20.8.12

On Project Management Office

I am on vacation, so I will be blogging a lot :).

Today it's on Project Management Office. We will discuss in later posts about its impact in the organization and the Project Management Information System.


The concept of Project Management Office was introduced in this post as a structure that is established when a company reaches a certain level of maturity in terms of Project Management. PMO can be established even earlier by a visionary executive management, but then the journey of this structure will be longer and more difficult, until the organization matures to allow for proper functioning of the PMO.

What does actually mean a Project Management Office? The meaning of the PMO might vary, according to senior management vision who needs to define and explain the objectives of the PMO to the rest of the organization. An example of the mantra of the PMO is described below.

The role of the Project Management Office is to supervise all activities of Project Management and to ensure standardization and predictability in how projects are run. Standardization is ensured through the use of a single project management methodology, and predictability is ensured through regular operational processes such as: Revenue Forecast, Progress Reporting and Portfolio Analysis.
In terms of the PMO and project managers, departmental lines are transparent and decisions are related to the whole portfolio, rather than at the department. For senior management, PMO provides the information necessary for optimal planning of resources, especially human resources, and access to any information required on the project. PMO is the single point of accountability on projects in the portfolio.

We underlined in the above description the word "predictability", which is very closely related to standardization. These are key words in a company, because they provide control over the future of the company. The stock exchange or the investors appreciate the quantitative indicators (eg, income or profit), but also the predictability of a company's financial statements as compared to the forecast. Any variation is perceived as a risk to the company's shares of stock in question and is penalized by a decrease in share price (for more information see the course of "Investments").

How is this linked to project predictability? In the case of organizations delivering services and solutions customized in a B2B model (business 2 business), projects provide the vast majority of revenue and profit. It is clear then that their financial results are as predictable as the Project Management activity, depending on delivering and billing projects as expected.
If organizations are not project-oriented, the projects are actually initiatives to create new products or make changes (improvements). In any case, the ability to run successful projects and completing projects on time is the company's ability to keep up with competition, market and industry. The relationship between healthy projects and financial results is more subtle and it is more difficult to demonstrate an impact on profit for example. It is therefore important to look at projects’ Return on Investment (ROI), and to determine the opportunity cost in case of failures or delays, to motivate management to provide resources to projects.

No comments: