Articles How to Set Up a Project Management Office (PMO)

How to Set Up a Project Management Office (PMO)

Goal-Oriented Project Management

Vlad Kovalskiy

12 min

742

Updated: September 23, 2024

Vlad Kovalskiy

Updated: September 23, 2024

How to Set Up a Project Management Office (PMO)

Before you begin drafting building plans, let’s review the fundamentals of a Project Management Office (PMO). Despite its name, a PMO is more than just an office—it’s a specialized team that oversees projects and ensures adherence to standardized processes within the company.

The members of a PMO are among the most highly trained and capable staff. They typically have extensive experience, often having been with the company for a decade or more. Some may even hold certifications, such as Six Sigma belts. The PMO team is usually small, often consisting of no more than 9 to 10 people, and they report directly to the company's executives rather than to managers or team leaders.

Not every company requires a PMO. However, if you find yourself answering "yes" to most of the following questions, it might be time to consider establishing one:

Are project deadlines frequently missed?
Do budgets often exceed their limits?
Are business goals and project goals misaligned?
Are clients and stakeholders kept in the dark?
Is there a lack of standardized processes for project execution?
Is there no reliable system for tracking project progress?

If you suspect it’s time to establish a Project Management Office for your company, you’re reading this article at the perfect moment. Let’s walk through the essential steps for setting up an effective PMO.

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Step 1: Define Project Management Office objectives

Establishing a Project Management Office is, in and of itself, a project, and as with any other, there must be a project management framework, a clear vision of what you want to achieve, and an understanding of the potential risks, blockades, and challenges. The primary mission is the list of objectives for your PMO. You need to clearly outline the goals and purpose of the PMO within the organization.

The following questions might help:

What will be your PMO's functions?
How will your PMO help the company save money?
Who will be part of your PMO? Would you need to hire externally?
How will your PMO reduce the risks to future projects?
Who are the supporters of your proposed PMO? Who are the doubters that need more convincing, and what are their concerns?
When will your PMO setup be complete and functioning fully?

Step 2: Gain executive support for your Project Management Office

Regardless of how convinced you are that your company needs a Project Management Office or how well-prepared your proposal is, you need to secure commitment and sponsorship from top management. Project governance can be costly and time-consuming compared to regular ventures, meaning that a Project Management Office might divert valuable resources from your company's primary focus. Beyond the financial considerations, it's crucial to secure the encouragement and support of company executives and senior leadership before investing the effort to establish a PMO.

Of course, this would take some work but if you already have a solid plan for what would be your PMO roles and responsibilities apart from how it is forecasted to profit your company's existing approach to project management. Be prepared with your list of PMO benefits to present and then secure an opportunity to put forward the plan to your executive management and emphasize how it can help your organization.

Step 3: Assess current processes by using Project Portfolio Management tools

If your Project Management Office is to succeed, it's worth taking the time and effort to review your current processes. Evaluate your existing project management practices and identify any gaps. You should either fix these issues or start fresh with an entirely new process. Even a single inaccuracy or error in one process can cause your entire initiative to fail.

You can use Project Portfolio Management software for this step in your Project Management Office setup. Project Portfolio Management is a source of reliable and accurate data that allows teams to utilize their resources and tools properly. The facts you're able to gather can be used in forecasting the risks and rewards of your venture so you can focus on the things that will only help your company thrive.

It would also be helpful if you could connect your current project management processes with the goals and objectives of your Project Management Office. In other words, the two should work together to benefit your endeavor. You pull reports from one and apply the changes in the other. Then, you'll end up successful once everything is done.

How to Set Up a Project Management Office (PMO)

Step 4: Develop a Project Management Office charter

Despite its intimidating name, a charter is a breakdown of the more extensive details, the particulars of your Project Management Office. The next step in the process is to create a formal document outlining the PMO's scope, roles, and responsibilities, much like a roadmap. Remember to include the expectations for both teams as well as your management. This should be completed after you've secured the backing of your company executives.

The following are the critical elements for any Project Management Office charter, so be sure to include them in yours:

Vision statement
Mission statement
Key performance indicators (KPIs)
Allotted budget

The charter should be foremost in your mind and at the top of your PMO documentation, as in a project folder. Schedule a periodic visit to make sure your team is guided by the components of the charter to drive the PMO campaign to success.

Step 5: Establish a governance structure for strategic alignment

Project Management Office governance structure characterizes how a PMO functions within a company. It's an organized assortment of practices, principles and processes that directs the PMO's progress and makes sure that they line up with the wider business master plan.

An effective and solid PMO governance structure is made up of these key components:

Clear breakdown of who does what - roles and responsibilities - along with the expectations of them.
Who will provide project oversight? This calls for a strategy for a hierarchy for making decisions and workflows to avoid miscommunications, misunderstandings, and bottlenecks.
Communication plan to guarantee that the reporting framework works and that updates, current statuses and performance are presented straightforwardly and consistently.
Procedures, policies, and PMO best practices for successful project management. Basically, a set standard for how projects should be carried out.

But why is your Project Management Office even in need of governance? What is it built to do for your PMO? Here are the objectives of PMO governance:

Alignment - Ensures alignment between project activities and the organization's goals. When total alignment happens, the project has an even bigger chance of succeeding.
Quality Assurance - Prepares the way for the implementation of the means for quality control, guaranteeing that high standards are maintained and exceptional results are delivered as a result.
Risk Management - PMO governance frameworks help identify, assess, and alleviate risks related to project delivery.
Resource Management - Optimizes resource allocation and utilization, which aids organizations in efficiently achieving their goals.

Step 6: Select a Project Management Office type to use

To better determine whether you need a Project Management Office, it's important to decide which type of PMO would be most suitable for your organization. But what are the types of PMOs? There are three main types to choose from:

Supportive PMO: Provides support as needed, with a low level of control over projects. It collects, stores, and utilizes the organization's data in a consultative role, offering templates and overall guidance.
Controlling PMO: In addition to offering the support of a Supportive PMO, a Controlling PMO provides more structured guidance by enforcing specific project management methodologies and tools. It also offers training and applies standardized project management templates and frameworks.
Directive PMO: This PMO takes full control of projects, managing assignments with a high level of authority. A Directive PMO is responsible for the success and outcomes of the projects it oversees.

Now that we have the three types of PMO to choose from, how do you know which one is the right one for you? How do you choose? Consider the following when selecting the right PMO to go with:

Your company—specifically, your company's culture and needs. Consider how your team approaches a project or problem and works as a collective, then identify any gaps. Choose the right PMO that can bridge those gaps or enhance your team's effectiveness.
Your project management experience - Look back at your past projects and the level of experience your team possesses. From there, you can choose the right PMO to further improve project efficiency.
Your standards - Study your standing processes, policies, and procedures. Take the time to review your resources and references. What is lacking? What can be enhanced or refined?

In the end, it's always helpful to keep in mind that the objective of a PMO is to improve the level of success of each project, whichever one you choose.

How to Set Up a Project Management Office (PMO)

Step 7: Define standard processes for strategic alignment

Develop standardized methodologies, tools, and templates for project management. Begin by evaluating your current resources and identifying areas that need fine-tuning before launching your new Project Management Office. A PMO represents an advancement beyond standard project management, which requires elevating not only your processes but also the tools you use to match this higher standard.

As you define these processes, consider the approval hierarchy, decision-making protocols, and task assignments. Clarify who has the final say on deliverables and how responsibilities will be allocated within the team.

Finally, review and update your templates, tools, and knowledge base. It's likely that some elements need refreshing to reflect current trends and best practices in project management. The goal is to create a comprehensive library of standardized methodologies, tools, and templates that will serve as the foundation for your Project Management Office.

Step 8: Choose the most appropriate tools

The success of your Project Management Office is significantly influenced by the tools you select. To ensure your PMO operates effectively, it's essential to choose tools that are not only top-quality but also suited to the size of your team, the scope of your organization, and your budget. If you already have a set of reliable tools, consider whether they simply need upgrades. However, if you’re starting from scratch, prioritize these tools:

Project management software
Task management tools
Collaboration tools
Reporting and analytics solutions
Communication tools
Workflows and templates
Document management tools
Company knowledge base

The priority is to select project management software and tools that align with organizational needs. They should correspond with your chosen type of Project Management Office, among other things.

How to Set Up a Project Management Office (PMO)

Step 9: Hire only qualified staff for your PMO

If you already have a project management team that you trust and rely on, you can have them fill your PMO. You can always add more staff if your current roster is lacking in headcount or expertise. Remember that a Project Management Office requires people with particular skills and competence, especially if you aim to achieve exceptional results.

When hiring staff to join your Project Management Office, look out for the following:

Experience in project management from 4 years on
Familiarity with project management tools
Leadership or management background for 2 years or more
Certifications for PMO administrators, analysts, managers, and directors
Understanding of data and reports related to PMOs

You can also elect to send your existing project management team members to get trained and certified for specific roles. Doing this is not only cost-effective but also saves time. You won't have to build trust or wait for the team to gel. You can just get started on the work that needs to get done.

Step 10: Implement training programs for continuous learning and improvement

Now that you have your Project Management Office team in place, it's time to arm them with knowledge. It's a direct hit to great success if you empower your teams with everything they need to do plus the added bonus of being able to help themselves with a company knowledgebase.

However, you can't always pull out team members from their work to give them training. The good thing is, there are a number of online training programs that you can send them to. These are usually updated with the latest trends, tools and methods and can be taken anytime and anywhere, making them perfect for remote workers as well as those who report onsite.

It's also good practice to regularly review your company's knowledge base to keep the information fresh and current. This way, your PMO will be able to find answers quickly and approach every project or challenge, even, armed with knowledge and experience.

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We have a long list of products, resources and solutions, perfect for your PMO to execute the set strategy. Once it's time to merge everything into a solid plan of action and execution for your PMO, Bitrix24 will be more than happy and capable of supplying you with all the tools you need. Sign up today to discover what we have on offer for you and your PMO.