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What is the role of a project management office?

project management office

Estimated reading time: 4 minutes

The PMO framework is critical to bringing products to market on time and on budget, especially in large complex organizations which often face resource planning and management issues.

There are many finely-tuned projects at the heart of any innovative product. It’s a simple concept to understand but quite challenging to put into practice. In my career, I’ve worked with numerous companies with brilliant ideas that couldn’t maximize ROI because they lacked project management discipline. These are the types of organizations that would benefit greatly from a project management office (PMO).

While some organizations (typically smaller ones) can operate without a PMO, most companies need an independent governance structure to orchestrate innovation. Let’s take a closer look at PMOs and understand their impact on innovation.

Understanding the PMO's role in innovation

A PMO is typically an internal group of senior program and portfolio management experts who facilitate the entire project lifecycle from Ideation through delivery. They also have finance specialists to ensure that the leadership teams have verified information such as net present value (NPV), the initial rate of return (IRR), and payback period to make informed decisions on what projects to take on. PMOs also ensure that the projects are adequately funded and staffed while ensuring that benefits are delivered as promised. In addition, they oversee the planning and execution to minimize the risk of project failure.

PMOs are also responsible for creating and enforcing project management standards and tools to support the project and innovation lifecycle. They create repeatable and efficient processes that position project managers to deliver projects on schedule while meeting agreed-upon expectations.

The PMO framework is critical to bringing products to market on time and on budget, especially in large complex organizations which often face resource planning and management issues. Without a dedicated team, this responsibility falls on the shoulders of the chief innovation officer or other business leaders who might not have the bandwidth to lead this critical function.

There’s no single PMO structure that works for all organizations. And the variations depend on the size of the organization and its projects. But they typically fall into the following two categories:

Pure play governance PMOs: They define the abovementioned process and monitor projects to ensure compliance. They also measure and report on key metrics on how the projects perform. They extract the data and turn them into actionable metrics so that the senior leadership team can make the right decisions. These PMOs are not directly responsible for project delivery.
PMOs with project delivery responsibilities: In this case, the PMO is a center of excellence (COE). In addition to providing the services mentioned above, they are also responsible for the project managers in charge of the innovation projects and meeting the dates and budgets.

PMOs simplify simultaneous projects

Large organizations typically rely on multiple PMOs to oversee projects that vary in size, scope, and goals. For example, a company plans to develop a smart washing machine. One could imagine numerous projects to bring this product to life:

  • Building a manufacturing facility
  • Designing and engineering the various mechanical and electrical components of the washer
  • Developing the software necessary for connectivity
  • Identifying marketing channels
  • Establishing and monitoring the supply chain required for manufacturing

And within each of those projects are sub-projects that will often require different ways to get from Point A to Point B. Depending on the needs of each project and sub-project, multiple PMOs may be involved to provide governance and guidance between projects. One of the critical goals is to establish gates and checkpoints between the various projects and monitor their interdependencies.

This is especially important when considering how processes vary from project to project. Using the smart washing machine manufacturer as an example, the hardware project may use a traditional process like waterfall, while the software project relies on Agile. PMOs help to ensure these projects move forward efficiently by creating standardized best practices that recognize different processes and meet deadlines.

Finding the right PMO tools

There are different ways to monitor the progress of a project. Relying on data rather than qualitative updates is one best practice that has never let me down. Data is critical to monitoring project progress and meeting deadlines. Each phase of the project lifecycle has some key metrics that need to be documented, reviewed, and acted upon. Some examples include:

  • Initiation: NPV, IRR, payback period, confidence rating on benefits and cost estimates, resource availability
  • Planning: Initial ROM, planned effort, target dates, planned dates, budget, resource availability, risk scores
  • Execution: Cost performance index(CPI), schedule performance index(SPI), team velocity, risk, and Issue score
  • Closeout: Variance on spend against the initial baseline, variance to end date against the initial baseline

As a result, PMOs now insist that organizations move away from archaic processes like disparate Excel spreadsheets and explore newer solutions that put updated data at their fingertips. Before exploring a new PMO tool, it’s essential that you’ve performed internal due diligence. You need to map out the process flow for each project lifecycle phase mentioned above to determine how a solution would best fit your organization’s specific needs.

For each PMO tool consideration, it’s critical to understand how you engage with all the different departments inside an organization, like the C-suite, finance, engineering, etc. Once you do that, you're in an excellent position to seek a solution that will harness data in a way that encourages intelligent project decision-making.

Learn more about the role of PMOs and their impact on innovation in a recent episode of the Innovation+Talks podcast. And to maximize the effectiveness of your PMO, see how Sopheon’s Acclaim Projects can help deliver innovation and products on time and on budget.

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