I frequently stop by the project management subreddit to see what is being discussed and join in sometimes. One frequent question is, “I have been tasked with setting up a PMO. What should I do now?”
There are several different models for a PMO, so the answer depends on what you are trying to accomplish. In this article, I will try to give some thoughts on the potential utility of three common models. Note that these labels were chosen for the sake of clarity, not to establish or align with any kind of standards.
Before I get into the differences, let us clarify a couple of points. When I talk about the project portfolio here, I refer to the collection of proposed and in-flight projects and the other assets under management, usually delivered in previous projects. This collection is the subject of your organization’s capital budget and part of the operational expenditure. It needs to be managed as a group of investments. There are a variety of ways to do this. Depending on the organization, it might be highly centralized or widely distributed. Also, risk management has financial implications. So, the way you want risks to flow up from projects and programs to portfolios and then the larger organization should help drive your choice of a PMO operating model.
Center of Excellence
In this model, all project managers are assigned to one organization, a PMO. They use the same tools and practices and are assigned to projects based on experience, availability, and problem domain knowledge. Under this approach, the PMO is a vehicle for delivering standard services to “subscribers,” who may be department managers or portfolio managers. This is an excellent approach for organizations that have mature project management processes. However, it will not benefit from the centralized governance of the project portfolio or an organizational roll-up of risks. It has the side benefit of being a great way to establish a career path for project managers.
Center of Governance
In this model, project managers are assigned to departments that sponsor projects. Meanwhile, the PMO budgets, selects, and prioritizes projects and resources, conducts in-process “gate” reviews, assigns auditors, and oversees the projects as investments. In this approach, the PMO is a vehicle for strategic decision-making and managing the project portfolio. This is an excellent approach for organizations that want centralized governance of the capital budget and project portfolio. The PMO wants visibility into significant risks but does not feel the need to develop a great deal of internal capacity for project management. It is also a great model for organizations that prefer to contract out project work. As you might expect, this approach leads to close alignment between the project manager and sponsor.
Center of Administration
As with the Center of Governance model, the project managers are assigned to departments sponsoring projects, but the department manages its own portfolio. The PMO provides administrative support, recordkeeping, and other services. However, in this approach, the PMO is a vehicle for administrative compliance. This is a perfect model for organizations that want to use structured methodologies, or are required to maintain specific, detailed records due to contractual or regulatory requirements. It is best for organizations with a lot of “accidental project managers,” meaning those for whom project management is not a core competency or a career goal. It is just something they ended up doing as part of their “regular” job. It is also beneficial for highly regulated industries that are subjected to a lot of audits.
The role of the PMO may change over time, depending on the needs of an organization or its relative maturity changes. My former employer used the Center of Excellence model and then changed to a Center of Governance model for about five years. We had a change of CIO and settled in somewhere between Center of Governance and Center of Administration. The PMO should not be a rigid institution. It should be like a project, “A temporary endeavor undertaken to create a unique product, service, or result,” as per PMI.org.
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