Development of the Project Management Office (PMO)

In recent years worldwide, there has been a dynamic increase in the number of organizations that have decided to implement a Project Management Office. Each organization goes through its journey of building the maturity of the PMO and the organization’s project maturity. Companies have different types of projects; not all projects have the same impact on the organization’s growth. However, developing a robust PMO can significantly enhance an organization’s growth trajectory. Therefore, while not identical in all companies, the PMO development path holds the potential for substantial growth. Below, we have attempted to generalize the stages of development of a project organization and Project Management Office.

Step-by-step PMO development

Just as one talks about the life cycle of a product, one can identify the successive stages of life or maturity of a Project Management Office. Such stages are shown in the illustration below:

Step 1: Occasional project management

A great many organizations are still at this point. There are already several projects in the company, but nobody controls them. Project managers are often not professionally qualified and manage projects to the best of their ability, but everyone does it differently, in their own way. The company does not report project statuses to the board or steering committees. Scattered tools are used, usually from the MS Office suite. There needs to be coordination between ongoing projects.

What to do to take it to the next level:

Decide to start a PMO or hire, at this stage, a person who is often called a project coordinator.
Develop and promote a simple ‘Project Management Handbook’ within the organization.
We are providing project managers with basic project management training.

How to create a Project Management Office in an organization?

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Stage 2: Trying to standardize project management

This is when there are already quite a few projects in parallel in the organization, more projects are being launched, and staff feels chaotic and uncoordinated. This is usually when organizations decide to launch a Project Management Office. Internal project management procedures are created, project teams use standardized tools, and there are first attempts to coordinate what is happening on projects. The first project status meetings in the company are organized. The organization slowly recognizes the need to implement a professional IT tool to support the company in project management. However, during this time, the expectations of the board, management, and the organization from the PMO are growing, and there are several misunderstandings and frustrations when its role is not precisely defined. Many skeptics within the organization question the standardization process, the need for reporting, and the overall role of the PMO.

What to do to get to the next level:

Clarify the role of the Project Management Office in the organization.
Describe the company’s project management standards.
Define project managers’ competencies, authority, and decision-making levels.
Develop reporting templates for company management and launch formal project status reviews.
Implementing project portfolio management and planning the use of critical resources.
Implementation of a professional IT tool for project management.

Stage 3: Projects deliver results

Projects already have defined business objectives to be achieved and delivered. The achievement of these objectives is monitored. The organization implements a professional IT program to manage projects and project portfolios. When implementing such a system, it is worth considering that it should be easy to implement, with a user-friendly interface, offering the functionality needed now but also in the years to come as the organization achieves further degrees of project management excellence (one program that meets these criteria is the FlexiProject project and portfolio management program). The organization defines project KPIs, manages project portfolios, and professionally plans the workload of human resources on projects. Regular meetings are held where project statuses are reported and decisions are made. The PMO Director/Manager is an essential and valued organizational role. An example of project status for projects at risk and in bad shape is shown in the following illustration from the FlexiProject system:

What to do to get to the next level:

Work towards more and better use of the implemented IT system.
Ensure a clear link between the company’s strategy and implemented projects.

Stage 4: Strategic project management

At this stage, some organizations have well-developed business strategies. These strategies are primarily implemented through projects, portfolios, and project programs. A key aspect is the clear link between projects and the company’s strategic objectives. These projects, known as strategic projects, are crucial in achieving the company’s strategic objectives. Project portfolios are monitored for their performance in achieving these objectives, and decisions are made about the optimal shape of project portfolios. While other projects of an operational or regulatory nature are ongoing, strategic projects are given priority in terms of resource allocation. The following illustration shows an example of a project portfolio, with the mutual attractiveness of the projects in the portfolio displayed on a matrix. This visual representation facilitates discussions among the company’s management about the optimal shape of the project portfolio:

What to do to get to the next level:

Continuous improvement in all aspects of project management.

Stage 5: Generating value through projects across the organization

Achieving strategic objectives through projects has become the DNA of the entire organization. The organization has a professional PMO equipped with practical tools. The whole organization sees value in the presence of the PMO. It is clear how projects allow the company’s strategy to be realized. Projects are implemented professionally by competent project managers. The organization strategically plans project resources and roadmaps projects accordingly over a year or even years, instilling confidence in our foresight.

Achieving long-term success in project management maturity

Stage 5 can only be achieved after some time. It usually takes organizations many years. Therefore, it is worth defining in the PMO development strategy what stage we want to achieve, when, and what it means to us in practice. Such a structured approach allows you to manage the expectations of the board and the entire organization well and gradually improve project management in your company.