A PMO can be the razor sharp point of your Project management spear or one of those medieval weapons no one knows how to use and you just hurt yourself trying. The difference is entirely up to you.
In any project management environment, installing a Project Management Office to oversee all projects is a popular approach (and a good idea to boot). Before we discuss how you set up a PMO, we need to talk about why they exist.
A PMO’s core responsibility is to ensure your project resources (cash, people, etc.) are adding the most value they possibly can. More practically, a PMO is a function that monitors new and existing projects and makes “Go” vs. “No-Go” decisions on them.
Now that you know what it’s really for, allow me to offer six critical aspects of a successful PMO. I’ll cover three of the steps today and three in the next post.
Anyway, let’s get started with the first three steps to PMO success:
It Starts from the Top
A PMO can add tremendous value, but it has to start with a strong leadership endorsement. Everyone from the CEO down to the worker bee has to believe adding a laser focus to project efforts will benefit them personally. You either take building a PMO seriously or don’t waste your time.
Everyone involved in the process will try to challenge the PMO from day one. Their arguments will include “This is a waste of time,” “I could be spending more time working on my project, if I wasn’t filling out your forms,” and “The PMO is UCO (Useless Corporate Overhead).”
These arguments are distracting, but a fact of life. Senior leadership must deal with them early and move past them. Believe in the goal, sell your people hard on the benefits, and be consistent in your message. The people who can’t be sold on doing the right thing might not be the right people…
Build a Process for Evaluating Potential Projects
If the goal is to focus our efforts on projects that add the most value, we’ll need a process. This process will depend upon your particular situation. I have seen a simple spreadsheet with Project Name, Estimated Cost, Estimated Benefit, Risk and Timeline used for $1B+ companies.
This doesn’t have to be complicated. The goal is to align your projects with your strategy (because we all know strategy is about saying “no”).
It is also important to specify decision making authority within this process. Many PMOs have monthly reviews of their project backlog with the CFO or CEO in order to approve or kill projects. Regardless of what process you use, ensure it’s transparent and as simple as possible. As I’ve discussed before, running the PMO doesn’t require a ton of paperwork.
Staff your PMO
First you need the right leader. The head of the PMO usually reports directly to a C-level executive (not excluding the CEO). Think about it. Whoever the head of the PMO reports to has great influence over which projects are approved. If the PMO reports to your Director of Internal Audits, I can promise your Internal Audit team will end up with PMO software and processes that rival those of the IRS.
The cost of a PMO is up to you. I have seen PMOs of 10 people manage 30+ concurrent projects which included a company-wide SAP implementation that cost $50MM+ ($30B chemical company), and I have seen an effective PMO which included the Executive Director and 1/2 an FTE be successful at a $15MM not-for-profit organization.
– How many people need to manage this process?
– Who from our organization would be a great leader for the PMO?
– How will we know when our PMO is successful?
When making this decision, remember – launching a PMO is like launching a new product line. If you start weak and just dip your toe in the water, you may never recover. And for goodness’ sake, make sure you don’t staff the PMO with a bunch of status monkeys but instead staff it with real project leaders.
In my next post, I’ll cover project execution, measurement, and communicating success.