5 Key Considerations for Establishing a PMO

5 Key Considerations for Establishing a Project Management Office (PMO)

Starting a Project Management Office (PMO) mirrors the initial steps of launching a consulting firm. Consulting firms often begin modestly, with a few employees and a single project. Entrepreneurs leverage their expertise from the first project to craft their Project Management Processes and establish a foundational Knowledge Base. They recognize that standardized processes and an accessible knowledge repository are crucial to ensuring quality and facilitating ongoing improvement. Similarly, if your IT organization is pursuing the establishment of a PMO, you likely aim to harness the advantages of robust processes and easily accessible knowledge.

Consideration #1: Assessing the Need for a PMO

 “You can't always get what you want, but if you try sometimes, you might find, you get what you need.” – Mick Jagger

Whether prompted by a consultant or a colleague, you may have contemplated the establishment of a PMO. Organizations of any size can benefit from the structure and best practices a PMO provides. Indicators that a PMO may be beneficial include:

• Recurrent project failures.
• Complex or multi-faceted projects.
• Limited or absent project management processes (e.g., CMMI Level 0).
• Project portfolios that exceed available resources.
• Lack of dedicated project managers, with other roles (e.g., developers) managing projects.
• Limited visibility into project timelines, costs, schedules, or outcomes.
• High project risk, with frequent inaccuracies in budgeting and scheduling.

If you are a smaller IT organization but face substantial budgets and high departmental expectations, consider outsourcing to a reputable consulting firm while you build internal PMO capabilities. Many organizations adopt either a fully outsourced or hybrid PMO model.

Consideration #2: Establishing PMO Goals and Success Metrics

 “If you don’t know where you’re going, any road will get you there.” – Lewis Carroll

If you've decided on a PMO, it’s vital to document precisely why and to define the metrics that will measure its success. Possible objectives may include:

• Achieving measurable, consistent project metrics and enhancing project oversight.
• Identifying reasons for projects not delivering strategic benefits.
• Clarifying roles for project managers, sponsors, and stakeholders.
• Establishing a framework for issue resolution.
• Standardizing project planning and progress tracking.
• Creating a knowledge base to aid current and future project management.
• Enhancing project quality, efficiency, and visibility.

Treat the establishment of the PMO itself as a project, setting quarterly performance and improvement metrics for at least two years post-launch.

Consideration #3: Adapting to Corporate Culture and Change Capacity

“To improve is to change; to be perfect is to change often.” -Winston Churchill

Creating a PMO is fundamentally a change management exercise. Its success depends on an operational framework that facilitates adoption at a pace suited to your organization. Considerations include:

• How effectively does your organization manage change?
• How quickly does it adapt to new ideas and processes?
• Are there departmental silos that may hinder strategic information sharing?
• Is there potential resistance to new accountability structures?
• Does the PMO have executive sponsorship and sufficient funding?

An organization’s readiness for a PMO depends on executive support and the ability to align with existing cultural dynamics. Peter Taylor, in Leading Successful PMOs, highlights three PMO styles—supportive, controlling, and directive. Each style offers varying levels of control and involvement in project management, allowing organizations to adopt a model that best aligns with their operational needs and cultural environment.

• Supportive PMO: This style is often seen in organizations with a well-established project management culture. A supportive PMO provides project managers with guidance, best practices, templates, and tools but exerts little to no direct control over project execution. Its primary role is advisory, assisting project teams with expertise and resources as needed, while project accountability remains with the individual teams or managers.
• Controlling PMO: A controlling PMO strikes a balance between offering support and enforcing standards. It establishes and monitors adherence to project management processes and methodologies, ensuring consistency across projects. Organizations adopting this model may require project managers to follow specific templates, reporting standards, and governance practices, while still allowing some level of autonomy in project execution.
• Directive PMO: This is the most involved style, where the PMO takes full ownership of projects and is responsible for managing them directly. In a directive PMO, project managers often report directly to the PMO, and the office maintains full control over project planning, execution, and delivery. This style is suitable for organizations needing a centralized approach, often to ensure alignment with strategic objectives and tight control over resources and risks.

By understanding the distinctions among these styles, organizations can select a PMO model that best aligns with their needs, whether it’s offering a flexible support structure, enforcing consistent standards, or centralizing project control.

Consideration #4: Selecting the Right Tools for PMO Success

 “We become what we behold. We shape our tools, and thereafter our tools shape us.”  - Marshall McLuhan

Establishing a PMO necessitates choosing the right tools to support your project management processes. Begin by thoroughly mapping your PMO processes, even if it requires external expertise in business process management.

Your PMO model, along with the complexity of your project management needs, will inform the selection of your Project and Portfolio Management (PPM) tools. Following tool selection, work collaboratively with stakeholders to customize them, then test with a pilot project. This "beta mode" trial will provide an opportunity to refine your processes and tools before broader implementation.

Consideration #5: Emphasizing Training, Incentives, and Continuous Improvement

"Excellence is never an accident. It is the result of high intention, sincere effort, and intelligent execution; it represents the wise choice of many alternatives—choice, not chance, determines your destiny."— Aristotle

To ensure the PMO functions effectively, clearly defined processes, roles, and responsibilities are essential. Training for both PMO team members and stakeholders must be ongoing. Start with establishing a common vocabulary for project status, resources, budgets, schedules, and risks.

• Project Status: Develop a shared understanding of terms like "On Track," "At Risk," and "Off Track." For example, "On Track" might mean that a project is progressing within its planned scope, timeline, and budget, while "At Risk" could indicate potential issues that might require attention without immediate action.
• Resources: Define resource categories clearly, such as "dedicated" versus "shared" resources. For example, if an IT resource is labeled as "dedicated," this would mean they are fully committed to a single project, whereas a "shared" resource may have responsibilities across multiple projects, impacting their availability.
• Budgets: Establish a common framework for budget tracking. For instance, a "baseline budget" might refer to the initial approved budget, while "actuals" represent current expenditures. Additionally, using a percentage system to indicate spending (e.g., "50% spent") can provide clarity on how much of the budget remains.
• Schedules: Define how schedule progress will be communicated. For example, the PMO might use terms like "Milestone Achieved," "Milestone Pending," or "Behind Schedule" to describe the state of different project phases, helping all stakeholders quickly understand current project timing.
• Risks: Create a consistent risk classification system, such as "Low," "Medium," and "High" risk, with criteria for each level. For example, a "Low" risk might be something with minimal impact on the project timeline, whereas a "High" risk might indicate a potential delay of several weeks or significant budget impact.

By building this shared vocabulary, the PMO can streamline communication, reduce misunderstandings, and improve collaboration between project managers, stakeholders, and executives.

Public dashboards can also boost morale and transparency, enabling teams to “compete” on metrics such as project efficiency. Platforms like Microsoft Teams and Slack can facilitate real-time communication around these dashboards, keeping teams updated on progress and performance in an accessible format. For project tracking, Jira and Smartsheet are excellent tools that allow teams to view project metrics, timelines, and task statuses in a visually intuitive way, promoting accountability and motivation.

Finally, establish a secure repository for project artifacts—such as plans, reports, and deliverables—and assign someone to maintain it. Tools like SharePoint, Confluence, or Google Drive can serve as centralized repositories for these documents, ensuring that all team members have access to the latest versions and that essential project files are securely stored and organized.

Hello, I’m Chris Clark, a Contract CIO and former CEO of a 100-person IT consulting firm. In my career, I have had the honor of guiding teams through agile project management and the formation of PMOs serving both internal and external clients.