What is a PMO and should your business have one?

With businesses increasingly organizing day-to-day work around projects, the skills and concepts of project management are more broadly relevant than ever.

Project management offices (PMOs) provide structure and consistency to project-based work across an organization, helping teams to repeat successful patterns and hit their objectives efficiently.

In this article, you’ll learn how PMOs work and how using one can help your company minimize risk and grow faster. We’ll also list some best practices to help you maximize your PMO’s return on investment (ROI).

What is a PMO and how does it work?

A project management office, or PMO, is a team or department that defines and maintains an organization’s project management standards.

The main aim of a PMO is to maximize the effectiveness and efficiency of its organization’s projects through the governance and refinement of relevant processes, policies, metrics and methods.

PMOs are growing in popularity as more companies realize the benefits.

According to Wellingtone data, 82% of organizations had at least one PMO in 2021 and 47% used multiple. Total adoption is up 11% from 2016, and more than a quarter of PMOs are less than two years old.

This growth trend suggests companies are giving the quality of project-based work more attention, although there’s still room for improvement. Only a third of Wellingtone’s survey respondents (project and program management professionals) said they were satisfied with their organizations' current level of project maturity.

What does a PMO do?

At the broadest level, PMOs are responsible for guiding project management teams and managing all project documentation.

The five most common PMO activities and responsibilities are:

1. Project status reporting. Updating stakeholders on a project’s progress and performance.

2. Maintaining project lists and portfolio management. Keeping accurate records on the execution of projects that are live, completed and upcoming within a business.

3. Maintaining project management methodologies and document templates. Defining and continually updating the frameworks project managers use to lead projects.

4. Facilitating project approval processes. Setting and overseeing the procedures project managers must go through to get stakeholder sign-off on their projects.

5. Project assurance and change management. Providing an independent assessment of a project’s chances of success (including the likelihood of staff adoption), before and during the project lifecycle.

Business needs dictate a PMO’s day-to-day priorities, so activities can differ between organizations and circumstances.

For example, a company forming a new project team or promoting a team member to the lead position may require its PMO to provide more direct guidance by acting as an internal consultant. This way, the PMO can use their expertise to help less experienced project managers avoid mistakes and develop their skills as they work.

PMO vs project manager vs program manager: What’s the difference?

You’ll see the terms PMO, project manager and program manager used together a lot.

While they are linked, each has its own meaning. Understanding the differences makes it easier to:

• Communicate with project management professionals

• Make a PMO business case for stakeholders in your organization

• Know where to look for expert guidance

What is a project manager?

Project managers are responsible for planning, organizing and directing projects (and related activities) within an organization. The organization’s PMO structure will dictate the following:

• The project manager’s level of control

• The frequency of communication between the project manager and PMO

Businesses can appoint internal project managers or outsource the responsibility to a freelance project manager. The latter approach can be more cost-effective for companies with smaller budgets and fewer projects, as it allows them to pay only when projects are active. Project teams then also get the benefit of expert guidance, even when their organization can’t justify a permanent hire.

What is a program manager?

Projects are temporary, one-off efforts to implement change. When a business links multiple projects and initiatives to achieve a bigger outcome, it becomes a program.

A program manager oversees programs and the projects within them to ensure they align with big-picture company objectives.

While program and project managers share some responsibilities and skills, program managers have more of a strategic focus. They maintain close ties to top decision-makers to translate executive thinking into day-to-day project decisions.

The 4 types of PMO and where they fit best

There are several PMO structures to suit different business types, sizes and needs. Using the right one can be the difference between effective and ineffective project management within your organization.

Large enterprises with budgets for multiple PMOs can use a range of structures to cover various project types and scopes with specificity.

Due to budget and scope constraints, small to medium-sized businesses (SMBs) are more likely to have a single, all-encompassing PMO, meaning the PMO’s role adapts its approach from case to case.

To help you build the right PMO for your objectives, here are the four main types and their characteristics.

1. The activist PMO

Suited to organizations with mature project management functions, activist PMOs take a broad and enabling approach, leaving project managers and other leads to use their experience to handle the finer details.

Their priority is always to align project delivery with the company’s overarching vision and support rather than instruct project managers.

The activist’s well-refined processes and standards help projects run with minimal PMO input. As a result, the approach works well in large businesses with established project managers, where it’s normal for many projects to happen simultaneously.

2. The delivery PMO (or project delivery PMO)

Gartner estimates that at least 40% of PMOs are delivery PMOs, making this the most common type.

Delivery PMOs are similar to activists in that they passively support project managers to meet objectives but tend to prioritize short-term results (i.e. deliverables) over long-term business vision.

Their focus on short-term deliverables means delivery PMOs are well-suited to agile projects and companies that use this methodology.

Waterfall vs agile project management

3. The compliance PMO

Compliance PMOs help to ensure projects stay within budget, on time and aligned with quality expectations. The project manager will identify these three constraints during a project’s initiation and planning phases.

Being more active makes compliance PMOs particularly effective in businesses with immature project management processes. In the absence of consistent procedures and documentation, the PMO can give extra guidance to inexperienced project managers.

4. The centralized PMO

Even more than other types, the centralized PMO acts as a go-to source for all project management information and decision-making within a business. These are sometimes called directive PMOs.

As well as setting project standards and directly influencing project outcomes, a centralized PMO can help new project managers and hires get up to speed with company processes.

With greater control over processes and more direct influence on individual projects, centralized PMOs fit well in large organizations with less mature project management processes.

5 ways a successful PMO streamlines business growth

A PMO adds repetition, structure and accountability to all project processes within a business. Done right, it drives greater project assurance and control over organizational growth and maneuverability.

Here are five key benefits of establishing a PMO:

1. Repeatable processes increase efficiency and predictability

With a PMO owning and maintaining best practices, you don’t need to reinvent the wheel with every project.

A refined framework exists for the project manager to apply their own objectives, meaning they save time at the initiation and planning stages of the typical project management process.

Where siloed project managers can choose how they gauge project performance, a PMO typically uses the same KPIs across all projects. This creates comparable data that makes it easier for businesses to spot inefficiencies and accurately predict future outcomes.

For example, a supportive PMO might compare the estimated spend of projects in a 12-month period with actual spend. If there’s a disparity, they can investigate ways to improve forecasting accuracy at the planning stage.

2. Major strategic initiatives get the attention they deserve for improved outcomes

Major projects that contribute to a business’s growth should be led by people with the appropriate skills and enough time to dedicate, but often they’re not. More than half of projects are handled by people whose main responsibility isn’t as a project manager.

Having a PMO focused on maximizing project benefits ensures projects, and the frameworks that guide them, consistently get the attention they need to deliver full value.

While internal project managers (and acting project managers) typically work through objectives with little time for reflection, the PMO can take time to measure outcomes and refine workflows without disrupting ongoing business. This way, project success rates should improve each time and business-as-usual tasks still get the appropriate attention.

Adobe Systems Senior Product Manager Margot Nack highlights the value of focus in a Project Management Institute (PMI) article on knowing when you need a PMO:

3. Greater emphasis on risk management reduces challenges and failures

While it’s the project manager’s job to identify, assess and mitigate risks linked to their work, it’s in the PMO’s interest to build an effective (and time-efficient) risk management procedure for project managers to follow. Only then can they fulfill their purpose of maximizing project benefits.

A streamlined, consistent and easy-to-follow process ensures risk management doesn’t become a chore or afterthought. The PMO’s refined templates show project managers what to look for and how to document it, minimizing unexpected challenges throughout the project.

A PMO that identifies risks on one project can share details with managers on similar or linked initiatives, helping the entire organization to become more risk averse.

For example, if a diversification project presents an unexpected legal challenge, the PMO can adjust the risk analysis section of its project framework to ensure other managers pre-empt the issue, saving time during planning.

4. Centralized knowledge establishes best practices for consistent performance

Risk information isn’t the only shareable knowledge. By keeping up with project management best practices, PMOs can deliver up-to-date training to help project managers optimize performance and stay ahead of competitors.

This is particularly useful for inexperienced project teams and new hires. When they arrive at the business, they can immediately access a wealth of knowledge on how the company manages its projects. Onboarding and upskilling preparedness saves the company time and reduces training costs.

5. A bridge to decision-makers for better-aligned projects

The PMO’s broadest purpose is to ensure projects align with the business’s long-term vision. In most cases, they’ll know this vision well and can support, amend or halt projects accordingly.

When projects need extra clarity or guidance, the PMO acts as a link between project manager and decision-maker. It has relationships with and understandings of both parties, ensuring communication flows efficiently.

According to a 2022 PwC survey, the most mature PMOs (who also report the biggest revenue growth and highest customer satisfaction metrics) overwhelmingly report having strong ties with top-level management. Of the top 5%, 94% agree that executives in their organization support PMO activities and objectives. Some 93% agree their executives see the PMO as a strategic partner.

If a business’s priorities change unexpectedly, the PMO can translate what they learn from executives into actionable information for project managers. This allows project managers to adapt their work quickly to maintain the likelihood of a positive outcome and avoid wasting resources.

How to maximize growth efforts with a PMO: 4 best practice tips

There’s plenty of data to illustrate the value of PMOs.

A KPMG project management survey found that 77% of respondents in organizations with established PMOs said theirs was effective at governing projects.

However, if establishing a PMO alone was enough to guarantee improved business performance, every business would have one.

It takes time, investment and care to set up and run a PMO that consistently optimizes productivity and contributes to business growth.

Here are four best practice tips to help you maximize the benefits:

1. Assess your needs to determine whether you can justify a PMO

A PMO improves project results in the right circumstances. It’s up to you to determine whether your business needs one.

Experienced program manager Mary Hubbard explains the key criteria succinctly:

It sounds simple but consider how many projects your business has undertaken in the past year. If the answer’s none, you don’t need a PMO. If you’ve conducted one or two and achieved all your desired outcomes, your set-up works for your current needs and, again, you probably don’t need a PMO.

However, if you’re ramping up growth efforts and building progress around projects, or just not getting great returns on regular project investments, a PMO can give consistent direction.

Discussing project-oriented companies that don’t have PMOs, Hubbard adds:

If you fall on neither of these sides and remain unsure, consider outsourcing PMO responsibilities to begin with. Experience some of the benefits and decide whether you can justify a full-time investment.

2. Establish control levels and highlight the PMO’s achievements to demonstrate value

Putting someone above your project managers without a proper explanation, especially if it’s a controlling PMO, can cause resentment and hinder productivity.

There are three steps to maintaining strong relationships and enabling effective collaboration:

• Involve all project managers and team members when establishing a PMO. Explain the benefits, discuss concerns and learn from their insight about which challenges and objectives to prioritize. Do this to emphasize the positive impact a PMO can have on everyone’s work.

• Establish clear project manager and PMO responsibilities early to avoid miscommunication and resentment. Both parties must understand their priorities and you must balance control levels effectively. For example, a compliance PMO expecting to be more actively involved in projects is more likely to clash with a highly experienced, hands-on project manager over responsibilities.

• When the PMO’s in place, regularly highlight its achievements using consistent and accessible metrics. For example: “Since establishing our PMO, project ROI has increased 22%. The PMO has contributed to this by alleviating four major risks and shortening our typical project planning stage by 15%.” This will remind project managers of the value of their PMO relationships.

You can’t always demonstrate PMO effectiveness and achievements with quantitative metrics. Conduct employee surveys to gauge and publicize a PMO’s subjective value.

3. Set reporting expectations early

As a link between projects and top leadership, PMOs are required to report on project status and performance. However, these reports are only valuable when they contain data that helps senior managers make better business decisions.

Gartner Senior Director Analyst Mbula Schoen explains:

Senior leadership must clearly define the value they expect from a PMO during its formation and then continue communicating that to account for changing priorities. This way, the PMO knows what data is most valuable and, as a result, creates consistently useful reports.

4. Invest in PMO software for company-wide visibility

PMO (project management office) software, adds extra consistency and efficiency to projects by centralizing:

• Activity schedules

• Project manager and team member responsibilities

• Outcome measurements

• Milestone progress

• Team communication

On an individual project level, having consistent data in a single location keeps project managers and team members organized and informed so they can pull towards the same project goals.

Using the same tools, PMOs can see how projects progress in real-time dashboards without distracting the project lead or needing to wait for a final report. They can use live data (often shown in easily-digestible dashboards) to make process decisions quickly and update executives with minimal effort.

There are many project management tools and PMO trackers available, all with their own pros and limitations. Task management solutions that integrate with your existing tech will help you keep clean, consistent data (allowing for more accurate insight) and save time by reducing the need to copy information between platforms.

Final thoughts

A carefully-run PMO can align projects with business goals, forecast performance to improve resource allocation and save you time and money by streamlining processes.

Not every business needs a PMO but in the right circumstances, it’s an easily justifiable investment.

If your business, like many others, is increasingly organizing day-to-day work around projects, establishing a PMO could be what helps you grow faster than your competitors.