A Project Management Office (PMO) is a department within an organization that standardizes and documents the best project management techniques. The PMO sets the scope for projects, trains staff, and tracks the metrics for all processes. PMOs use metrics to optimize processes and ensure each project is aimed at the organization’s objectives and goals.
Why Is a PMO Important?
An optimized, repeatable process eliminates reactionary tasks, and provides a solid progression of tasks that are aimed at completing a project successfully. The advantage of an optimized process is the process has been previously used with positive results. Any variables that can take a project off track are significantly reduced. Risk of project failure, missed deadlines, and cost overruns are all minimized.
Another critical component to having a successful project are the personnel using the processes.
PMOs need to have a clear understanding of individuals’ skill sets using the processes. Processes are designed to be completed within a specific timeframe, and the lack of a required skill set can jeopardize the project timeline. Depending on the business, a lacking skill set can range from configuring a server, procuring materials, pouring concrete, or utilizing a software application. Identifying any knowledge gaps and providing refresher training is critical to a project’s success.
Training gaps are created any time new technological tools are introduced into an organization, and unfamiliarity with a collaboration or construction tool can negatively influence a project if training and tool implementation plans are not a coordinated effort.
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Technological tools are the third pillar of project management, alongside processes and people. That said, the technological advances in today’s project management environment require constant training for the personnel involved in a project.
Specialized project management software eliminates the need to print out reports. Collaboration tools remove the need for a centralized project management team, while Bring Your Own Device (BYOD) and cloud technology give the ability to address any critical path issues at any time. Software like Zoho Projects allow PMO personnel and project participants to easily communicate, keep track of time, and provide easy access to all project documentation. With specialized project management software, it is easier for PMOs to fulfill their roles and responsibilities.
PMOs Establish KPIs
One of the primary responsibilities of the PMO is the creation of a project governance framework. The governance framework ties directly into the organization’s objectives and goals. The framework provides a structured, methodical, and repeatable approach that governs all projects. The governance board consists of PMO personnel, project managers, resource managers, and sponsors, such as investors and clients. These stakeholders have a vested interest in the progress of any project. Within the framework, there are measurable standards and metrics that allow the PMO to identify any process gaps or deviations from expected outcomes.
Processes and project success are measured against Key Performance Indicators (KPIs). Many KPIs are measured on the expected outcome versus the actual outcome of a project. Some of the most common KPIs include the following:
- Cost Performance Index (CPI)
- Planned hours of work versus actual situation
- Percentage of tasks completed
- Percentage of projects completed on time
- Resource utilization
- Return on Investment (ROI)
Generally, KPIs are used to determine the success or failure of a process or project. A failing project could be attributed to problems such as a lack of a required resources, or an individual’s job performance — the PMO will examine KPIs to find the cause. For example, poor job performance isn’t likely to cause a project to fail if the individual team member has demonstrated good time management and consistency in completion of all assigned tasks. However, if these benchmarks are not being consistently met, maybe refresher training will be required for the individual.
New tools are a constant in many disciplines today, and measuring a new project management technological tool against the established KPI standard is one method used to determine if a new tool will improve upon an established process. As you can see, KPIs are critical in determining the success or failure of a PMO-initiated project.
A business without an established method for measuring processes or project success is more vulnerable to project fluctuation. A small business may not need a PMO department, but it will need the project management skill set in the business to maximize personnel, resources, and projects efficiently. PMO is even more vital if a project requires cross-functional communication and coordination amongst different departments.
Internal PMO vs. External PMO
Whether the PMO is internal or external, it’s difficult to have a large successful business with cross-functional department-wide interaction if PMO oversight is not firmly embedded in the business. Internal PMOs (IPMs) and external PMOs (EPMs) have the same goals, but their primary audiences are slightly different. The IPM audience is employees and the management staff, though the IPM can also communicate with shareholders and investors. An EPM still works with a business’s internal staff, but it may have more communication with the customers, shareholders, and investors. One notable difference is that an EPM may not hold a business’ employees accountable for not adhering to an established process.
IPMs and EPMs share common roles and responsibilities. They establish project management standards and ensure projects align with the organizational objectives and goals. IPMs and EPMs provide training, project coordination, and resource planning, as well as briefing the CEO or CFO as required. Either PMO office must get buy-in from the lowest levels of the business. Establishing a project charter that allows all involved employees to provide input is good practice.
A business may sparingly succeed without project management best practices implemented. But for larger businesses with cross-functional interaction, it is important and critical to establish PMOs for sustained success.
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