Volume One Issue One
Page 3 – Why Do You Need a PMO?
Key Benefits of the PMO
PMOs produce key benefits for the organization, such as the ability to better address the typical challenges and characteristics of complex projects. In a PMIsponsored survey, 50% of executives reported that project success rates increased as a result of having a PMO. Respondents indicated that key practices such as providing standard processes and tools, and linking projects to company strategy improved the organization’s project success and helped meet financial and strategic goals.iii
As shown in Figure 1, we use a schema called the “Three Cs of Project Management” to categorize the key benefits of a PMO: Control, Collaboration, and Communication.
Figure 1. Three C’s of project management: Control,
Collaboration, Communication
1. Control
Control refers to management of schedule,
scope, resources, and benefits. Typical benefits of better control include:
• Improved project cost management
• Reduced time to market
• Decreased scope changes
• Minimized project risk
These benefits are attained through:
• Resource Management. Most organizations must deal with the demand for scarce and critical resources across competing projects. Projects vie for people, capital, facilities, and mindshare within organizations. The PMO provides management and mechanisms for prioritizing and assigning these resources to projects.
• Standards and Industry Best Practices. Individual projects typically do not have time in their schedules to create processes and tools based on industry standards and best practices. The PMO is charged with providing tools and processes that reflect standards and best practices to projects, which increase the likelihood of the project’s success.iv
• Scope Management. Project scope management is primarily concerned with defining and controlling what is and is not included in the project. It is the process to ensure that a project includes all of the work required, and only the work required, to complete the project successfully. Poorly done, it is one of the primary causes of project failure. Failures triggered by poor scope management include acceptance of a large number of small changes (without changes to cost or schedule), failure to get sponsor approvals in a timely manner, and poor project team accountability. Scope management is challenging on single projects, but can become daunting with complex projects, as changes in one project or a part of a project affect other, co-dependent projects. As an independent organization, the PMO can manage scope at a higher level, across multiple projects. This ensures better control of scope, no duplication of efforts and possibly, synergy between separate projects.
• Independence. The PMO is independent from the organization or team charged with completing project work. Therefore, their objectivity (in looking at schedule, control, and cost) meets the criteria for new legal requirements facing most organizations. Under the Sarbanes-Oxley Act of 2002, publicly traded companies are now required to implement processes that support an "adequate internal control structure and procedures for financial reporting.” Setting up a PMO is in alignment with this act because it provides the visibility needed for critical project investments."
Fifty percent of executives
reported that
project success rates increased as a
result of having a PMO.
Scope management can become daunting with complex projects because changes in one project affect other, codependent projects.