all relevant parties. This will allow project teams to know what is expected of them and by when. It will also allow them to manage their time and ensure that regular requests are not seen as “fire drills.” Project managers can get very agitated with what they think are last-minute requests and will be very vocal to their project sponsors.
Once you have set out schedules and routines, adhere to them. Failure to do so will frustrate the stakeholders, who will not know what is going on. This will result in more fire drills and send the message that meeting dates are not really important.
Step 7: PMO charter
Steps 1 – 6 cover a lot of information. Therefore, it is a good idea to capture these key elements in a project charter. A good project charter will cover all of these points in a way that is easy to articulate, such as:
PMO objectives
What the PMO will / won’t do
Organisational model (including roles & responsibilities)
Tools and processes
Monthly reporting requirements
Key contacts
What are the benefits of a project management office?
While smaller companies may not need a PMO, the benefits of a PMO are manifold for larger companies that handle multiple projects with many specifications. These include:
Improved standardisation and project consistency
A PMO ensures that projects follow standardised processes, methodologies, and best practices. It establishes project management methodologies, standards, and guidelines that teams can follow when completing projects. This reduces variability across projects, leading to consistent outcomes and better predictability in project delivery.
Better resource management
A PMO oversees resource allocation, ensuring that scarce resources (human, financial, or physical) are optimised and not spread too thin across projects. It tracks resource utilisation, identifies bottlenecks in resource utilisation, and ensures that the right people, funds, and materials are available for the right tasks at the right time.
This reduces the likelihood of overburdening teams or missing key project deadlines due to resource shortages. With this, projects are more likely to stay on track, stay within budget, and meet quality expectations.
Strategic alignment
A PMO ensures that all projects align with the organisation’s overall strategic goals and priorities. This means that every project undertaken contributes directly to the overall objectives, whatever that is.
Thus, it prevents the organisation from wasting time and money on projects that do not align with its vision. Instead, resources will be focused on the most important initiatives, contributing to the organisation’s long-term success.
Improved communication and collaboration
A PMO acts as a bridge between departments, stakeholders, and project teams, as it ensures that information flows smoothly to all key stakeholders. It creates a central hub where project information, status updates, and feedback can be shared.
This ensures that project stakeholders are always informed of a project’s progress, significantly reducing misunderstandings and miscommunications. Efficient information sharing also helps cross-functional teams work together more effectively.
Improved risk management
PMOs improve risk management by proactively identifying and assessing potential risks throughout the project lifecycle. They also implement risk management frameworks, such as risk registers that document risks and outline mitigation strategies. These activities mean that PMOs mitigate risks more effectively, reducing the likelihood of project failure.
On-time project delivery
A PMO increases the likelihood of completing projects on time and not missing deadlines.
The office develops timelines, determining how long individual project tasks will last and setting all project deadlines. It also tracks project progress to ensure tasks are being completed as scheduled. Plus, it helps identify and address issues that threaten project completion as planned. These activities help minimise delays and ensure that projects are completed on time.
Enhances performance measurement and reporting
A PMO makes it easier to assess project performance. The office establishes and tracks key performance indicators (KPIs) that measure project performance. These metrics provide the PMO team and senior management with objective data on how the project is progressing, enabling them to make informed decisions.
Improves knowledge management
A PMO ensures that valuable lessons learned from completed projects are used to improve future projects. The office captures insights from completed projects (both successful and unsuccessful), which can be assessed later and used to refine future project approaches.
Conclusion
Defining and setting up a PMO does not have to be complex and take a long time (even if you’ve not done it before). If you follow these steps, you can quickly design and build a PMO.
Define the objectives of the PMO (provide a clear statement of what the PMO will achieve).
Sponsorship (ensure the sponsor provides PMO with a mandate and publicly communicates this).
PMO tools and processes (outline the functions/services the PMO will provide).
PMO organisation (outline the roles and responsibilities, engagement models, etc.).
Engage and communicate (ensure stakeholders know what is going on and that there is a 2-way flow of information).
Regular routines (get the reporting up and running as a priority to demonstrate progress and to start providing value).
PMO charter (capture all of the key points in a charter that can be shared).
Remember, you do not have to have everything perfect and ready on day 1. You can implement it in phases. This is a good approach because it will provide incremental value and help prevent sponsors from getting nervous about whether the investment will provide value.
A good approach is to have a day-one plan, a week-one plan, and a month-one plan. You can lay this out in a simple road map so everyone knows what to expect. Another tip to help accelerate the PMO setup is to consider buying professional PMO templates, especially if you do not have any templates you can reuse. The small cost far outweighs the time to design and develop your own.
PMMajik provides a suite of tools, templates, and resources to help organisations effectively manage their project management offices (PMOs). Our solutions include pre-built reporting templates, governance frameworks, and guidance for setting up and optimising a PMO. Ready to accelerate your PMO setup? Contact PMMajik today!
The PMO Manual
Do you need to design & set up a PMO?
Do you have limited time but need results?
Is this the first PMO you have set up?
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If you answer ‘Yes’ to some or all of the questions, don’t worry. The PMO Manual shares valuable knowledge gained from many years of designing, building, and implementing PMO’s. It’s your own step-by-step guide for quickly setting up a pragmatic PMO for the real world.
Unlike many other books, this is not an academic or theoretical book with ideas and concepts that are difficult to understand and implement. It does not assume you have many years of experience or a full understanding. Instead, it is aimed at people who have been asked to set up a PMO and want help taking the right steps.
Benefits
Step-by-step guide to setting up a PMO
Easy-to-understand action lists
Saves time – start implementing your PMO today
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Quickly gain years of valuable knowledge
Designed so you can quickly take action
PMO Template Framework
If you are looking to really “fast track” the design and implementation of your PMO, the PMO Template Framework is what you need!
All the core templates you need
Instructions on each template
Step-by-step guide to setting up a PMO
PMO Handbook to customise for your organisation
Video tutorials for each process and template
Full e-mail support
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All of this is available in the PRO Membership package, which also includes the PMO Manual and the Mobilisation Framework (a tool designed to help rapid mobilisation of projects, programmes, portfolios, and PMOs).
Visit the PM Majik Members Area for more details about this and other time-saving tools, templates, and frameworks.
FAQs
Here are the answers to some common questions about PMO:
What are the 4 Ps of PMO?
The four Ps of PMO are people, processes, projects, and performance.
The People component ensures that the right people are in place, trained, and empowered to execute projects effectively. The Processes component involves establishing standardised methods for managing projects to improve efficiency. The Project component is about ensuring that individual projects align with the organisation’s strategic objectives and deliver value. The Performance component is about measuring performance to ensure successful project outcomes.
What are the 3 primary functions of a PMO?
The three primary functions of a PMO are Governance and Oversight (setting standards, ensuring compliance, managing risks, and providing regular project reports), Support (providing resources, tools, training, and guidance to project teams and managers), and Strategic Alignment and Portfolio Management (ensuring that projects align with the organisation’s strategy, selecting and prioritising projects, and managing the overall project portfolio).
How can you identify an effective PMO?
To determine whether a PMO is effective (supports the success of individual projects and the overall strategic objectives of an organisation), look out for Strategic alignment of projects with the organisation’s goals, clear and structured project-related governance processes, consistent success in delivering projects, strong communication and collaboration across levels of the organisation, efficient resource management and optimisation, and strong support for project managers and teams.
What are the stages of PMO maturity?
There are five stages of PMO maturity. Level 1 (the initial process stage) is when processes are just becoming defined, with the PMO having limited influence. Level 2 (structured process stage) is when basic processes have been established but are only used on certain projects. Level 3 (organisational standards stage) is when processes are standardised across the organisation. Level 4 (managed processes stage) is when management mandates compliance with the PMO, and the PMO’s processes are integrated with corporate processes. Level 5 (optimising processes stage) is when the PMO has full processes in place to measure project efficiency.
