How to Set Up a PMO in 5 Steps

What is a project management office (PMO)?

A project management office (PMO) is an internal department or an external body that is responsible for, monitors and supports, all of a company’s projects. A PMO standardises internal project management and implements best practices.

A PMO acts as a central support team across all functions and acts as a helpful service provider for stakeholders, with a common goal of making work easier and completing projects in a quicker and more cost-effective manner through planned coordination.

Internal vs. external PMO

PMOs can be located both within the corporate structure and outside with an external provider.

Internal PMO: You establish another department in your company and staff it with both existing and newly recruited employees. In the organisational chart, a PMO is often placed very high up as a staff position. The benefit for you is that you control the PMO yourself and can ensure it provides long-term support. This of course takes time, but an internal PMO is also available for small-scale execution of specifications

External PMO: You commission an external entity, such as a management consultancy or a PMO agency, to carry out basic standardisation and coordination. The advantage for you is the PMO is ready to go immediately and without any further investment. On the other hand, support is often only temporary.

What are the tasks of a PMO manager?

In a PMO, project managers work as cross-functional partners and strategic advisors to project managers. Their remit is divided into two parts – establishing project processes in the back office and setting guidelines that apply to all departments. In other words, they create the necessary structure within which projects are implemented.

In day-to-day operations, PMO managers ensure the defined guidelines are implemented. They are always on site when a new project is scheduled, sensitive project steps are pending, or a crisis looms on the horizon. The PMO is where all the threads come together – those responsible coordinate the individual projects, embed them in the overall strategy and allocate resources.

What’s more, they are also responsible for offering ongoing support and ensuring project standards are upheld. Specifications must be updated on an ongoing basis, while tried-and-tested procedures must be further standardised. Training sessions for employees are also held on a regular basis.

What a PMO specialist does at a glance:

• Coordinate individual projects
• Develop project standards and PM strategies
• Plan project portfolio and available resources
• Prioritise and allocate resources
• Train project employees.

What a PMO manager does:

• Project coordination to reduce duplication and unnecessary effort
• Devise efficient project standards and PM strategies to ensure project success and compliance
• Develop multi-year portfolio plans to improve strategic direction and financial planning
• Support project prioritisation and resource allocation to maximise impact and ROI
• Develop PMO capabilities, including service catalogue, roadmap, and tools
• Train project employees on processes and best practices to boost project team efficiency
• Promote the PMO, its services and best PM practices.

Why do you need a PMO?

It’s clear that not every company needs a PMO. In smaller companies, for example, coordination is so seamless that having too many specifications tends to inhibit flow rather than promote it. The benefits of a PMO are also limited in areas where there is less pressure and minor discrepancies are less significant.

You should examine the cost-benefit analysis very closely! The following benefits of a PMO are especially noticeable in mid-sized and large companies that manage a multitude of projects on a daily basis.

Greater efficiency and flow in project work

Are things not moving forward in your projects? It could be that the productivity of your team is fizzling out somewhere amidst a lack of standards and tedious processes. PMOs establish project management standards, project management methodologies and guidelines that help to orient teams. Well-defined standard processes, frameworks and tools leave less room for interpretation, resulting in higher efficiency as well as more seamless workflows.

Better alignment thanks to the strategic direction

The PMO bridges the gap between the individual departments and sets a common strategic direction. It creates a collective understanding of the strategies, processes, and tasks, while aligning all measures with the overarching corporate goals.

As a central point of coordination and communication, the PMO relays decisions on projects to the stakeholders and brings business units together at strategic points. This way, it creates favourable conditions for interdepartmental collaboration.

Optimised time management

Timing is everything when it comes to project management! With a PMO, you are far more likely to stick to your schedule and not miss any deadlines.

The PMO keeps track of all ongoing projects, sets deadlines, and schedules important dates within the process

The PMO manager determines how long should be spent on individual project steps

If deadlines are missed or projects are re-prioritised, the PMO is responsible for rescheduling the calendar and coordinating deadlines across departments.

Optimal resource management

Budget, personnel, and materials – these are usually the (scarce) resources that make up successful projects. With a PMO, you raise your capacity and resource planning to a professional level, ensuring that the respective resources are available at just the right moment.

How to set up a PMO in 5 steps

Are you convinced of the benefits of a PMO and want to set one up in your company? You should keep in mind the following things:

Accompany every phase of the project with change management. PMOs often have to deal with acceptance problems. However, they can be prevented if relevant employees are involved in the who, what and why from the very outset.

The Next Level PMO study conducted by Deloitte2 demonstrated that a PMO should be bespoke in order to provide effective support. That’s why you should take the time to design a PMO specifically tailored to your needs and adapt it on an ongoing basis. If you have any doubts, we recommend you seek advice from our PMO experts.

• Integrate the PMO with existing enterprise software to achieve full data integration.
• Ensure that the PMO is actively endorsed and promoted by your senior management team.

Step by step to a PMO

1. Evaluate the status quo of project management:

• How are the teams currently working?
• What processes already exist in the individual teams? Which ones work, and which ones don’t?
• Which projects are currently running, and which will be added soon? Compile as complete as project list as possible.

2. Set individual goals for your PMO and develop a concept:

• Perform a stakeholder analysis: what do stakeholders want and expect?
• Carry out a target-performance comparison with the results from step 1 and the stakeholder analysis: what is lacking, and what does the PMO need to do?
• Integrate the PMO into the company’s organisational framework in such a way that it has active rights of intervention.

3. Make the necessary preparations

• Communicate the PMO’s goals throughout the organisation
• Address any questions and doubts
• Train your PMO employees.

4. Implement the PMO

• Get the ball rolling with a few initial tasks
• Assess the results and make appropriate improvements.

5. Transition the PMO into regular operations

• Now gradually expand the areas of responsibility and authority
• Commence ongoing optimisation at an early stage.