The PMO enjoys great popularity worldwide. Although it is nothing new, many aspirations in terms of effectiveness and efficiency are expected of the PMO, which in practice all too often are not fulfilled. When I talk about a PMO in the following text, I am referring to an organisational unit that is responsible for a variety of projects and performs specific tasks. The PMO is usually there to develop, provide and implement the standards necessary to manage the projects. Often this includes training or coaching of those involved in these standards or in project management in general.
The PMO is often used by a senior executive in a business area who, on the one hand, wants to improve the maturity level of the affected organizational units in the management of projects, but, on the other hand, needs transparency over the entire portfolio of projects for decision-making. For this reason, the PMO collects all relevant status information and decision-making needs for the decision-maker or the relevant committee, prepares these in a report and is thus active at the interface between projects and decision-makers. However, the PMO itself is not authorised to make decisions, so it is a pure support function.
A PMO can also take on important tasks for knowledge management and general maturity in PM by collecting, evaluating and processing the lessons learned from the projects, inviting the community of project managers to an exchange of experiences and incorporating these as well as external findings (i.e. benchmarking) into the continuous improvement of the project management system.
A PMO should also be clearly distinguished from a Project or Program Office (PO), the latter dealing with a single project or program and supporting the manager in his or her tasks. In larger organisations there is often not only one PMO, but several PMOs, e.g. in different country organisations, business areas or even separated by project type. In this case, it is advisable to set up a so-called “Enterprise (E)PMO” at the top level of the company, which will take over the governance function for all other PMOs and will provide higher-level steering.
The PMO is an important source of ideas and information for the management because it has a good overview of the projects, e.g. it can identify undesirable developments in individual areas or cluster risks and propose appropriate measures. The PMO can also provide valuable impulses for the strategic development of the company. A study published by the German Project Management Association (GPM) in 2014 shows, however, that PMOs are often not integrated into the process of strategy development or strategic planning. This is particularly worrying because in today’s VUCA (Volatility, Uncertainty, Complexity and Ambiguity) world, managers must react much faster to developments and adjust strategic orientations or strategic priorities more often. It is no coincidence that agile models or scaling frameworks emphasise the role of agile project portfolio management, which also requires an agilization of the entire business (“business agility”) and the corporate strategy.
An important trend for PMOs is also digitalization or the use of artificial intelligence. The Covid-19 pandemic has highlighted the importance of powerful collaboration software. It is not only about communication between distributed project teams or companies, but also about making available a wide range of information, communication, documentation, reporting and knowledge management applications. The availability of large amounts of data from projects enables the immediate processing, evaluation and distribution of this information through digitalisation and artificial intelligence. The focus here is not only on efficiency, but also on the creation of new, digital services or business models. For the PMO, this has the effect of replacing simple (manual) activities with digital applications, thus creating time and capacity for new, more advanced tasks of the PMO.
Companies are currently under pressure to respond to a variety of changes in society, markets, disruptive technologies and business models. For example, the automotive industry is currently struggling to digest not only a weakness in sales caused by the Covid-19 pandemic, but also the structural changes resulting from new mobility demands. The adaptation efforts often take the form of change projects or comprehensive transformation program. As a result, new tasks are being assigned to the PMOs. On one hand, they have to deal more with projects that bundle internal change measures- on the other hand, the (E)PMO is increasingly becoming the Transformation Office (TMO) in order to better support strategic initiatives.
PMOs are therefore required to constantly adapt to new requirements. They have to check whether they can deliver real added value for the project stakeholders and the management of the company in the respective situation. This requires them to formulate clear KPIs and performance measures and to make clear what value add the PMO delivers. KPIs can, for example, concern the areas of performance or efficiency of the project business, the maturity in project management, the ability to innovate or the progress of knowledge in the area of responsibility. The GPM study mentioned above provides clear indications that PMOs are particularly accepted if they can demonstrate concrete added value based on clear KPIs.
Author: Reinhard Wagner, CEO of Tiba Management