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In a business era characterized by escalating complexity and constant change, the role of a Project Management Office (PMO) extends beyond merely coordinating projects - it functions as a strategic asset. The PMO guides organizations in streamlining project processes, enhancing consistency, elevating success rates, and, most importantly, driving strategic value across project portfolios. It's the catalyst that turns individual project achievements into collective portfolio success, a key player in realizing the bigger strategic picture.
However, increasing portfolio value and fully unlocking the PMO's potential demands more than just establishing a PMO; it necessitates the thoughtful implementation of best practices. It requires an understanding of the landscape in which the PMO operates, a clear vision of the organization's objectives, and a strategy to get there. In essence, it involves positioning the PMO as a strategic partner in the organization, actively contributing to the fulfillment of strategic goals.
This blog post ventures to delineate 10 fundamental PMO best practices. These practices are not only vital for the efficient functioning of a PMO but are also instrumental in enhancing the strategic value of portfolios. Our aim is to provide a roadmap that can lead your PMO to drive not only project success but also organizational growth. By delving into these practices, you can equip your PMO with the tools it needs to navigate today's challenging business environment and increase the strategic value of your project portfolio.
Here's a table of contents to guide you through the content ahead:
- Align PMO with Organizational Strategy
- Project Prioritization and Selection
- Adopt Effective Project Methodologies
- Risk Management
- Stakeholder Engagement and Communication
- Promote Continuous Learning and Skills Development
- Resource Allocation and Management
- Implement Robust Reporting Mechanisms
- Ensure Active Executive Sponsorship
- Use Appropriate Tools and Technology
1. Align PMO with Organizational Strategy
The first, and possibly the most critical, best practice to increase portfolio value involves aligning the PMO with the organization's strategic objectives. This alignment forms the foundation of PMO operations, enabling all projects and resources to be focused on the strategic objectives, thus ensuring efforts aren't wasted on inconsequential activities.
When the PMO and strategy move in sync, each project undertaken contributes to strategic advancement. For example, if an organization's strategy is centered on technological innovation, the PMO should be selecting and driving projects that foster this innovation. This could involve projects related to new product development, process automation, or business transformation, which in turn increase the portfolio's strategic value.
However, the task of aligning the PMO with organizational strategy doesn't end at the initial alignment. As organizations operate in dynamic environments, their strategic goals and priorities may evolve over time. Market shifts, technological advancements, or changes in leadership can all necessitate strategic realignment. In such scenarios, the PMO must be agile and responsive, adjusting its focus to match these changes.
Moreover, the PMO is also the conduit that connects delivery teams to the strategy. Projects are never quite as easy in execution as you hope they might be in planning. As specifications get tweaked, and concessions made it's key that the strategy is front of mind, so only the right corners get cut.
Let's also remember that the PMO should be the champion for benefits realization, so should be communicating how deliverables have supported strategy, and challenging business stakeholders to unlock the value inherent in the business case.
2. Project Prioritization and Selection
If a portfolio contains the wrong projects, no amount of best practice is going to avert failure. That's why leading PMOs know their role has to include project prioritization.
People tend to be very passionate about their projects, and while this energy can be very positive it also sows the seeds for irrational decision making. That's why the PMO should adopt a data-driven approach that ranks projects based on their potential to add value to strategy. This approach calls for objectivity, immune to personal bias or political influence, with consultation to build a syndicated knowledge base and objective criteria that quantify projects' value.
Selection also means the delicate touch of understanding what else matters beyond value. Having a spread of projects between departments, ensuring quick wins are in place, limiting the number of moonshot high-risk projects are all typical factors which require Human Intelligence rather than AI to optimize for an organization's needs.
However, a single round of prioritization isn't enough. As business dynamics shift, the market fluctuates, and organizational strategies evolve, the importance of projects can change. The PMO needs to recognize these shifts and be prepared to reprioritize projects as required. This could mean having the bravery to stop failing initiatives, and the calmness to assess 'must have' last minute requests with the same rigor as the existing backlog.
Learn more: Why AHP prioritization is different
3. Adopt Effective Project Methodologies
Project management methodologies significantly affect the PMO's effectiveness and, consequently, the strategic value of the portfolio. Tried and tested methodologies, such as Agile or Waterfall, provide systematic frameworks that guide project execution. Following these methodologies increases the likelihood of project success, thereby enhancing portfolio value. However, sticking strictly to these traditional methodologies may limit the PMO's adaptability and responsiveness to project-specific needs.
The PMO should remain open to exploring and adopting emerging project management methodologies. These novel methods can bring distinct benefits to different types of projects. For example, Lean Startup might be more suitable for innovation-driven projects, while DevOps might work best for software development projects. The PMO needs to stay updated on these new methodologies, understanding their strengths and when to apply them.
Moreover, the PMO should not hesitate to mix and match methodologies or customize them as required. The ultimate goal is to choose the methodology that best fits the project's nature, requirements, and team capabilities, even if that means creating a hybrid methodology. By adopting this flexible and dynamic approach towards project management methodologies, the PMO can ensure optimal project execution, adapt to a rapidly changing business environment, and maximize portfolio value. Conversely trying and force one tool on every team risks distracting energy away from the high value-add work, and onto low-value add internal compliance.
4. Risk Management
Risk is an inherent part of both project and portfolio management, making risk management an indispensable PMO best practice. The PMO needs to be proactive about identifying potential risks at the project's inception and planning appropriate risk responses. The PMO should also be having a grown-up conversation about risk to leadership. Eliminating 100% of risk will cost >100% of profit. Ignoring it might wipe out the business. Finding and agreeing on the balance is therefore key.
But risk management doesn't end at planning. Risks are dynamic – as projects progress, initial risks may change, and new risks may emerge. The PMO needs to monitor project risks continuously, adjusting risk mitigation strategies as necessary. It is essential to incorporate regular risk review sessions, involving the entire project team in the process. These reviews ensure that all potential issues are surfaced and addressed promptly, avoiding surprise disruptions.
Lastly, effective risk management also involves learning from past projects. The PMO should document all identified risks and their outcomes, creating a risk database that can be used as a reference for future projects. This proactive and comprehensive approach to risk management helps to reduce project failures, keeps projects on track, and maximizes portfolio value. It also creates a start point in case anything does go wrong, thus minimizing the need for a value-destroying mad scramble.
5. Stakeholder Engagement and Communication
A brilliant PMO is like Google Translate - able to speak both technical and commercial languages. Transparent and regular communication ensures that stakeholders remain informed about project progress, potential risks, and any changes to the project scope or schedule, while honest, thoughtful conversations with delivery leaders means no nasty surprises when it comes to key milestones.
This two-way valve role needs to work both on a human level and a formal one. Regular reporting provides cadence and structure, while trust and conversations bring understanding to the data and develop solutions to issues arising.
Beyond project tracking, the PMO should also encourage stakeholders to contribute their expertise and ideas to problem-solving discussions. This collaborative approach can lead to innovative solutions, promote a sense of camaraderie, and build trust among stakeholders. By cultivating such strong stakeholder relationships, the PMO can improve project performance and increase the strategic value of the portfolio.
6. Promote Continuous Learning and Skills Development
In the fast-paced world of project management, the PMO should foster a culture that values continuous learning and skills development. Every project is an opportunity to learn and grow. Conducting thorough project post-mortems can be instrumental in this process. These retrospectives offer a chance to reflect on what went well and what could be improved, providing valuable insights that can be applied to future projects.
However, learning shouldn't be limited to post-project evaluations. The PMO should also facilitate ongoing learning throughout project execution. Regular project check-ins can help identify challenges and successes in real-time, allowing the team to adjust and improve their approach as they progress. This proactive learning approach leads to constant incremental improvements, boosting the overall quality of project execution.
In addition to encouraging learning from experience, the PMO should also invest in formal training and development programs. These programs can help team members enhance their project management skills and stay updated on the latest industry trends and best practices. Regular training not only improves the quality of project execution but also boosts employee satisfaction and retention rates. By promoting continuous learning and skills development, the PMO can drive better project outcomes, thereby increasing portfolio value.
7. Resource Allocation and Management
A crucial function of the PMO is to manage resources efficiently and effectively. This involves evenly distributing workloads among team members and ensuring that resources are assigned to projects in a manner that maximizes portfolio value. The PMO should avoid scenarios where some teams are overloaded while others remain underutilized, as this can lead to decreased productivity and lower team morale.
Achieving this level of balance will not happen by accident. It starts with structuring resource requirements into prioritization, making the ability to deliver a critical constraint when deciding which projects should be done in a given delivery cycle. If a PMO allows too many projects to be 'approved' they are not doing their job properly.
The PMO should also be thinking about how more value can be delivered with the resources available. This might mean creating a shared contingency across a portfolio to improve overall delivery. It could mean challenging budgets to move funding into bottlenecked areas. It could simply mean stopping lower value projects to focus on delivering what matters most. In reality it probably requires all of the above.
8. Implement Robust Reporting Mechanisms
Robust reporting mechanisms are vital for the PMO to measure performance objectively and operate transparently. These mechanisms should offer detailed, accurate data that can guide decision-making, track project progress, manage risks, and measure project outcomes. Utilizing reporting tools and techniques that provide real-time data can also help identify issues early, allowing the PMO to take corrective actions promptly.
However, reporting needs can vary among stakeholders. Detailed, granular reports might be necessary for project teams, while high-level dashboards may suffice for executive stakeholders. The PMO should cater to these diverse needs by developing flexible reporting capabilities. Providing relevant, tailored reports can help keep all stakeholders informed and engaged, promoting a transparent and accountable project environment.
Moreover, the PMO should leverage data-driven insights from these reports to improve project performance. For example, by analyzing trends in project data, the PMO can identify areas of recurrent issues and implement strategies to address them. This data-driven approach to project management can enhance project execution efficiency, ultimately contributing to portfolio value.
9. Ensure Active Executive Sponsorship
Active executive sponsorship plays a pivotal role in project success. The PMO should strive to secure an executive sponsor for each project. Executive sponsors can champion the project within the organization, providing necessary support, removing obstacles, and facilitating access to resources. They can also provide valuable strategic insights, helping align the project more closely with the organization's goals.
Executive commitment to a project makes an excellent criteria for project selection. Without it, there is a significant risk that work done will end up being wasted. It's also a good way to differentiate between projects the CEO must have and bright ideas he'll get bored of by lunch time.
Keeping executive sponsors engaged is equally important. Regular briefings and updates can help them understand project progress, challenges, and successes. Their involvement can facilitate more informed decision-making and enable them to provide timely, relevant support. When executive sponsors are actively engaged, they can contribute to project success more effectively, thereby enhancing the strategic value of the portfolio.
10. Use Appropriate Tools and Technology
In today's digital era, leveraging the right tools and technology can significantly enhance the PMO's performance. Project management software can streamline various tasks, from planning and resource allocation to risk management and reporting. By automating routine tasks, these tools enable the project team to focus more on strategic activities.
The PMO should stay abreast of the latest technological advancements and be prepared to champion them inside their organization. Tools normally require human support to succeed, whether that's from a configuration perspective or from a change management one. Either way it's the PMO's job to ensure that the new toy gets played with.
We've said a lot about what a PMO should be doing here... one thing they should not be doing is wasting hours of their precious time with homemade solutions that are 'free'. Yes Excel spreadsheet. We're talking about you.
Read more: 6 PMO Tools to Keep Your Portfolios Aligned to Strategy
Conclusion
The effectiveness of a PMO is not a matter of chance; it requires the meticulous adoption of best practices. It is not free. It requires investment in tooling, training and time to unlock the benefits inherent in forming a Project Management Office in the first place.
If you're reading this from the PMO office, then we want you to be a superhero. The sector is still quite new, but we've learnt a lot already, so let's not ignore these lessons when we're figuring out how to make the function work.
If you're reading this from the C-Suite, then your PMO will need your help. They'll need your time to build strategic alignment, your support to get the business to accept change, and your cash to mean they don't waste time re-inventing wheels.
To dive deeper into Strategic Portfolio Management and learn how to implement best practices for your PMO, check out our comprehensive guide on Strategic Portfolio Management.
