PMOs – How To Integrate PMOs Into
the Organizational Structure

By Bruce Beer, PMP

Note: This is the fifth and final post in a series on PMOs.

In the previous four blogs in this series we looked at defining a PMO, the business value that they bring to a company, why your company might need one, and how to establish one. In this final blog of the series I want to look at how this new bright and shiny PMO might be integrated into the organizational structure and not just be regarded as a new “toy” that will shortly outlive its usefulness once the novelty goes away. In other words how do we internalize the necessity and contribution to strategic goals of a PMO to provide maximum contribution to your company and justify the high cost in terms of its even higher value?

There are two main types of PMOs in my experience:

1. Those that are created to manage a major project or a program (for the duration of this article I will use the generic term “program”) and will disassemble itself at the end of the program, or
2. A Company PMO that is established to form a “Center Of Expertise” for project management. It is there for the benefit of all projects undertaken by the company and remains in existence as different projects form and finish.

Program PMO

Let us consider the program specific PMO first. This is created to manage a specific program and is created generally during Initiating and remains until the late stages, probably into the formal Close. It is customized for that specific program, so it’s forming and ending will be dependent on the specific needs of that program.

The value of the PMO in the overall control and management of generally a large program can justify the cost by providing significant value. The areas where value can be demonstrated are areas such as coordination between the projects within the program and understanding and managing the potential ripple effects of issues, risks, and changes on one project with respect to all other projects. With regard to change management, if a change is implemented in one project in a program in isolation, the impact on other projects may not be recognized until final acceptance testing or even worse, in initial live operation.  For example, understanding how changing a database record in one project may impact other projects using the same database is critical.

If a company starts using program-specific PMOs, the value should be immediately apparent, particularly by considering what might have happened if the PMO had not been in place. One major advantage for senior management is coordinated reporting at the program level rather than having multiple project reports. This allows them to now have the overview or “big picture” on the status of the program in one report.

Other key areas where a PMO provides significant value by overseeing all projects in a program are:

1. Scheduling – identifying the critical path of all projects in the program, plus the critical path within each critical path project. Any issue affecting an individual project completion date for a critical path project will impact completion of the overall program. It might be a good idea to recognize and incorporate this into the overall plan.
2. Risk – if a known or unknown risk occurs on a project and a contingency plan is implemented, does this impact the ability of other projects to complete successfully on time and on budget? Is the overall program under threat? It would be highly beneficial to the overall success of the program to know this.
3. Quality – having a common methodology and project tools/templates will result in a common look and feel for all elements of the program and enable interfaces between them to be more easily defined and implemented. It also opens up the opportunity for reuse both within this program and for future similar programs.
4. Cost – overall cost of a program is composed of the costs of each individual project, and escalation of cost on one project will impact the overall cost of the program. Forecasting the latest cost of a program will be significantly more accurate by taking an integrated view of the whole project and can lead to one overall financial report rather than multiple financial reports from each project.

For this type of program-specific PMO, the benefits and value of a PMO should be clear, so the use of PMOs should be easy to justify and institutionalize for large programs.

Company or Permanent PMO

A PMO that is established on a more permanent basis for use by all projects in the company has many advantages to the company.

1. It can be the creator and keeper of the company project methodology and historical database. It can create common tools for use on all company projects. (This will allow easy re-use of tools and templates). It can also create and implement a common approach for quality and risk management throughout all company projects.
2. It will encourage all company PMs to utilize the company standards, methodology, tools, etc., leading to a unified company approach to projects and project management. It can also provide project auditors to perform regular or adhoc reviews of projects in execution to ensure all project standards are being met and to gather lessons learned from each project throughout the project lifecycle.
3. It allows members of the PMO to mentor and coach company PMs, again to help institutionalize a company methodology.
4. It can accumulate “best practice” documents that can easily be stored in a library and re-used for all future projects, saving cost by having a group of standard templates such as a quality management plan, a risk management plan, a change management plan and most other “management” plans so that projects are not reinventing the wheel for every project.  Once the company quality policies and procedures are created, the quality management plan will be “standard” for all company projects.

Integrating PMOs Conclusion

In conclusion, the value of either type of PMO should be clear, and the improvement in resulting projects will not only justify the cost of the PMO, but enable higher quality projects with an increased probability of meeting the key project baselines of scope, time, and cost. Once a PMO has been created and used on a major program or multiple company projects, the benefits should justify their use. The PMO will be incorporated into the company approach to projects and become institutionalized.

PMO Series Conclusion

Overall I hope that this series of articles on PMOs has shown what they are, the business value that they bring to a company, why your company might need one, how to establish one, and in this final post of the series I hope I have showed how a PMO might be integrated into the organizational structure. In this way, it can become a valuable asset for a company to use to improve their ability to manage large programs or to establish the framework for management of all projects in a company.

PMOs can be expensive but the value they provide to a company will normally far exceed the cost. They should standardize a company’s approach to projects, lead to time and cost savings, gradually improve the project management ability of the company, and make projects a valuable tool for a company rather than something to be feared.

How has your organization incorporated a PMO into its culture? If it hasn’t, what would it take to do so?

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