Why implement a PMO? A compelling reason is that organisations who implement a PMO deliver more projects on time and on budget and are able to make better decisions about how to allocate their resources. A recent study by Gartner Group discovered that nearly 70% of organisations that have implemented a PMO report that project success rates have improved significantly.

Irrespective of the type of organisation, a PMO can make a significant contribution to project outcomes and business decisions.

In organisations we work with, a common set of reasons are cited as the drivers for setting up a PMO and include excessive rates of project failures, cost reduction, resource issues and management having insufficient information about projects and their status.

Are you in the process of setting up a PMO? If so download our free white paper creating a project management office (PMO). It explores topics such as why organisations implement a PMO and runs through the services a PMO can provide to the organisation.

Creating a project management office (PMO)

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When organisations start implementing project management and portfolio management processes they quickly realise they need a tool to help them. Think of all the things you need to do – keep a central register of projects, track who is doing what and when, build resource forecasts, produce status reports, deliver fancy graphs to the executive team to help them understand what projects they are spending all their money on. The list is endless. spreadsheet-hell

No problem, you just crank up Excel and start creating a bunch of spreadsheets. Two hours work later and taa daa… the perfect project management solution. And the best part is, it didn’t cost a penny.

Given minimal effort and no cost you have a solution in place. For these reasons, spreadsheets are the project management tool of choice for many organisations large and small. But there is the nub of the problem. Pretty soon you have project management spreadsheets appearing all over the place, doing things differently, not connecting up and in many cases doing things just plain wrong.

Spreadsheets will end up costing you a lot more than a tool dedicated to the job. So let’s take a simple example of using spreadsheets to track the most basic of project management requirements – a list of projects and their status…that has got to be really easy.

In the beginning there was a single project spreadsheet where all the projects in the organisation were listed. Fantastic, now we know what we are doing. But hang on, we need to know how each of those project is going – are they on track?

So we get each project manager to open up the spreadsheet and update their projects. But Joe can’t – because Bill in R&D has it already open.

Ok, so we start emailing out the spreadsheet and getting people to update it. Until we lose track of which version is which! There must be a better way of doing this.

Ok, why don’t we get each project manager to email Joe with the status of their projects and Joe can put the updates in. Hmmmm.

And you have this problem for all the different things you are trying to track. Project requests, issues, risks, tasks, budgets, status… the list goes on.

Ok, you get the message. Here is why we think spreadsheets for project management will be the most expensive project management tool you didn’t buy.

Spreadsheet explosion

Very quickly you will end up with spreadsheets all doing something slightly different. Each project manager “tweaks” the spreadsheets to get them just right for them. And right away you have created a massive overhead when it comes to trying to find and consolidate project information.

Maintenance cost

With spreadsheets the money you save by not buying a project tool you end up spending on staff costs. Updating all those spreadsheets takes time. A lot of time that could be better spent elsewhere on more productive activities. The PMO in a mid-sized organisation we worked with was updating over 35 different spreadsheets to keep track of their projects, time spent and resource forecasts many of which were interconnected.

Errors

We have seen some beautiful spreadsheets, stuffed full with errors. Take an example such as using a spreadsheet to forecast resource demand. Yes it can be done, but is pretty complicated and very error prone. One prospect we engaged with shared their current resource planning spreadsheet with us so we could understand their process. A simple error in the sheet meant they calculated they needed 12% more staff to execute on their projects than they really did. With over 50 resources, that was quite a blip.

Email and sharing

How do most people communicate spreadsheets – email. Multiple versions, people updating the email version… Need we say more?

Spreadsheets do have their place and in project management and PMO’s. But they should not be the core tool used; their value is around performing on the fly analysis or reporting. Not in being a project management tool or PPM tool. Why not take a look at our project management solution and leave your spreadsheets behind?

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In most organisations the PMO has five main responsibilities:

Set standards for how projects are run

The PMO builds up a common set of practices, principles and templates for managing projects. Standardisation means project managers can move more easily between different projects and new project managers get up to speed faster. Creating project management templates means standard components can be reused which saves time and money as they are not created for each project fresh.project-management-office

Ensure project management standards are followed

While the PMO sets project management standards, it also must ensure they are followed by performing regular assessments of projects. This process can feedback into the standards definition.

Gathering of project data and production of information for management review

The PMO will track the status of all projects in the organisation based on updates from the project managers. They will standardise the way this information is compiled and reported to management. The normal way to present the information is using project dashboards which provide a clear way to keep track of the status of projects.

Source of guidance and advice for project managers

Most PMO’s develop into a centre of excellence for project management and can provide guidance and coaching to novice project managers or new project managers who need to understand how the organisation runs projects. In many organisations we work with, the people running projects are not always formally trained project managers and the PMO plays a key role in assisting this group.

Creating a project management office (PMO)Managing and facilitating the portfolio management process

For organisations that have implemented a project portfolio management approach (PPM), the PMO manages and facilitates this process. This can include:

  • Capturing project requests and ensuring each request has sufficient information to assess the project.
  • Keeping an up-to-date repository of projects underway and requests pending review.
  • Implementing scoring and prioritisation models to help assess which requests should be approved.
  • Managing a resource capacity plan or resource forecast to help understand resource availability for projects.
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Definition of a project management office (PMO)

Quite simply, in a project based organisation, the project management office (PMO) is a department or group that defines and maintains standards around project management for the organisation.

The main functions of a PMO are typically:what is a pmo

  1. Set standards for how projects are run and ensure project managers follow them.
  2. Gathering of project data and production of reports, dashboards and metrics for management review.
  3. Source of guidance and advice for project managers.

For organisations that have a portfolio management process, the PMO is often involved in recording requests for projects, helping implement scoring and prioritisation models and facilitating the project selection process.

Centralised vs. decentralised PMO

Most organisations organise PMO’s into either centralised or decentralised models.  In a centralised PMO the project managers work for the PMO and are drafted in to run projects in business departments. Whereas in a decentralised PMO, the project managers form part of the business department. There are pros and cons of each approach.

Are you in the process of setting up a PMO?

If so download our free white paper creating a project management office (PMO). It explores topics such as why organisations implement a PMO and runs through the services a PMO can provide to the organisation.

Creating a project management office (PMO)

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