An organization setting up or developing a project management office (PMO) must necessarily consider a range of dimensions and responsibilities such as those discussed in this tutorial. In many cases, organizations unsystematically grapple with the design process. This article proposes that a group setting up a PMO can shortcut the process of designing a PMO, that will match the requirements and priorities of their organizations, by systematically evaluating the dimensions listed herein and adopting the design options that best meet their needs.

As the move to “manage by projects” becomes more popular in organizations, there is also a move to set up PMOs to support project management. The role of these PMOs is diverse and varied, but commonly includes setting standards and methodologies for project management. Often, this role is expanded to include aspects of project human resource management and sometimes to include responsibility for the execution of projects.

Confronted with the task of setting up a project office, the responsible executive or group must define the roles and responsibilities of the office. Some authors have identified several types of project office design such as the PMO as repository of project management knowledge, or the project office as a functional group responsible for managing projects. However, these models oversimplify the variety of designs that are possible. This article contends that there is an almost limitless variety of possible designs.

A framework is presented for designing a project office that is appropriate to the needs of an organization. A number of key dimensions and responsibilities that should be considered are identified. These have been subdivided into: organizational factors; human resource responsibilities; responsibilities for setting project management standards; project execution responsibilities; and strategic responsibilities. These dimensions and responsibilities are discussed in terms of the choices that are available, and the reasons for adopting a particular design. This tutorial takes the position that there is no one ideal design for a PMO and that the design of a PMO within an organization should (and will) evolve over time as the organizational requirements and priorities change and the organization’s project maturity and competencies change.

ORGANIZATIONAL FACTORS

A starting point in setting up and designing a project management office is establishing the organizational role and power of the office. Some of these organizational factors may be mandated by the executive or group setting up the office, but frequently they are refined as a PMO evolves. These factors are pivotal to

the roles and responsibilities of a PMO. The following are some of the core design factors to be addressed in establishing and designing a PMO.

Reporting Arrangements

The reporting relationship of a PMO is an important factor in establishing the power and potential roles of a PMO. A variety of reporting arrangements is possible. A PMO can be set up as an independent group reporting directly to a president or executive committee. This potentially provides the office with considerable power and independence. Alternatively, a PMO can report to an executive within a functional department. This provides a lesser degree of independence but may still provide the group with considerable power. The reporting arrangement can be at lower levels; but in these cases, the role of the PMO generally becomes more restricted to particular areas of an organization’s operations.

In addition to the external reporting arrangements, there are a variety of possible internal reporting arrangements that may impact the roles of a PMO. For example, in geographically dispersed organizations, there are benefits in establishing separate PMOs. These PMOs may report locally but be affiliated with the other PMOs or report to a central PMO. Matrix reporting relationships are also common.

Organizational Positioning

PMOs can be established as stand-alone groups or can be part of a functional group such as information technology (IT) or operations. Typically, a PMO will be positioned in a functional group with prime ownership for projects. For example, in financial institutions that are heavily reliant on information technology and its development, PMOs are often located in the IT areas. This has the benefit of bringing a PMO close to the project execution areas; however, there can be a downside when the PMO is seen to be too heavily influenced by the functional group in which it is located. Broadening the reporting arrangement to a cross-functional steering committee can overcome this concern.

Projects in Scope

There is a wide variation in the scope of projects for which a PMO can have responsibility. PMO responsibilities can include all the projects undertaken by an organization; all the projects undertaken by a particular functional group such as IT; or projects of a certain type. The scope of responsibility should be closely aligned to an organization’s needs. Typically, when PMOs are first established, scope is restricted within an organization. This is often part of a “prove yourself” strategy as organizations assess the value of a structured approach to project management. PMOs may be established to progress particular organizational priorities. For example, many organizations set up PMOs to oversee and implement special projects. Similarly, PMOs have been set up to support organizational transformation projects or to facilitate organizational acquisitions. Projects in scope typically evolve over time to reflect changing organizational strategies and also organizational project management maturity.

Ownership of Resources

A PMO can operate as an independent group with a mandate to oversee and influence projects but without direct control of projects. In these cases, a PMO can be quite small in size. Alternatively, a PMO can “own” the staff who undertake projects. This could be restricted to owning an organization’s project managers but could extend as far as owning an organization’s total pool of project resources. All these models have been adopted. The choice depends on the expected extent of direct involvement in projects.

A Permanent or Temporary Office

A PMO can be set up either as a temporary or permanent office. A temporary office may be set up to manage a particular group of projects. For example, a number of organizations set up PMOs to overview their Year 2000 initiatives. Other examples include managing an acquisition or managing a major organizational transformation project. The motivation for a temporary office is to support a set of projects with a fixed duration. A permanent office is suited to supporting an organization’s projects on an ongoing basis.

Although an organization may initially adopt the temporary model, the value demonstrated and the infrastructure established often lead to the PMO being given expanded responsibilities and a continued mandate.

Size and Budget

In addition to the direct ownership of project resources, budget and staff resources are fundamental organizational factors to be addressed. Clearly, the staff and budget need to be increased as the responsibilities and capabilities of a PMO are expanded.

HUMAN RESOURCE RESPONSIBILITIES

A PMO can have a broad range of human resource-related responsibilities. These responsibilities can range from no responsibility for human resources to a role where a PMO takes on a wide range of human resource responsibilities for project resources. These expansive roles can occur both in the case when project resources report directly to a PMO and in cases where resources report independently to different functional groups. Potential human resource responsibilities of a PMO include the following.

Recruitment and Selection

A PMO can have responsibility for recruiting and selecting project staff. This may be restricted to a narrow group of positions such as project managers or it could include a broad cross-section of project resources. Recruiting and selecting staff provides an opportunity to have a significant impact on the project management culture of an organization, to ensure that skills acquired align with projects in scope, and to shortcut the development of project management skills.

Training and Certification

PMOs can take on the role of providing project management training to organizational staff. They ma y do this by providing this training themselves or they may facilitate this through outside vendors. In these cases, the role generally would include the selection of vendors. Responsibilities can also include the certification of project managers.

A PMO may set minimum standards that staff must achieve to be selected or promoted as project managers, or set a project management accreditation path within the organization. For example, an organization may agree that only externally accredited project managers be designated as project managers. Training and certification provide a PMO with significant opportunity to develop and promote project management skills.

Appraisal and Promotion

Appraisal of project managers often provides challenges that are not present in the traditional hierarchical organization. Project managers often move between projects and consequently between different sponsors and managers. This makes it difficult for consistency and comprehensiveness of appraisal. A PMO can play a central role in the appraisal process by providing appropriate templates and guidelines and acting as a coordinating point to obtain and combine appraisals from a variety of managers. This role can be expanded to being responsible for making or recommending promotions. The need for these roles increases as the movement of project managers across diverse projects increases.

Providing Resources to Projects

A role that PMOs can fill is to coordinate the provision of resources to projects. This could be restricted to the allocation of project managers, but could extend to providing entire project teams. As the size of an organization and its project resource pool increases, there is an increased need to systematically manage resources. This includes both managing availability and competencies. For example, in a large IT group where there may be hundreds of employees with a diverse set of skills, it is important to know when staff are available and the skills that the staff have in order to make the most effective use of resources. This facilitates the alignment of resources and requirements and the minimization of idle resources. A role that PMOs have provided is to maintain a project resource repository and to use this to manage the allocation of project resources. In a resource pool with hundreds or even thousands of resources, this becomes a major undertaking. Even in a smaller resource group, the uncertainty associated with project execution and competing priorities in an organization can make this a daunting task.

Time Recording

A PMO can have the responsibility for managing a time recording system. This role may include selecting the time recording tool and tracking time spent. This may also include analyzing staff utilization or time to be charged to a client, utilization against budget, etc. These roles are most relevant in large organizations and organizations where staff time is billed to the department being served.

Career Planning

A PMO can have the role of supporting the career planning of an organization’s project resources. This role can be linked to other human resource responsibilities such as recruitment, training, certification, appraisal, and resource allocation. A PMO, by monitoring and administering these factors, can potentially play a significant role in career planning — both from an organization’s and an individual’s perspective. This has value, both in supporting individual growth and in building organizational capability.

Personnel Administration

Personnel administration, such as managing holiday schedules and sick leave, administering salaries and bonuses, etc., can be a role for which a PMO is responsible. Reasons for having a PMO undertake these roles include freeing project and program managers from these day-to-day responsibilities to better focus their efforts on project execution.

External Vendor Management

PMOs are frequently exposed to a variety of external vendors due to the central role they play in a variety of projects. These may include recruitment agencies, service providers, hardware and software vendors, management consultants, etc. The multiple exposures that come from these interactions may place PMOs in a position where they are best able to manage the relationships with these vendors.

Counseling and Mentoring

A PMO may provide either formal or informal counseling and mentoring to project resources. This role can be especially useful to support new project management staff, such as when an organization is establishing project management or new staff are recruited.

RESPONSIBILITIES FOR SETTING PROJECT MANAGEMENT STANDARDS

Establishing project management standards is a common role for PMOs. This set of responsibilities provides the opportunity for a PMO to influence how an organization undertakes projects. These responsibilities help to set the organizational infrastructure for projects. This can provide both a direct and an indirect influence on projects.

Setting Project Management Methodologies

This role can include either, or both, defining project execution standards and defining project life cycle standards. The former relates to setting parameters for items such as documentation, reporting, sign-offs, issue management, etc. The latter relates to defining, usually at a high level, the sequence of activities a project will go through (e.g., requirements gathering, design, prototyping, sign-off, building, testing, and roll-out).

Defining the methodologies to be used by projects is a powerful force in influencing how an organization undertakes its projects. It is thus often a key responsibility given to a PMO when an organization expects a PMO to have a major impact on improving its project execution.

Providing Templates

This responsibility links closely to setting methodologies. By providing templates for project activities such as chartering, status reporting, risk assessment, budgeting, issue management, and post -implementation reviews, a PMO can have a very direct impact on how projects are managed. Templates can provide very explicit direction on what processes are to be followed. This enables an organization that is new to project management to quickly put standard processes in place.

Providing Project Management Tools

Providing tools has both a direct and an indirect impact on how projects are managed. Tools can range from templates (discussed above), to “off-the-shelf” project management software, to customized project management tools.

Providing Repositories

Another potential responsibility for a PMO is to set up and maintain project repositories. These can include shared computer directories for storing project documentation such as status reports and budgets; directories for maintaining all project documentation; and a central source of “best practice” project process and deliverables. A recent trend in this area is to establish Web or intranet sites.

PROJECT EXECUTION RESPONSIBILITIES

Responsibilities for project execution or delivery are closely tied to ownership of resources. A PMO that “owns resources,” typically project managers or a project resource group, generally takes on much of the responsibility for delivering projects. A PMO that has responsibility for project execution will require expertise in the range of project management knowledge areas and project management processes. Many PMOs do not have this direct responsibility. Their responsibilities are more indirect, focused on supporting and building project management capability by influence. However, even in these cases, PMOs typically will have responsibility for some key processes.

Risk and Issue Management

A PMO can be given a comprehensive risk management role. This may vary from setting the standard for risk management processes to actually facilitating or conducting project risk management. Reasons to make this a PMO, rather than project, responsibility can include introducing independence, introducing greater cross-project input, and building specialty expertise.

Issue management, like risk management, responsibility can be moved to a PMO from a project. Reasons for this are similar to those for moving risk management.

Impact and Change Management

Responsibility for assessing impacts of projects on their stakeholders — customers, employees, and shareholders — can be given to a PMO. A PMO as a focus for project activity can be in a good position to be able to understand the impacts of projects, both on each other and on stakeholders. For example, a PMO may be able to overview the impacts of quite separate initiatives on employees because of its vantage point. Individual projects may not have the same ability to assess these impacts. Similarly, analyzing and understanding the organizational changes that projects cause can be a responsibility particularly suited to a PMO. The potential for a PMO to have a useful role in managing impacts and changes increases as an organization’s size and project portfolio grow.

Communication

The exposure of a PMO to multiple projects places it in a good position to both manage communication among projects, and between projects and other parts of the organization. This role may extend to providing executive updates on projects to an executive group. Communication can be mediated either by direct communication such as by providing newsletters and presentations, or indirectly by providing access to project repositories such as shared directories or intranet sites. These roles become more important for larger organizations or organizations with many projects. In these cases, a PMO has the potential to provide a summarized and focused overview of projects.

Project Auditing

A major potential role for PMOs is auditing the application of project management standards. This may be done to all projects or may focus on particular “high importance” projects. This may be done by formal assessment or it may be an ongoing oversight role of a PMO. Some organizations use their regular internal audit processes, but others choose to use their PMOs due to the project management expertise that these groups may have.

Focus on Major or Special Projects

A variant on the role of a PMO in project execution is giving a PMO execution responsibility for a selected group of projects. This could include major projects, projects requiring special attention such as politically sensitive projects, or groups of related projects.

RESPONSIBILITIES FOR BUSINESS STRATEGY

In organizations such as those in the communication and financial sectors, which have an ongoing major investment in technology, and others where project-related expenditures consume a major part of the discretionary budget, PMOs are ideally situated to take on an expanded strategic role.

This central role, plus exposure to the life cycle of multiple projects from initiation and planning to execution and closing, places PMOs in a unique position to take a major strategic role in organizations. The strategic responsibilities of a PMO can potentially include the following.

Collection of Initiatives

A PMO can act as a central point for the gathering of initiative proposals. This role can include the provision of templates and guidelines to assist those submitting proposals.

Project Evaluation

PMOs can be a central point for project planning. This would include the evaluation of proposals against various criteria. These criteria could include evaluation of factors such as costs, benefits, strategic fit, stakeholder impacts, risk assessments, resource impacts and availability, and relationships with existing projects and schedules.

Project Prioritization

The PMO role can also include the prioritization of the proposals received. This may be from a cost/benefit or other financial perspective, but may also include prioritization by assessing project resource availability, project impact evaluations, and risk assessments.

Project Planning and Scheduling

PMOs can play a key role in planning individual projects by providing appropriate tools and templates. However, because of their exposure to multiple projects, PMOs are in an ideal position to coordinate projects and entire programs. Projects may be planned and scheduled by coordinating tasks and dependencies, but may also include resource and impact considerations.

Project Approval and Funding

An extension of the prioritization and scheduling role is the formal approval and funding role. A PMO cannot replace other organizational groups in planning or managing an organization’s discretionary budgets and activities. However, they are ideally positioned to coordinate and facilitate these processes.

Project Monitoring and Controlling

Once projects have commenced, a PMO can take on the role of monitoring project progress. This is already a common role of PMOs. By implementing and reviewing regular status reporting, a PMO is able to monitor elements such as cost, resource utilization, timing, and progress against plan. This information provides a basis for exercising control over projects. Remedial action can be taken on projects that are failing to meet cost and other plan targets.

Project Portfolio Management

An extension of the monitoring and controlling role is the management of the portfolio of projects. A delay, or speedy progress, in one project may provide opportunities for other projects. Similarly, monitoring a portfolio of projects enables rapid response to changing organizational priorities; resources can be moved from one initiative to another, or scope or time priorities can be adjusted.

CONCLUSION

This article has discussed a wide variety of factors that should be considered in designing a PMO. Undoubtedly, the list is not comprehensive — in fact, it is unlikely that it could be possible to identify all the factors that could be relevant to all organizations. However, the list does include a major set of factors that are relevant to designing PMOs. Every organization will have its own set of requirements. By considering the factors discussed, an organization has the opportunity to systematically choose a set of design factors that will help it meet its requirements at a given point in time.

The design possibilities for PMOs are almost limitless. A PMO can be designed to have quite restricted responsibilities; or a PMO can be established to have a major role in the planning, controlling, and coordinating of an organization’s portfolio of projects and managing its project resources. By systematically evaluating the design possibilities, an organization can quickly choose a design that meets its needs.