Project Management Office in Company Operations

Introduction

Growing businesses inevitably encounter a variety of possibilities for expansion and optimization through the implementation of successful projects. However, without the knowledge of how to build an effective and productive team, project management cannot be introduced successfully. A project management office (PMO) is defined as either an internal or external group that ensures and maintains relevant project management processes across an organization.

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The responsibilities of an organization’s PMO will vary depending on a company’s goals as well as how the department was initially formed. The key job of a project management department is to ensure that all practices and operations associated with ongoing projects go as planned and fall within an established budget. According to Brian Weiss, vice president of the Project Management Institute (PMI), “PMOs are there to ensure project and program success, and that’s critical because organizations deliver value through projects and programs” (as cited in Miller, 2017, para. 6). This report will focus on providing recommendations regarding best practices for project management and steps that should be taken to integrate PMOs successfully into company operations. Apart from these recommendations, successful examples of implementing project management in large companies will be given.

Importance of Project Management

As mentioned, project management (PM) is a growing field that successful businesses are integrating into their operations. This approach is important for companies seeking to broaden the horizons of their organizational capabilities as it offers new perspectives on how to approach new projects. For instance, PM is necessary when a company has an opportunity to work on a temporary venture that may bring long-term benefits. By integrating PM through hiring experts in the field, companies are able to focus on their organizational goals while also benefiting from the experts’ contributions. Professional project managers are experienced in creating goal-oriented plans aimed at delivering positive results for organizations through integrating available resources (Project Management Institute [PMI], 2017). Planning, budgeting, and communication skills are all integral in ensuring the successful implementation of temporary ventures.

According to the Project Management Institute (2010), executives recognized that when their companies adhered to PM efforts and procedures, they improved success rates and cut costs, two vital components to surviving in tough economic conditions. Thus, top management reported that the disciplines involved in good project management “stopped us from spending money on projects that fail,” as mentioned by Ron Kasabian from Intel (PMI, 2010, p. 1). As resources become more scarce and expensive, project success rates decrease, meaning that organizations must make sure every dollar they spend goes toward project success.

Recommendations on Best Practices

Choosing leaders for a project management team depends on organizational capabilities and the number of workers a company has at its disposal. While some may appoint a project manager from a PMO, others have no choice but to find a manager from another department due to a lack of personnel. In an ideal scenario, it is best to appoint an employee who specializes in project management and who can immediately start selecting and planning potential projects. To avoid wasting time, choosing a project manager from a PMO is the recommended option because such an individual will be more effective in differentiating functions among team members, defining responsibilities, managing processes, and maintaining consistency due to his or her professional experience (Khan, 2016). Thus, when an organization has enough resources to appoint a specialist in project management, it is advisable to do so.

To ensure that a PMO operates appropriately, human resources within an organization must improve. In the past, human resources were considered a cost; however, in the wake of PMO, such resources are considered capital that should be managed and invested correctly (Crawford, 2009). The creation of an effective PMO within an organization requires managing the workforce’s skills and schedules. Managers should decide how to obtain human capital to include in a PMO, how to structure the office, and what resource management information should be involved in the entire process. Overall, resource management is a challenge for many companies that want to establish an effective project management department.

Apart from challenges associated with finding and improving the right human resources, organizations face other issues such as poor capacity planning, inadequate documentation of resources, unrealistic planning, and a lack of resource risk assessment. These challenges can be addressed through the establishment of a PMO. Employees who deal with project management can also play the role of resource evaluators through validating business assumptions and finding information on cross-functional resources (Crawford, 2009). Within a PMO, a competency center can be created to provide training and mentoring to other employees. Also, project management consulting is another responsibility that a PMO should fulfill to solve any issues related to staffing.

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When involving CEOs in decision-making, it is imperative to align senior management demands with a PMO’s function. This means that transparent communication is necessary to ensure that the CEO knows about projects that are being implemented and can thus support project managers by giving advice. A project analysis section may serve as a communicative tool between the department and higher management; however, creating this section is not an urgent need. As a PMO grows, new tasks such as project analysis may appear, meaning that establishing a sub-section within the department is only necessary if the workflow dictates its necessity.

PMO Stakeholders

Before establishing a project management office within an organization, it is essential to identify relevant stakeholders and create a strategy that will help in their management. A stakeholder is defined as a person, group of people, or organization that can affect or be impacted by a specific decision, outcome, or activity (Usmani, 2012). If stakeholders are selected appropriately, a PMO will run projects successfully due to stronger connections between the people and the aims that they want to achieve. Thus, a project is successful if the identified stakeholders are happy with its outcomes.

When developing a project management office within an organization, team members, sponsors, the company’s CEO, the human resource department, and partners of the PMO are identified as key stakeholders. In the beginning, a PMO is a relatively small department, and the number of stakeholders will below. As the office develops and expands, the list of stakeholders can be expected to increase and may even involve outside stakeholders. For example, if an organization deals with providing consulting services to other companies, PMO’s stakeholders may include the company’s clients who are paying for the services it provides.

In the context of project management, it is important to recognize that stakeholders are rarely equal because of varied opinions and expectations about success. This means that a PMO should treat stakeholders in line with their requirements to avoid jeopardizing the success of the projects the team is managing. Stakeholders can be differentiated into internal and external categories; while the former is found within an organization, the latter is found outside of it. Examples of internal stakeholders for a PMO include a project team, project manager, sponsors, internal clients, and one or more managers from other departments (e.g., HR manager, administrative manager, etc.). Examples of external stakeholders include suppliers, media outlets, external clients, an end-user of a project, and subcontractors.

It is essential for a PMO to recognize that stakeholders can be positive as well as negative and therefore can impact the outcomes of some projects. A positive stakeholder, on the one hand, looks at the benefits of projects and has bright expectations for their success. A negative stakeholder, on the other hand, looks only at the disadvantages of such projects and therefore may have a lower likelihood of helping the team reach a positive result. In some cases, other workers inside and outside an organization can be stakeholders, especially when projects involve a variety of participants and thus affect different aspects of the operation.

Overall, the initial identification of the PMO’s stakeholders is among the most important steps for guaranteeing a department’s success. A project manager who guides a PMO should choose stakeholders who will be interested in the outcomes of the team’s performance to help achieve successful results. If the manager fails to cater to the stakeholders’ needs and requirements, it is likely that the operations of a PMO within an organization will be severely limited.

Project Management Office Framework

As identified previously, achieving success for a project management office can be difficult due to the large number of variables involved in the process. Before choosing a framework for a PMO, it is first important to differentiate between types of PMOs. The first type is an Organizational/Divisional/Departmental PMO, which is targeted at providing project-related services to support units and business services. These PMOs are the most popular, present in 54% of organizations (Salameh, 2014). Project Support/Control Office PMOs are the second type and supply continuous support management of organizational projects. The third type is the Enterprise PMO; this highest-level project management department aligns projects with the corporate strategies of organizations. Center of Excellence PMOs is associated with providing organizations with tools and methodologies for implementing projects instead of taking full responsibility for them. Project-Specific PMOs involve services related to particular plans and objectives on a temporary basis.

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In the context of the assignment, a departmental PMO has been chosen as the focus of the recommendations to be made. The proposed PMO framework implies the following steps:

  1. Obtain an understanding of the corporate definition of project success.
  2. Define the objectives, mission, and strategy of the PMO.
  3. Specify the key functions of the PMO.
  4. Define criteria for success and metrics pertinent to the PMO.
  5. Identify the structure of a PMO.
  6. Determine the appropriate number of employees for the PMO.
  7. Define the PMO charter.
  8. Ensure the support of the organization’s top management.
  9. Develop a methodology for project management.
  10. Train PMO employees as needed.
  11. Track metrics, key performance indicators, and enhance PMO efforts continuously (Salameh, 2014).

The breakdown of a successful PMO framework is presented in Table 1:

Table 1. Successful PMO Framework.

1 Corporate definition of project success Align methodologies of project management to strategies and processes that already exist within the organization (Millhollan, 2009). For example, when a company is prospering under laissez-faire leadership, a PMO should follow this style.
2 Objectives, mission, and strategy of a PMO A PMO’s mission, objectives, and strategy should provide value to the organization. For example, “Our PMO will help our company deliver timely projects within budget and enhance the quality of products and services that we offer, as well as improve organizational efficiency and competitive advantage.”
3 Key functions of a PMO Key PMO functions may imply delivery of prosperous projects, support of the existing administration, and the establishment of project management procedures.
4 Criteria for success and metrics pertinent to a PMO Key criteria by which a PMO’s success is measured may include evaluations of customer feedback, the satisfaction of stakeholders, performance according to financial objectives, quality of project delivery versus preliminary evaluations, and final cost versus preliminary evaluations (PMI, 2013).
5 PMO organizational structure A PMO is headed by a PMO director, who reports results either to CEO or top executives. Employees in the office include project managers and project support (including IT) who report results to their PMO director.
6 The appropriate number of employees for a PMO To create a separate department in a medium-size organization, the following number of employees is appropriate: a PMO director, between two and three project managers, up to 10 individuals in project staff, and two to three workers in support staff.
7 PMO charter The charter should include what will happen, as well as when and how, during the implementation of a PMO (included in the next sections of the report).
8 Support of an organization’s top management It is vital to encourage collaboration between PMO employees and top management to ensure that projects align with executives’ goals.
9 Methodology for project management Defining a methodology (e.g., agile project management) for a PMO is an essential step that can be done by identifying corporate goals and strategies.
10 Training for PMO employees Before establishing a PMO, all stakeholders (from project managers to support staff) should be trained on the specific aspects of their work. These aspects can include considerations of organizational culture, best practices for PMOs implemented in successful companies, effective teamwork strategies, and so on.
11 Metrics, key performance indicators, and enhancing PMO efforts continuously Reporting of PMO efforts and outcomes can be conducted through assessing progress, determining aspects for improvement, and evaluating the contributions of the department. For continuous improvement, monitoring, collecting data, and metrics are essential.

Tools for Project Management

With the wide availability of software solutions targeted at helping organizations optimize their operations, most PM tools are associated with computer-based programs. Online PM Tools include dashboards, Gantt charts, project scheduling solutions, reporting applications, and task-tracking services. Dashboards are necessary for effective project management because they combine the most important graphs and charts in one place (Figure 1), allowing team members to track their progress in real-time and thus make immediate decisions (Landau, 2017). Dashboards are especially relevant to agile project management contexts. Gantt charts allow PM teams to streamline their schedules and assist in assigning tasks that workers can monitor, update, and analyze. Similar to Gantt charts, project-scheduling applications offer visibility in all aspects of projects to bring a team together for careful planning and implementation.

Dashboards for project management.
Figure 1. Dashboards for project management (“Dashboards,” 2017).

For the essential step of project reporting, PMOs can use software that will help in creating reports on all project aspects. Ranging from expenses to workloads, teams can customize needed data. Thus, project managers can compare their actual progress to their initial estimates. Project- and task-tracking applications are necessary for PMOs that include numerous team members. Such applications allow clear visualization of project deadlines and assignments. Also, team members can share tasks with each other to foster collaboration.

Choosing the right PM tool depends on a PMO’s mode of operation along with its goals. In addition, all PM tools are targeted at making sure that PMO team members understand their tasks and manage their time appropriately. Successful integration of tools, either online or offline, will allow businesses to stay on top of their performance through streamlining and effective time management.

Project Management Charter

Creating a project charter will help a company understand how to successfully integrate a PMO. This tool includes such essential information as the PMO’s mission, objectives, critical success factors, metrics, staffing, sponsors, and relevant stakeholders. Strategy, budget, project constraints, project dimensions, and timeline are also important. Project constraints and dimensions have undergone an evolution and thus bear mentioning. While key constraints initially involved only time, cost, and scope, project planning has revealed that additional issues such as quality, risks, and resources could also limit final success.

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All of the mentioned project phases are presented in Table 2:

Table 2. Example of Project Phases.

PMO Mission The PMO established within [organization name] will provide a solid foundation for the selection, approval, and management of relevant projects by creating an environment of discipline- and goal-driven work.
PMO Objectives
  • Create a PMO environment focused on successful execution;
  • Deliver projects within the budget and timeframe;
  • Establish effective PMO practices that align with [organization’s name]’s vision and business strategy;
  • Involve [organization’s name]’s key management in decision-making.
Critical Success Factors
  • Introduce PMO functions and responsibilities gradually to ensure their adherence;
  • Implement a program or rewards to keep project managers motivated and engaged;
  • Ensure the alignment of the CEO’s vision with PMO’s goals and objectives.
PMO Metrics
  • The ratio of the project’s positive versus negative outcomes;
  • Positive versus negative changes in workers’ attitudes toward project implementation;
  • The ratio of improvements associated with the previous identification of PM flaws;
  • The ratio of met business objectives versus unmet objectives.
PMO Staffing Project management director, 2 project managers, 1 project coordinator, 2 support staff.
PMO Sponsor The project for establishing a PMO at [organization’s name] is sponsored by [sponsor’s name] and was approved by the company’s CEO and senior management.
PMO Stakeholders [Organization’s name] executive team, sponsors, HR manager, project management director, project managers.
PMO Strategy To establish a PMO at [organization’s name], the initial step involves approving the current charter with the CEO and senior management. PMO requirements, cost estimates, plan, and implementation strategies should all be reviewed by the above stakeholders. Any changes and refinement efforts should be implemented before project implementation. Lastly, an ongoing review process and the measurement of the above metrics will be performed.
PMO Budget During the first operational year, the budget for the project will depend on its implementation. Up to $100,000 can be spent on hiring, office renovation, purchasing of computers, training, and salaries.
Project Constraints Risks (what can go wrong?), quality (will expectations meet reality?), time (by when will result be visible?), cost (is the available amount enough?), resources (what is needed for the project to succeed?), scope (what exact outcome is expected?).
Project Dimensions Team (how does it approach PMO integration?), management (is management involved?), scope (what is the influence of the project on [organization’s name]?), customers (are customers engaged and satisfied?), quality (do reviews show a positive outlook?), finance (is every detail is included in the budget?), schedule (does the project fit the timeline?).
Project Timeline One year to implement the PMO project.
Month 1: Defining project mission, goals, and success factors.
Month 2: Coming up with project metrics, finding sponsors, hiring new staff.
Months 3–4: Employee training.
Month 5: Creating a PMO.
Months 6–8: Assigning projects, identifying responsibilities, conducting preliminary measurements.
Months 9–11: Implementing project management.
Month 12: Measuring project outcomes, making conclusions.

Agile Project Management

Agile Project Management (agile PM) was initially used by software developers as a concept targeted at the inspection and adaptation of changes necessary to ensure the ultimate success of a project cycle. The implementation of agile PM involves specific procedures aimed at allowing organizations to benefit from the method by which projects are managed (Figure 2). Advantages of agile PM include the following:

  • Helping organizations meet goals (75% of agile companies reach them; PMI, 2015);
  • Helping companies finish projects on time (65% of agile companies);
  • Helping companies to finish projects within established budgets (67% of agile companies; PMI, 2015);
  • Allowing businesses to make changes in real-time;
  • Offering retrospection to understand reasons for failures and successes;
  • Increasing the speed of issue detection;
  • Increasing the company’s orientation on customer demands;
  • Enhancing capabilities regarding project flexibility and adaptation.
Agile project management
Figure 2. Agile project management (“Agile project management assessment test,” n.d.).

To achieve and implement agile PM within an organization, it is recommended to start by creating a “bucket” to hold tasks that should be completed to accomplish corporate goals. Next, these tasks should be analyzed and broken down into a range of separate assignments with specific timelines. Each PMO worker should be assigned different tasks to establish ownership and ensure a balanced distribution of labor (“11 steps to implement agile project management into your workflow,” 2018). The assigned tasks must be prioritized depending on their level of urgency to ensure that critical parts of the work are completed earlier than others. For this purpose, the agile PM model recommends estimating the time that each assignment will take, similar to the example in Figure 3.

Estimating time for assignments
Figure 3. Estimating time for assignments (“Estimate how long each task will take,” 2018).

After conducting relevant estimations, it is recommended to keep the entire PMO up-to-date and encourage communication to improve problem-solving. Google Drive has proven a useful tool for improving the internal integration of processes as it allows several employees to work on the same document. The next step is to hold daily meetings with the whole PMO team for the purpose of quick reviews of project accomplishment and to identify possible complications. Also, agile PM implies the use of retrospection to help workers learn from past mistakes with an eye to continuous improvement. It is recommended for a PMO director to sit down with his or her team to review the task board to ensure that all urgent assignments are completed successfully. The last step in implementing agile PM is associated with checking all assignments as complete and recording team accomplishments.

Examples of Successful PMOs

IBM

Companies that integrate PMOs into their business operations have a higher chance of successfully implementing projects. The example of IBM’s establishing a PMO shows that companies must consider adding the department to their operations. In the early 1990s, the rapid changes within its industry prompted IBM to reconsider its existing organizational structure and business model. The company struggled with customer satisfaction issues, erosion of profits, and project failure. In 1996, the organization introduced project management as a core business competency through creating the Project Management Center of Excellence (Crawford, 2011). Thus, IBM established and drove a consistent infrastructure of employment to hire the best practitioners in the field and create a community that shared PM values. Though PMO implementation, IBM succeeded in:

  • assigning qualified project managers to the most valuable projects;
  • making project managers accountable for success through rewards and recognition;
  • developing a nurturing PM community that shared experiences and best practices (Crawford, 2011); and
  • applying the latest approaches for PM certification and qualification.

Norton Healthcare

Another example of successful PMO implementation is Norton Healthcare, which faced the challenge of not being able to attain success in project introduction due to low human resource capacity. The organization reported such issues as cultural differences between employees, making the integration of potentially valuable measures difficult and sometimes impossible. In 2003, Norton Healthcare hired skilled PM consultants who formed a PMO and started delivering consistent results on all projects they had undertaken.

By 2005, the department started receiving more requests for more projects than it could handle, leading to the establishment of an enterprise project management office (EPMO) that dealt with 59 projects handled by seven project managers. Among these projects, the EMPO guided the “construction and staffing of a new hospital, which became one of the finalists of the Project Management Institutes’ Project of the Year Competition in 2010” (Crawford, 2011, para. 12). Apart from this, the organization solved the problem of cultural differences by catering to the specific demands of its employees.

Conclusion and Recommendations

This report focused on outlining the most beneficial aspects of project management to convince the target audience that the integration of a PMO is worth the resources invested. Implementing such a project, PMO introduction, calls for careful planning to identify key objectives, define metrics, hire professional staff, and train workers as needed. The second stage of project implementation involves the establishment of a project management office and assigning the tasks that the team will have to complete. If the project has been planned correctly and the PM director does his or her job appropriately, it can be expected that the team will achieve positive results after implementing the assigned projects.

It is recommended that a company integrate project management slowly to see how the corporate structure and strategy responds to the changes involved. When resources are limited, it can be more efficient to form a PM team from different sections of the company based on the employees’ interests and skills. If resources are abundant, hiring skilled PM staff is the best option because such employees will bring a fresh outlook for project management as they apply their experiences in the field.

References

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Crawford, J. (2009). Mastering resource management: The PMO’s role. Web.

Crawford, J. (2011). Lessons from the best practices of the world’s top PMOs. Web.

Dashboards [Image]. (2017). Web.

11 steps to implement agile project management into your workflow [guide]. (2018). Web.

Estimate how long each task will take [Image]. (2018). Web.

Khan, B. (2016). 5 major roles a project management office plays within a company. Web.

Landau, P. (2017). 5 best project management tools [Blog post]. Web.

Miller, J. (2017). What is a project management office (PMO) and do you need one. CIO. Web.

Millhollan, C. (2009). The journey to an enterprise project management office. Orlando, FL: PMI Global Congress Proceedings.

PMI. (2010). The value of project management. Web.

PMI. (2013). Pulse of the profession. PMO Framework. Web.

PMI. (2015). Pulse of the profession. Web.

PMI. (2017). Inventing the professional association of the future. Strategic plan. Web.

Salameh, H. (2014). A framework to establish a project management office. European Journal of Business and Management, 6(9), 19-26.

Usmani, F. (2012). Stakeholders in project management [Blog post]. Web.

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