Starting a Project Management Office

Companies today are constantly seeking new methods for increasing the reliability, quality and cost effectiveness of IT projects.  Although the concept of the Project Management Office (PMO) is not new, it has recently become one of the latest crazes among CIOs of major corporations.

CIOs instituting PMOs are doing so very carefully.  The investment in a PMO is not small and there isn’t an immediate payback.  PMOs require retraining of staff or bringing on additional staff, office space, equipment and setting up of new policies and procedures.

Why a PMO?

Companies have been struggling with poorly planned IT projects since the beginning of the computer era.  They are continuously over budget, and most are late or don’t deliver the planned requirements.  The leaders of most IT projects tend to be technical and have little or no background in business issues and the importance of conserving project money and time.  By instituting a PMO, the CIO hopes to save money, improve estimates of delivery, utilize staff more efficiently, and ultimately have happier corporate customers.

Don Narup, CEO of CRA Information Services, a software development company in the banking industry, says “doing large projects is hard enough.  We don’t want to approach each of our projects as if it is our first.”  Learning from your mistakes, and the mistakes of others is a powerful motivation for implementing a PMO.

When is a PMO a good idea?  This depends on your culture.  If you have IT projects that come in on time and on budget, then read no further.  There is little to gain by putting in a PMO.  If your IT group is struggling and chronically late and/or over budget, or seems to have too many failed projects, then a PMO may be right for you.

A PMO is overhead, and is expensive.  Make sure that the benefits out-weight the costs.  In order to justify a PMO you must be doing a lot of projects.  A good rule of thumb is 25 or more projects in the medium to large project size per year indicate you should have a project office.  If you have less than 25, look closely at whether you want to proceed with a PMO, it may not be worth your while. 

Initial Goals of a PMO

When companies are first exploring the PMO concept, some of the most common motivations are: