3 Must-Haves for a New PMO

Tom Carter


Three factors are critical in placing a new project management office on the road to long-term success: alignment of staff size, skills and reporting level with the organization’s expectations; a charter that clearly defines responsibilities, processes and standards; and demonstrated value in the first 100 days and six months.

Many organizations expend a great deal of time, effort and resources in establishing a project management office (PMO), only to have it fail a short time later. In most cases, the probability of success can be greatly improved by proactive effort in just three areas. Among the many contributors to organizational success, there are three that are critical for deployment of a new PMO. The first is alignment of management expectations for services and results with the PMO’s reporting level and number and skill level of its staff. The second factor is an organizational charter clearly communicating the PMO’s authority and services to the business. And the third critical success factor is early results that demonstrate value to the business in the first 100 days and six months.

1. Alignment of Expectations

The importance of alignment between expectations and capabilities cannot be overstated. A one person PMO is not going to rescue all of a companies troubled projects, create, align, and balance its project portfolio, create and deploy a development life cycle, and train/coach the project managers. Similarly, a PMO with all junior staff will be less effective than a PMO staffed with experienced personnel. The number of staff and their experience determines what can be accomplished. Make sure that what you are being asked to accomplish is consistent with you staff size and their experience.

In addition to staffing levels and competence, the organizational placement of the PMO needs to be consistent with management expectations. PMOs can report in at the company, division or department level and their services and influence are primarily determined by where they are positioned in that hierarchy. A division-level PMO often has responsibility for managing the portfolio of all the projects in the division. They have the positional level of authority and peer relationships necessary to execute that assignment. A PMO at the department level does not. Make sure that what you are being asked to accomplish is consistent with your placement in the organization.

2. Organization Charter

A project charter is an essential document for achieving consensus on the problem, business objectives, scope and organization of a project. An organizational charter accomplishes this for the PMO. The PMO charter defines and communicates the services provided, how to engage the PMO, and the PMO’s authority in areas such as reporting and standards compliance. Here is an example of what might be covered in a PMO charter:

1. Introduction
1.1 Business Problem/Opportunity
What difficulties with projects is the organization experiencing? Is there a specific opportunity that the PMO was formed to pursue? This section is closely coupled with Section 2, Justification.

1.2 Organizational History
If starting a PMO has been tried before and failed, it is important to discuss what factors contributed to the failure and what is going to be done differently this time. Alternatively, if there are other PMOs within the company that are successful, this section can be used to discuss how lessons learned from them will be applied to this situation.

2. Justification for PMO Formation
Why was forming a PMO chosen over other alternatives to address the Business Problem/Opportunity? How will the PMO be funded?

2.1 Expected Benefits
What are the expectations of the Sponsor and the rest of the organization? What is the value proposition for the PMO?

2.2 Initial Cost Benefit Analysis
This is difficult to do and is closely tied to Section 5, Metrics. Most organizations use some sort of balanced score card approach rather than relying on purely financial measures. The Center for Business Practices suggests the following as examples of scorecard measures:

· For shareholders: economic value added, earnings-per-share growth, cash flow per share, economic profit, total factor productivity, percentage of new-product sales, return on management

· For customers: customer satisfaction, product quality index, repair incidence, customer loyalty

· For employees: employee satisfaction, employee turn-over, productivity, diversity in management, training time per year

· For community: index of environmental impacts, safety record, community satisfaction, charitable and community contributions.

3. Organization
Who are the people on your staff? How are you organized? Consider an organizational chart.

4. Services
The services you offer and how the rest of the organization can engage you for those services needs to be defined. There are many potential services a PMO can offer, too many to be listed here. The important thing is that with your organizational placement and staff, you can deliver the services.

5. Metrics
What can you measure to demonstrate value to the organization? Don’t leave this for others to decide, take the lead and propose metrics that will allow you to show how the PMO is contributing to organizational success. For example: reduced cost and schedule over-runs, higher customer satisfaction, reduced attrition, finishing more projects per year, better alignment of projects with organizational strategy.

6. Critical Success Factors
While many things contribute to the success of the PMO, CSFs highlight a small number of things that are most important:

· PMO launch has a higher risk of failure if CSFs are not addressed.
· They are often outside the PMO manager’s control and require senior management support.
· Stating them creates an opportunity for management action - they can take actions to ensure they occur.
7. Constraints, Assumptions, Dependencies
· Constraints are known factors that restrict the available options.
· Assumptions are expected factors that for planning purposes are considered to be true, real, or certain. They generally involve a degree of risk.
· Dependencies are other programs or projects impacted by this one or, other programs/projects that impact this initiative.
8. Risks and Issues
It is important to have a detailed and concise description of each risk and to identify who is responsible for mitigating the risk. Here again, this presents an opportunity for management action.

9. Appendices
Use this section to capture information that, while not directly relevant, contributes to the understanding of the problem and/or the solution.

In addition to a charter it is a good idea to prepare a “sales brochure” that describes the services offered by the PMO and how to contract with the PMO for service delivery. The brochure is a good focus for discussion and a good “leave-behind” when meeting with prospective clients.

3. Results in 100 Days and Six Months

The first 100 days are where foundations for success are built. During this timeframe you must reach out to the potential users of your services letting them know who you are, what your roles/responsibilities are and how they can work with you. The primary focus in this period is to understand the organization, market your value and services, and get a few quick wins. Here is a suggested list of things to accomplish in the first one hundred days that will help build a strong foundation. Not all of the activities listed below will apply to all PMOs and, depending on the number of staff and their experience, some may require more time.

· Understand existing staff capabilities
· Understand organizational politics
· Define and document scope/expectations and develop a PMO charter (if there isn’t one already)
· Develop a staffing plan linked to the scope/expectations
· Develop a communications strategy for the PMO and begin execution
· Establish a list of all “key” projects in the area(s) of the business you are responsible for resources, major milestones, and start/end dates
· Focus on business value, not compliance. Some low-cost, high-value activities are:
__ Lead lessons learned facilitations
__ Help with project initiation