Project Management Office: PPM Best Practices
What is a Project Management Office?
A project management office (PMO) is a group that establishes, maintains, and governs project management standards across the organization. By centralizing best practices and providing the proper tools that ensure project transparency and strategy alignment, the PMO delivers value to not only the business but the project and program stakeholders as well.
Roles and Responsibilities of a PMO
Projects or work, if left to each business unit or team member, can quickly go off track, consuming resources and missing delivery dates due to inefficiencies, poor direction, and strategic misalignment. The project management office provides governance, supporting project managers in ensuring teams follow standard company procedures, best practices, and processes when planning and executing projects and programs.
PMI found that companies that align their PMO with corporate strategy experience a 38 percent increase in the number of projects that meet their goals, with 48 percent fewer project failures. The project management office plays a key role in setting the company up for more consistent program and project success. Gartner’s The PMO Leader’s First 100 Days says there is no “right” model for a PMO, but the most effective ones “set achievable expectations, demonstrate ‘real’ value, and are a good match with their organizational culture.”
Measurement and reporting are critical responsibilities of the project management office. These shareable reports provide granular and high-level insights into the status of projects and teams all in one place. Executives have access to real-time project, program and portfolio progress updates and roadmaps, as well as potential capacity and budget issues.
With reliable data in hand, leaders can make more informed decisions sooner and with greater confidence, reducing risk and optimizing resources. They are also able to more rapidly and appropriately pivot strategy based on market changes, realigning work as needed to continue to innovate and stay competitive.
Project Management Office Types
There are multiple types of project management offices, including IT PMOs and EPMOs. An IT PMO is a departmental or organizational PMO; that is, a project management office that resides within the IT department.
While an IT PMO ensures consistency and builds best practices within the IT department, it is siloed and limited in its capacity and influence. According to PMI, the departmental PMO may be able to successfully deliver the projects within their department, but “struggles to integrate with the rest of the organization.” Departmental PMOs have a place, but they should be careful to ensure their work contributes to the greater business strategy, seizing opportunities to remove barriers that hinder business efficiency.
Digital transformation presents an opportunity for organizations to think more broadly. Organizations are less fixated on projects and more focused on enterprise planning, delivery, and performance to respond to increased digital business demands.
To achieve cross-functional alignment and provide visibility across the delivery and performance of all portfolio investments, many program and portfolio management leaders are establishing an Enterprise PMO (EPMO). Gartner predicts that by 2023, 80 percent of organizations will have an EPMO focused on integrating digital products and programs, saying the EPMO is responsible for “bridging strategies and delivering value across business units.”
Project Management Office Benefits
Standardizing project and program planning and execution has advantages. According to CIO Magazine, a good project management office offers many business benefits, including:
- Providing tangible, repeatable, long-term benefits to the business
- Aligning with corporate strategy and culture
- Agility to adapt as strategy shifts
- Integrating data and information from corporate strategic projects
- Enabling the sharing of resources, methodologies, tools, and techniques for project success across the enterprise
Additional benefits of standardization include lower costs, greater efficiencies, and reduced risk. When teams follow the same workflows and proven processes, there is less chance for overspend and wasted time on the wrong projects. Teams share lessons learned to sustain continuous improvement and faster execution with greater confidence.
The project management office empowers project managers and their teams with tools and methods, acting as a strategic business partner focused on serving the needs of the organization. With a steadfast presence and commitment to supporting the business, the PMO equips the organization to reach its goals faster, more efficiently, and with a greater return on investment.
Project Management Office Tools
Specific tools support the project management office and provide the necessary transparency and automation to deliver insights, management capabilities, collaboration, governance, and scalability. There are many tools on the market, but IT Central Station offers a good starting point by naming top performers in its “Best Project Portfolio Management Solutions.”
Cloud-Based, Real-Time Software
Software for centralized project and portfolio management is critical for any project management office. Static spreadsheets and disjointed systems provide little clarity on what is happening at any given moment. Team members must be able to leverage real-time data to collaborate effectively, and managers need this data to make timely, informed decisions.
Portfolio View and Roadmap
A portfolio view will include all programs and projects across the enterprise, providing a more comprehensive understanding of interdependencies and where the company is investing. Filters, sorting capabilities, and other customization options ensure each user can see what is most important to them, both at a macro and micro level.
The project management office needs to understand how each project is progressing over time. A project portfolio health view enables leaders to be more strategic and accurate in decision-making as they forecast and optimize financials and resources.
Portfolio and Project Management
The PMO needs to manage projects within portfolios in one place, with insights into project-level financials, as well as program alignment and delivery. With so much information to manage, having a consolidated view ensures executives, managers, and team members are all working with the same information and understand how their work contributes to helping the business achieve its goals.
Strategic Alignment and Project Prioritization
Work must be prioritized based on the value it brings to the company. By aligning work with business strategy and objectives, the project management office is better able to prioritize the highest-value work, even as strategies and goals change. Scenario planning and predictive portfolio analysis are powerful tools that enable leaders to keep resources focused on the right work at the right time leveraging the right resources.
Flexible Resource and Capacity Management
Resources are complex, involving people, time, and finances, and are almost always limited to some degree. The best project portfolio management tool provides understanding in how to share and optimize resources among projects, providing real-time visibility into the status of those resources for proper investment, workload, and capacity planning.
Reporting, Dashboards, and Analytics
Reporting not only provides an instant snapshot of work in progress, but it also puts information into context for each user and executives. In-app reporting, customized dashboards for easy viewing, and analytics reveal historical, real-time, and predictive insights enabling more accurate forecasting and smarter decision-making as companies manage change, portfolios, and resources.
The Role of the Project Management Office Is Changing
In the past, the business often viewed the project management office as being an enforcement agency tucked away in the IT department. With so much internal and external change affecting the enterprise, the project management office is in an ideal position to make a real impact on the business by delivering efficient and effective project portfolio management (PPM). Project management office PPM best practices help define how to transition from a governing body to a guiding force that drives value across the entire organization.
There are many PPM best practices to consider when evolving the PMO. It is beneficial to remember that the key function of a modern project management office is to continually provide executives and stakeholders clear visibility into business performance. What these leaders need most isn’t governance or endless reports, but to be equipped with the right data at the right time to make decisions that will shape the trajectory of the business.
Common Project Management Office Challenges
No matter the intention of the project management office, perception is reality. The business often has its own view of the PMO, none of which are as a value center.
Much of the disconnect is due to the fact that the PMO frequently falls into the trap of concentrating on the wrong things, inadvertently supporting the reputation they would prefer to change. Three common impressions of the Project Management Office include:
The process cop is the perception that the PMO is focused on processes, procedures, and conformance above all. The importance of following the stated checklist outweighs the benefits of measuring success by outcomes, value, and speed of delivery.
There is a one-size-fits-all approach that is highly structured and rigid, lending to the corporate notion that the project management office is not there to support the business as a valued partner, but to be avoided or simply tolerated as a process enforcer. The PMO ends up hindering innovation and value delivery because it is bogged down in the rules.
A project management office that is focused on execution is frequently considered a Demand Wrangler by the rest of the business. All ideas are believed to be good ones; therefore, all are greenlighted without prioritization. This clogs the project funnel and tips the scales of capacity and demand.
While this type of PMO may at first appear to be friends of the business by never saying no or killing projects that aren’t bringing value, its reluctance to establish a standardized process to prioritize work and measure outcomes means resources are often overutilized and projects quickly go over budget and past deadlines.
Value Blind PMOs are focused on the wrong metrics or none at all. Even if they are measuring something, they have no trustworthy way to quantify their value or the success of their efforts in relation to the organization’s strategic objectives.
Instead of providing needed visibility into performance, the smoke and mirrors reporting only serves to confuse executives and stakeholders who must build budgets and schedules based on incomplete data that doesn’t provide the right context. The wrong projects continue to progress and receive funding even though there is no real proof they are or will bring value.
Adapting to Change
Without implementing PPM best practices, the project management office is limited in its ability to adapt to the changing world of work and evolving customer demands. They continue to rely on systems and processes that struggle to keep up. Many PMOs want to transition to be more agile, but they are unsure of which steps to take or tools to use. However, there is a cost to doing nothing.
Manual tools and legacy applications, for instance, are unable to adequately manage the influx of work and complex resources considerations. Spreadsheets still reign, quickly becoming unmanageable and obsolete as data is not updated in real-time.
Making things worse, business units and teams often use their own systems, creating an integrated web of disparate data that fails to provide a complete picture. The data is not operational; therefore, it has less value to the business to inform decisions.
With many traditional PPM efforts providing no organizational-wide visibility, low-value work consumes the limited resources of time, budgets, and people. Innovation stalls and increasingly more projects fail to deliver their intended outcomes.
Learn about the benefits a standardized PPM solution can bring and the 8 steps in selecting the right PPM solution for your organization.
Without implementing PPM best practices, the PMO will continue the grind. Best practices aim to optimize resources, so the right skills are aligned to the right projects at the right time. Without visibility into work and resources, however, resource optimization is impossible.
Adoption is key to success for any new project portfolio management tool. Proper training and change management are often missed opportunities to ensure the PPM tool delivers its intended value. Instead of changing from the inside out, the project management office remains stuck by not optimizing its people, processes, or tools.
Without the right balance of capacity to meet demand, the PMO will continue to execute projects that fail to align with strategic goals or bring value. They commit to too many things and are unable to deliver strategic projects on time.
Poor team collaboration inevitably results in miscommunication, duplicated efforts, and no visibility into how team decisions can affect the rest of the business. Output is limited because resources are not utilized properly.
A lack of organizational-wide visibility into projects and resources hinders executives’ ability to make informed decisions. Decisions are based on guesses or data that doesn’t show dependencies.
The PMO must remember, above all else, that effective PPM has little to do with governance and everything to do with value-driven guidance.
Evolving the Project Management Office with PPM Best Practices
According to “The Savvy PMO’s Guide to Visibility and Reporting,” the modern Project Management Office exists to enable and support their stakeholders in their efforts to achieve strategic goals. Creating visibility through “just right” reporting is key.
Continual improvement of the project management office can only be achieved through repeated measurement of the metrics that matter most. Implementing the following PPM best practices will provide the PMO with the best opportunity to evolve to better meet the needs of the business, even as those needs change.
Know What Your Stakeholders Want to See
The first step in PMO progression is to first define the outcomes your stakeholders are seeking. These requirements may vary depending on what’s important to each stakeholder, forcing the PMO to break out of its one-size-fits-all mentality to embrace agility.
Use a PPM tool that centralizes data, creates different levels of visibility, and allows for data manipulation, such as “what if” scenarios. The right tool will enable stakeholders with historical, real-time, and predictive reporting.
Learn about the questions to ask to ensure your organization is getting the most ROI from its projects and key features of the best PPM tools.
Embrace the changing world of work
“The Journey to Agile Portfolio Management” says the best project management office is one that embraces different ways of working instead of mandating a particular work methodology. Whether traditional waterfall, Lean-Agile, hybrid, or collaborative, an agile PMO empowers teams to do what they do best in a manner that suits them to get the right work done. The project management office provides the right oversight with “just enough” governance that focuses less on execution success and primarily on value outcomes.
Align work to company goals and strategic portfolios
All work must directly and consistently align with business strategies or they are doomed to be failures at some level. The project management office should partner with business leaders to develop project evaluation criteria that provides a measurement of whether a project does, in fact, align.
Investment in a project portfolio management solution simplifies this by providing the automated capability to identify projects that warrant investment (both now and continually) and provide clarity into projects at different levels. One PPM best practice is to leverage PPM reporting tools that can measure key metrics that show the big picture. Only then will leaders have the data they need to inform their decisions that result in better prioritization of projects and resources.
Learn about the impact of poor PPM and the difference Agile PPM practices can make.
To make decisions about whether or not projects are bringing value to set goals, stakeholders need data derived from the constant measurement of objectives and outcomes. This is where many PMOs fail: they get lost in the details instead of focusing on the big picture executives and stakeholders need.
Time tracking is a notorious sticking point. It’s not about timesheet compliance. The purpose of tracking time is to understand where your resources are spending time and how much that costs so leaders can optimize them. The more you show team members how executives are utilizing their timesheet data, the more they will utilize timesheets and ensure data quality.
Timesheet data is just one measurement. There are many more KPIs that need to be aligned with what matters to stakeholders for continual project management office improvement. PPM best practices break these KPIs down into two categories:
- Internal effectiveness of the PMO
- Output of projects
Project completion and success rates, progress improvements, and the number of people working on multiple projects are just as important as tracking budgets and cost savings.
Learn how to establish and track 18 project and portfolio management key performance indicators.
PMO Success Begins and Ends with Effective PPM
By implementing PPM best practices, the evolved PMO better supports continuous value delivery by implementing effective PPM tools. Gartner recommends that one of the keys to PPM leaders avoiding common PPM implementation pitfalls must be to ensure that PPM solutions are comprehensive to address all of the needs of the business by identifying and assessing gaps in use case and decision needs. The right PPM tools enable the business to manage projects, programs, and resources in one place for greater efficiency and exceptional visibility into the performance of the business.
In fact, effective project portfolio management is the greatest contribution the project management office can provide to the enterprise. The PMO must remember, above all else, that effective PPM has little to do with governance and everything to do with value-driven guidance.
When everyone across the organization, no matter their role or title, is focused on driving business value, the enterprise is able to quickly adapt to consumer demands to remain relevant and competitive despite any change. This is the opportunity facing the PMO: To define itself as a valued business partner that enables, supports, and guides the enterprise to true success.
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