When Should You Get a Project Management Office (PMO)?

As a company grows, keeping projects in line becomes less and less possible for managers on their own.Your team may be working hard, and with passion, but without the intention and 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 PMO can help you keep the reins of multiple projects without stretching your staff too thin. It can become the foundation for a better culture of project management.…

Part 1: What is a PMO?

PMO stands for project management office. It’s an 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 the workload of executives and ensure that more large-scale projects end up as successes in the long run.They are mostly used by enterprise organizations that have a lot of high-priority projects running at any given time.

Part 2. What is the role of a PMO? Set and monitor KPIs

According to research from the PMI, the most common function of a PMO is setting and monitoring project KPIs.But, the role of a PMO typically also includes standardizing project management methodologies, managing projects, training and providing project managers, helping the company grow to maturity, managing resource allocation, and tackling portfolio management.Let’s take a closer look at each of these focuses.

1. Setting project management KPIs

One way the PMO can improve the project success rate is by setting and monitoring crucial project KPIs and milestones.Many of these KPIs 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

There are, of course, other performance metrics, but these help show a detailed picture of performance.

2. Implementing standardization

Another role of this senior management office is to standardize the methodologies, frameworks, and tools used throughout the company.Not only will this make collaboration between teams smoother, but it will also be easier to manage resources.For example, if all of the project teams in your business use the same tools, processes, and workflows, it’s much easier to move people around as needed.Project management standards make transitions across projects and teams easier.

3. Overseeing training & providing project managers

A directive PMO will train and provide project managers to manage projects throughout the organization.It’s often the fastest way to ensure the standardization of methods and tools. It also guarantees that there’s communication between project teams and the main PMO.So it’s a leading PMO implementation for a reason.

4.  Leading the company to maturity

Overall, the goal of introducing a PMO is to increase the company’s project management maturity.By standardizing the tools, setting KPIs, and providing training, you can optimize the entire process. And that’ll make a big difference for your business performance.

Survey results showing the ROI of maturity in project management techniques.

They are also 24% more likely to finish projects on time and 10% less likely to encounter project failures.

(5) Managing resource allocation

Coordinating resources, money, talent, locations, and more can be difficult for smaller teams to manage.An office that understands the status of all projects can make the right call every time. By allocating resources where they’re most needed, you can boost project performance without needing to exceed budgets.

(6) Handling portfolio management

Some PMO offices are also responsible for managing a portfolio of projects or even entire sub-companies. It 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.Get started

Part 3: 5 main PMO benefits

But what are the concrete benefits that you can expect from a PMO? Where are most companies seeing a return on their investment?That’s what we’ll explore in this section.

Survey results on different PMO benefits.

Let’s break down the results from this PM Solutions report.

1. Cost savings

Companies with a PMO see a 33% improvement 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).What could your company do with $200,000+ to reinvest in new projects? It might fund a new marketing campaign or a completely new UX feature.

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 (like developers) 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.Increasing overall productivity and output across projects is a primary PMO function.

3. Fewer failed projects

There’s also a 25% decrease in failed projects, which means a lot less wasted time. Combined with the general efficiency increase, the impact on overall productivity is two-fold.Any time invested in a project that fails is, by definition, wasted time. By avoiding doomed projects in the planning stage and readjusting the course to avoid unnecessary failures, you minimize wasted effort.Successfully finishing more projects will propel your company forward at a faster rate than ever before.

4. Better alignment with goals

Companies also saw a 43% improvement in project alignment with strategic objectives. It may sound like a platitude, but it’s not.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 projects and better alignment with company vision also benefits the customer. On average, companies saw a 27% improvement in customer satisfaction with a PMO.The reasons behind the improvement include:

  • Fewer delays and broken promises
  • More changes and UX improvements delivered faster
  • Consistently meeting project objectives

A better handle on your projects is a must if you want to make your customers happy.Get started

Part 4: What are the types of PMO? From Enterprise to department

Different types of project management offices are categorized in 2 different ways.

1. Enterprise-wide vs department-specific PMO

The 1st categorization method is based on the structure and position within the organization.Is it an overarching office that controls enterprise-wide project management strategy and implementation? Or do you have multiple department-specific or region-specific “divisional” PMOs?Enterprise-wide PMOA 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.

Survey results on different PMO types and their goals.

Of course, this can also mean large-scale changes like moving to Agile to focus on faster implementation.Department-specific PMOSmaller 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, the goal is to make sure all the moving parts in that area are working at max capacity at all times.

2. 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: runs regular reviews and ensures standards are implemented
  • Directive PMO: actively trains project managers who are then assigned to different projects throughout the company

Part 5: 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.You need to take your time and consider these 4 factors first.

1. Are your company projects large enough to justify the investment?

Hiring a single full-time project manager in the US costs $66,137 per year, on average. Imagine the cost of fully implementing a new project management program throughout your company.Just the senior project manager to manage the overall process could cost over 0,000 per year. Add in other team members and surrounding infrastructure, and you start to see the whole picture.Is this an investment your company can justify?

2. What are your priorities?

Do you want to standardize the approach and make sure, or do you want to create a PMO branch that acts mainly as a direct coordinator and supervisor?The type of PMO you want will impact which roles you need to fill and the overall scale.

3. Is specialist staff spending a lot of 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 shipping products? Will customers see concrete, tangible benefits if you can improve project results?These are questions you need to answer before committing to establishing a new PMO in your company.

4. Can you gain the bulk of the benefits by just upgrading tools & 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. If your teams don’t use modern tools and processes to handle their projects, that may be a better place to start.Get started

Part 6: 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.

1. Project documentation

monday project documentation template

A general set of project documentation can help you standardize the management approach across offices.It doesn’t need to be a treatise outlining every step of every part of the process. Instead, it can highlight the core values and principles that should drive the planning and management process.For example, you could draw inspiration from the 12 Agile principles or values.

2. Project roadmap

screenshot of project roadmap showing project task status

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 having a digital roadmap that your teams can access and edit at any time is so important.

3. High-level project plans

template to manage roadmap on monday.com

High-level project plans are essentially the overarching recipe for making the roadmap a reality. The best format 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 have a different workflow from a development team focused on bug fixes.At monday.com, our R&D team uses the Scrum framework, so they rely on a specific Scrum sprint planning template instead.The added transparency of seeing who’s working on what, and their progress, makes the daily Scrum meetings more productive and ensures a smoother overall process.

4. Resource management

Effective resource management is crucial for tracking and overseeing all of your company resources, from materials to capital to each team member.Your company can’t afford to waste resources. For example, once a project is past its initial design phase, wireframe designers should be freed up to work on other projects.Decisions aren’t always as clear-cut and easy to make, which is why a shared resource management table is a great idea.

5. Feature or product backlog

feature backlog template monday.com

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.This backlog of potential features (user stories in Scrum) is essential for planning future sprints.

6. Real-time KPI reports and dashboards

monday project KPI dashboard

How do you know that a PMO (or set of tools and directives for your teams) is working? You want to see an improvement in primary deliverables.To check this, you need to 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 & marketing team focusing on a new market, these would be leads and sales. Development KPIs could be commitments and customer satisfaction ratings.

Conclusion: 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 retake control.Take it for a spin and create your first project roadmap in just a few minutes.