The Ultimate Guide to the PMO

Welcome to our Ultimate Guide to PMOs.

The goal of a PMO, regardless of type, should be to maximize the business return on the investment in projects. It really is that simple.

How to achieve this, how to build a PMO that’s right for YOUR organization right now, well, that’s a big topic but this guide will get you pointing in the right direction. Our goal is to give you an overview of what PMOs are for, how to set one up, and how to ensure your PMO delivers value.

There are links to blogs, articles, videos and more that will go deeper into specific topics.

If it feels like a lot, it is. Don’t worry. Keep this guide handy and reach out for help when you need it. If we can’t help, one of our partners can.

Here's what we'll cover:

What is a PMO?

A PMO is the link between the strategy of your organisation and its execution through projects.

The PMO is an organisation that amplifies the value returned to your organisation from its investment in projects. The main ways it does this can be categorized into three buckets:

  1. Strategy alignment: this involves capturing project requests and prioritizing them based on the goals of your organization. It also involves creating a resourced plan to execute the portfolio of projects and all of the governance and decision-making processes that are required to successfully deliver the strategy of the business.
  2. Project execution that delivers benefits: this is where projects are executed. The goal is to maximize the flow of value while minimizing risk. This means supporting project teams without overloading them with bureaucracy. It might include reporting, resource management, administrative support or “expert coaching”, but it’s all aimed at realizing the benefits from the projects.
  3. Best practices: projects are complicated, as is your organization. As such, the PMO can shape the methods, tools and processes that will help the whole strategy / project delivery organization to perform at a high level. This might include creating project templates, deploying PPM tools, training or setting up robust “lessons learned” processes.

We will look into each of these categories later. For now, just remember that no two organizations are the same. As such, no two PMOs will be the same. Some PMOs will focus at the portfolio level. Others will focus on managing a specific program or project.

The common thread, however, is that the PMO is designed to maximize the business value delivered through projects.

Let’s call that maximizing ROI from projects.

What are the benefits of a PMO?

Reality check: up to 72% of PMOs are being called into question by the leadership team.

Fundamentally, PMOs fail because they do not deliver benefits to the organization. If executives don’t feel like the PMO is delivering a return on investment, the investment stops!

So, what is the value that executives want? The main drivers of value are pretty universal. Executives always complain that:

  • It feels like projects aren't aligned with strategy
  • We never have capacity to do all the projects I want
  • Projects take too long and cost too much
  • And they seldom deliver the business results I need!

This is great news because it tells us exactly what benefits the executives want from the PMO.

The benefits of a PMO are:

  • Better alignment of projects with business goals
  • More projects being completed
  • Faster and cheaper project delivery
  • With fewer failures / lower risk (so you deliver the business benefit)

All of these benefits are aimed at delivering one overarching goal: to maximize the return on investment from projects, and we measure “return” as the ability to reach your organization’s goals.

At TransparentChoice, we have set ourselves an ambitious goal: we want to help our customers double the strategic ROI from their portfolio. “Madness!” I hear you cry! Well, not so; in this video you can hear the story of one customer who did double their ROI.

As a general rule, PMOs support executives through three mechanisms:

  • Delivering visibility: Most executives we speak with feel like they don’t know where the money is going, where their key risks are, which projects are in trouble or where the main bottlenecks are. The PMO can fix this.
  • Delivering control: Putting in place the governance processes that allow clear, timely decision-making over where the money is going, how to address risks, correct failing projects and eliminate bottlenecks… the PMO can put those processes (and the tools and data collection needed to support them) in place.
  • Improving execution: This is the PMO as template-creator, project supporter, coach and, sometimes, sledgehammer to help improve the speed and reliability of projects. This is about making sure project teams have methodologies, templates and tools to execute efficiently and to manage risk. Paradoxically, this is sometimes where the “PMO Police” must pull back and “stop being so helpful”.

Later in this document, we’ll talk about specific services that help you deliver that all-important ROI and how to select the ones that are important to your organization.

A word about ROI...

You’ve probably noticed that I keep saying that the goal of the PMO is to “maximize the ROI from projects”.

I’m not using “return on investment” in the same way that someone in finance might. They will look only at the financial aspects of an investment.

In this document, we are talking about “return” as “moving you towards your organization’s goals”. Maximizing ROI simply means maximizing progress towards your goals.

Some of those goals are likely to be financial. Others may not be financial at all.

Non-financial goals might be around developing specific capabilities (e.g. a car company might set the goal “Be the leader in battery technology”) or around HR (e.g. employee motivation), social or environmental targets (e.g. health outcomes or carbon emissions reduction).

Just because ROI isn’t wholly financial doesn’t mean you can’t measure it.

This article describes how to use the analytic hierarchy process (AHP) as a way to measure ROI across a basket of goals, financial and otherwise.

Right… now we’ve cleared that up, let’s get back to how PMOs can help maximize ROI.

What type of PMO should I set up?

There has been a lot written about different types of PMO. Frankly, I think this is the wrong question to ask, but all those authors can’t be wrong… so let’s spend a minute thinking about it.

The PMI categorizes PMOs as:

  • Controlling PMO: with a top-down approach, it might create specific templates, conduct regular audits and require project teams to follow strict processes - think of it as the “PMO police.”
  • Supportive PMO: provides consultative assistance to projects by providing templates, good practices, training, access to information and lessons learned from other projects.
  • Individual PMO: creates basic standards and oversees planning and control activities for an individual complex project or program.
  • Departmental PMO: supports multiple projects within a department or business unit. Its main role is to integrate initiatives of various sizes and types.
  • Enterprise PMO: operating at the corporate level, EPMOs ensure projects and resource allocation align with organizational goals and priorities. With executive support, they drive key initiatives, accelerate change, and report to top executives. May set standards and processes to boost project performance across the organization.

Other organizations categorize PMOs differently, but it doesn’t really matter because it’s very rare that you ever actually meet one of these PMO types.

Why? Well, in my view, they aren’t really “types” at all – they are more like ingredients. YOUR recipe might include a bit of Controlling (especially if you have low project delivery maturity), a bit of Departmental (to ensure some balance in delivery) and a sprinkling of Enterprise thrown in (to keep resources aligned with your organization’s goals)!

Or you might be a “PMO of One” struggling to do it all on your own.

Of course, I’m not really saying that EPMOs don’t exist. It’s more that the idea of a “pure” EPMO is a bit unrealistic. It might be that you do, indeed, have an EPMO, but that it only carries out some of the duties that the PMI describes for an EPMO and that’s just fine…

…so long as your PMO is boosting the ROI from projects.

So the question should not be “What type of PMO should I set up?”

No, the real question should be “What services should I deliver to maximize ROI from projects?”

How do I get my executives to buy in to my PMO?

When I speak at conferences, this is one of the most common questions I’m asked. The answer is simple: give your executives what they want.

Let’s break that down a little. This analysis is based loosely on the book The IMPACT Engine by Laura Barnard. Laura is a good friend of mine and I’ve seen this approach work many times. It’s not the only way to build a successful PMO, but it works and it’s simple...

Ask them what they want

To get started, talk to your executives and ask them what problems they would like you to solve. What are the things that are stopping them from achieving their goals? What is driving them crazy?

Do not ask them what you should do to fix it. They are not experts in project management or portfolio management. That’s not their job, but because they are execs, they will feel like they need to give you an answer… and it will be the wrong answer. So don’t ask the question!

No, at this stage, you’re simply going around your leadership team asking them for their pain… and you’re writing it all down. I mean really… write down exactly what they say because you can use that as evidence later.

Prioritize the pain

Having spoken to several of your key stakeholders, you can compile a list of pain points using their words. Next, review that list with them and ask them to prioritize the pain points. Often, you’ll find the same pain point being voiced by several stakeholders – a clear sign that this is a high-priority pain point.

From this prioritized list, pick the top three or so…

Root cause analysis

Imagine you’d had a headache nonstop for a month. When you go to the doctor, you don’t want them to simply give you paracetamol to treat the symptom. No, you know this isn’t a simple headache and there must be a deeper cause. Paracetamol might take the pain away for a couple of hours, but it will be back.

You want the doctor to identify (and fix) the root cause of the problem.

It’s the same with your stakeholders’ pain points. They are symptoms – like the headache – but you need to understand the root cause, which means it’s time to crack out the “5 Whys”.

For each of your three selected pain points, ask, “Why does that happen?” When you get an answer, ask, “And why does THAT happen?”

Traditionally, you’d go through “5 Whys”, but sometimes it’s more or fewer. Regardless, your goal is to find the root cause of pain.

You can hear Laura Barnard walk you through a root-cause analysis here.

The dirty little secret

Once you’ve done root cause analysis with the high-priority pain points, you can look for commonality. When you do, you will most likely see the same root causes cropping up in your analysis again and again.


    • Project execution:

      • Lack of training
      • Lack of process / standards
    • Lack of portfolio governance:
      • Poor intake process
      • Weak prioritization process
      • Poor resource capacity planning
      • Poor data on project progress
      • Lack of focus on realizing benefits

It’s like magic. We see the same root causes come up again and again, regardless of industry, sector, size of portfolio or even maturity level.

 

Click to view a Root Cause Analysis example

The turn-around

If the same root causes keep cropping up, that means that addressing the root cause will “fix” multiple pain-points. Now we’re really onto something!

Let’s say you start with fixing project prioritization. You can look at your list of pain points and ask, “If I fixed project prioritization, which of these other pain points would also improve?”

Usually, the answer is “A whole bunch!”

So, fixing the root cause of the problem fixes a bunch of pain points… let’s put that into a summary something like this...



Click to view Root Cause Solutions example

 

Repeat this process for your main root-causes, and then propose a solution for your root causes. Assemble these into a plan, making sure that you’re delivering something of value every 90 days (or less). Executives love a good 90-day plan – it fits well with the quarterly business cycle and delivering quickly builds credibility and support.

Winning exec buy-in

Now it’s time to present your case for change. Here is a handy template for what to cover:

  1. Walk the execs through their pain-points (in their own words, remember – show you were listening!) Make sure to use lots of examples of things that went wrong – your goal is to highlight that there is a very real cost to doing nothing.
  2. Show the link between their pain-points and your root causes – keep it high-level. The main point here is that you need to treat the cause, not the symptom and that the same causes keep coming up again and again.
  3. Now show that, if you fix the root causes, you also fix a whole load of other pain. In other words, focused intervention on a few root causes should have a massive impact on your ability to deliver real value to the organization.
  4. Finally, present your proposed timeline – 90-day value delivery cycles, remember - and “the ask” (money, people, commitment to participate, etc.) This is like presenting a business plan. Heck, it IS presenting a business plan!
  5. Sit back and enjoy the applause. Or at least celebrate the fact that your execs are bought in to your plan!

Sometimes you can do this in one big meeting. In other cases, you might need to pick off executives one at a time. Sometimes, you pick off a few friendly execs and enlist their help to win over the rest. This last technique is especially handy if there’s one big “pitching meeting” – if you brief one or two “friendlies” before the meeting, they can support you and set the tone.

Remember to speak in Business Language not Projectese. The more project-terminology you use, the less likely they are to understand your point… and then you’ve lost them. Practice with colleagues if you’re unsure.

Finally, here’s a little gift for you. We’ve put together a fun little e-book that explores how to double the ROI from your project portfolio. It’s a handy reminder for you, or an introduction for others. You can download it here.

What are the quick wins?

Do you remember the “Dirty little secret” above? When you do the analysis of your stakeholders’ pain-points, there are relatively few root causes of those pain points. As a reminder, they were:

  • Project execution
    • Lack of training
    • Lack of process
  • Governance
    • Poor intake and prioritization process
    • Poor resource capacity planning
    • Poor data on project progress
    • Lack of focus on realizing benefits

This is great news, as this gives you a number of ways to generate quick wins.

One of the quickest wins is to put in a tool to give your stakeholders a single view of the portfolio (if you don’t already have one). Visibility is usually one of the key “pain points” of leadership teams and TransparentChoice can help you deliver this visibility in weeks, not months.

If you have low project management maturity, then putting in place some basic training for project managers and/or exec sponsors could be a quick win. Similarly, putting in place basic project methodologies and templates can quickly raise project execution up a level or two.

But don’t over-do it. Investing more and more into project methods, templates and tools will quickly put you into the Zone of Diminishing Returns. This presentation, recorded at the Global Project Management Forum (GPMF) in Saudi Arabia, shows you how this works.

Law of diminishing returns

Another quick win is to put in place a good portfolio management process (project intake, project prioritization, portfolio selection / optimization, resource capacity planning). Project prioritization solves many of the more common executive pain-points and a good resource capacity plan can remove bottlenecks, accelerate project delivery and increase the number of projects that you complete. Again, the GPMF recording will walk you through the process.

TransparentChoice software provides the scaffolding to make all of this work. Our decision-science-based project prioritization process is highly collaborative and flexible, our portfolio Kanban gives visibility over project lifecycles, and our AI optimization tools help create the what-if scenarios you need to quickly select projects and lay them out on a timeline.

What services should my PMO offer?

Many PMO consultants will come and do a PMO Assessment. Often, this consists of a long list of services / capabilities that the PMO might offer and asks you to rank yourself against them. They will, typically, then offer to help you fix any that you’re not delivering to a high standard.

You’re smart. You read the section of winning executive buy-in. You’ve already spotted the problem with this approach.

This assumes that every PMO should deliver every service and that’s just not true.

What services should my PMO deliver? Well, it should deliver the ones that help maximize the ROI from the portfolio. You should deliver the ones that fix the pain-points of your stakeholders. You should fix the root-causes, not the symptoms.

So it turns out that taking stakeholders on the journey to discover where you should start also gave you the roadmap of services you need… at least for now.

Of course, once you’ve got those first few services in place, you go through the whole process again and refresh and update. Once you fix one set of pain-points, the most important ones, you can tackle the next tier.

Here is a quick list – not an exhaustive list – of some PMO services you might, eventually, want to offer.

Click to view PMO service catalog example

Remember, there are 4 guiding principles in deciding what services you should offer:

  • Services should solve a pain-point and not be there “because it’s on someone’s checklist”
  • Address root-causes, not symptoms
  • Deliver them in sprints – don’t get bogged down trying to fix everything at once
  • The services you need to deliver will change over time as your level of maturity changes and the organizational context changes

How to set up a PMO

There are fundamentally two schools for how to set up a PMO. By the end of this section, you’ll probably be able to guess which school I subscribe to...

The check-list school

First is the school of the check-list. These folks focus on lists of services you should offer. They offer up a “menu” to executives, allowing them to pick and choose which services the PMO should offer.

They then set out to build maturity in all of these services.

The problem here is that your executives are not experts in project management or portfolio management, or any of the other things PMOs do. They will ask you for something – usually along the lines of “make sure you’re executing projects better”. This will lead you down a path of ever-increasing templates, processes, controls and reports and, usually, this leads to bureaucracy rather than business outcomes.

Before you know it, you’ve spun up a bunch of services and your executives are still unhappy. You’ve delivered all the templates, tools and services they’ve asked for, but you haven’t delivered the one thing that they actually want; a significant increase in the ROI from your portfolio.

So, what’s the alternative?

The cyclic school

There are several other models for how to set up a high-impact PMO. Interestingly, most of them are wheels of one sort or another.

Laura Barnard has an IMPACT Engine wheel. I’ve personally seen this method turn around failing PMOs and change people’s lives. If you’re reading this and you don’t follow Laura… what are you thinking!!!

The PMI’s PMO Global Alliance has their PMO Value Wheel, thanks in no small part to the efforts of Americo Pinto and his PMOGA volunteers – amazing work.

House of PMO, Wellingtone and others also have wheels.

What these frameworks typically have in common is that, at the heart of the process, is something about maximizing ROI or increasing business value. It’s about moving beyond the “Iron Triangle” of on-time, on-budget and on-scope and looking at the actual benefits delivered to the organization.

There’s usually a diagnostic phase (identifying pain) which rolls round to an execution phase (building services) to a measurement phase (are we actually delivering more business value?) and back around to diagnosis…

There is no checklist of services that you “should offer”. Rather, there’s a goal – maximize ROI or something similar – and a process you go through quickly to move you in the direction of the goal. It’s agile, iterative, adaptive.

This ensures that you’re always focused on the value that executives want – business impact – rather than on processes and templates. Because the cycle revolves quickly, you’re always coming up with quick solutions which builds trust.

The more trust you have, the more support you have to build out more services, expand the team, take on other portfolios… rule the world! Mwah ha ha ha ha…

Sorry, did I “say” that out loud?

So, yes. I’m definitely a follower of the cyclic school of setting up a PMO.

We’ve already walked you through one of these cycles in the “How do I get my executives to buy in to my PMO?” and the “What services should my PMO offer?” sections… so now you know how to set up a PMO!

This guide - we need your help

This guide is ever-evolving, and we need your help. If you see any errors, let us know. If you think we’re missing information and you’d like us to add it, let us know.

We will update the document regularly and together, as a community, we can make this, truly the Ultimate Guide to the PMO.

 

Next Steps for Fixing Portfolio Governance

If you're still reading then I suspect you know you need to fix governance.

Here are 6 steps to get started:

  1. Portfolio HealthCheck. .
  2. Engage decision makers. You'll need the boss (and probably their boss) on board. Check out our handy slide deck to help make the case, or download the full guide as a PDF.
  3. Build a business case. Consider the opportunity cost of not fixing prioritization, and then ask yourself, is my prioritization spreadsheet really 'free'? ... and can I afford to ignore this?
  4. Identify prioritization criteria. Start with a simple review of projects' pros and cons & existing documentation. When you're ready for detail, check out our project prioritization criteria guide.
  5. Research project prioritization tools. We believe Transparent Choice is the best, but if you're shopping around here's what to look out for. Be wary of anything not based on Decision Science.
  6. Schedule a Demo. AHP is the best-in-class approach for prioritization. Better than a PPM tool, a spreadsheet, or even a magic-eightball. Book a meeting to see how it could work for you.

Not feeling quite ready to start? Implementing quality prioritization is a change process, and change can be scary - this blog might help you deal with the angst.

Free webinars

Learn more about project prioritization from these free webinars.

 

 Project prioritizatio guide pdf