How to Set up a PMO (Project Management Office): A Step-by-Step Guide

I love this topic because, like many of you; I was brand new to PMO Management when I was first offered a PMO. It was scary and you might not understand where to start. Yes, you can search up and down LinkedIn, and I can tell you that there is advice there for sure, but it is often not expert advice.

I read it all the time, people telling you how to run a PMO and have zero or very limited experience doing it themselves. I saw a PMO expert that was offering an eBook for building PMOs on LinkedIn a couple of days back, but when I dug into his profile, he had no PMO experience. His LinkedIn banner said he was a PMO coach as well!

So, I am not saying this to disparage anyone; I am not. I say that the key to learning is through hands-on experience, and a classroom setting can only provide limited knowledge. So, please search for people who have done this before because those are the ones that have learned the hard lessons and can really help you grow in this PMO space.

Why learn from me?

Let me spend a minute and tell you the story of when I started in my first PMO leadership role. I was a project manager working for AT&T Wireless in the early 2000s; I think it was 2003, and my director at the time asked me to take on running the Data Warehouse PMO from her.

I was a Data Warehouse Project Manager at the time and had lots of experience managing projects, but never a PMO. But, she wanted me to do it, so I said yes, I would love to try. She was managing the PMO at that time, and was asking me to take it over for her.

I was excited and scared at the same time. Handing me her PMO meant a ton to me, and I would not fail. So, that’s it, and really that simple; I hinted to her I wanted it for a long time and she finally caved in and gave it to me.

What is a PMO?

I have said this a couple times in articles and interviews before, but there is no single definition of a PMO.

Let me explain. A PMO at one company can mean something completely different to another company.

For example, when you define a PMO, focus on the P of the PMO. Is that P stand for Project, or does it mean Program or Portfolio? That’s the point, but when you don’t know what the executives want for the PMO, then you will not know how to define the PMO properly.

I have seen so many definitions of a PMO being a “Project Management Office” meaning the P is for project management and that is not wrong, but it is not the same across every company.

My current PMO has Portfolio, Program and Project Management. So, I am using all 3 Ps in this case. Therefore, don’t look for a single definition from the web or anyone article. Look for what makes sense for your company.

What are the different types of PMOs? Aka… The PMO Model

I think this list grows every time I get on LinkedIn. It is crazy how we can keep saying the same thing in different ways.

Here is the list I have used for a while that seems pretty solid and ones adopted and accepted by the industry.

PMO types include:

• Directive
• Controlling
• Enterprise
• Agile
• Managing
• Supportive
• Center of Excellence

You may see different names from these listed above, and I get that and like I said, it is changing all the time. But for now, as you are learning and growing in this space, stick to what the industry is already using.

What are the roles and functions of a PMO?

This is also a very interesting question because what you see when you search on what roles and functions do you need in a PMO on the web, the most common result that comes back is project management roles.

You might see some other roles like Business Analysts, but again, it is very much project management related. That will make sense when your PMO has Project Management as the main P, but what I have done is come up with a better and more structured way of understanding what roles and functions you need in your PMO.

I have used this same process across my PMOs for years now with great success. Basically, what you do is take your PMO Service Offerings that your PMO is going to perform, and you create the roles needed to perform those services. It is that simple.

You can check out the book here: PMO Service Offerings eBook on Amazon today that guides you through this simple but effective end-to-end process.

What are the benefits of a PMO?

This is another significant area to cover when creating your PMO, but another area as well that will differ from PMO to PMO and organization to organization.

You should start with a benefits list like this below, but adjust and tweak for your organization.

1. Standardization of program and project execution
2. Improved governance across the organization and individual projects
3. Resource management and utilization
4. Increased program and project visibility
5. Issue and risk management across programs and projects
6. Knowledge sharing
7. Enhanced communications
8. Strategic alignment to the companies mission and vision
9. Performance measurement and process improvement
10. Ongoing training and employee development

As you can see, there are just some of the top benefits of having a PMO at your company, but these benefits, although standard across the industry, may not resonate with your company.

As a new PMO leader, make sure you have a benefits list that everyone in your organization can rally behind.

What skills are you going to need to run a PMO?

As a new PMO leader; you don’t know what you don’t know, so having a list of these skills is important.

Here is what I feel you will experience most days in your PMO and, therefore, you will need these skills to be successful. They include:

• Helper
• Advisor
• Teacher/Mentor
• Facilitator
• Auditor
• Strategic Planner
• HR Manager
• Negotiation
• Communications
• Motivation
• Problem Solving

Make sense? Did I miss any? Anything else you would add? If you are new at running a PMO, jot down this list and look for courses and ways to improve your skills in these areas. I can help you as well if you are really serious. If interested, just email me at billdow@dowpublishingllc.com.

Ok, let’s jump into it now, with a look into how we build a PMO.

How do you setup a PMO?

That’s a significant question because when I got that PMO role, I had eleven years of project management experience already, but zero running a PMO. So, I did not know where to start officially, but more in a position to take over what she already had in place.

Remember, back then, 2003 PMOs were new, so there was nothing in place like there is today. At that time, the internet had limited resources to assist me in understanding what to do. There were no books or experts available in the field.

So, what I did and in hindsight, it was not the right thing to do, but I started running the PMO based on how I ran my projects. So, if I had an issue and risk log for my projects, then, of course, my PMO would need risks and issue logs.

If I had a schedule for my project, then, of course, my PMO needed a schedule as well. With that, I also wanted to see all the project manager’s schedules, so one of the SOPs of my PMO was that all project managers had to have project schedules.

Basically, I ran the PMO like I ran a project. In hindsight, that was not the right approach, but that was ok, it was all I knew back then. My focus was on the tactics and execution of all the projects in the PMO, rather than on the PMO itself.

What did I do wrong? A look back into how I built PMOs

Well, first I have to say, go easy on me, remember the timeframe, it was 2003 and there was not a lot of information about PMOs. It is quite different today where everywhere you turn, there are PMO materials at your fingertips. Back then, YouTube wasn’t available either!

But, what did I do wrong and where many, many PMO managers struggle today, and that is this: not treating their PMOs like fully fledged organizations.

Ineffective leaders don’t treat their PMOs like they would treat Finance, HR, IT, Marketing, etc. They don’t look at PMOs like a business function, but more so a place to crank out programs and projects, which is very wrong.

I wanted to share where I began managing PMOs and how I approached it because I believe it will resonate with you and where you might be today. You might not look at your PMO like an organization as important as say Finance.

I would say “STOP” right there and change your thought process. If you think that way, change your thinking about your PMO, so you are giving it the importance that it is at your company. It is not about cranking out programs and projects.

Does that make sense? Ok, let’s keep going and unpacking that a bit more.

Challenges in setting up a new Project Management Office

Establishing a Project Management Office can be an exciting, but it is not without its challenges. Trust me, in the ten PMOs I have built, they have not been easy. I had management challenges, people challenges, budget challenges…etc.

I know for a fact that one common hurdle that organizations face when setting up a new PMO is resistance to change. PMOs have such a negative connotation to them that just in the name alone, people turn away and think it is negative. Employees may be comfortable existing processes and reluctant to adopt new methodologies introduced by the PMO.

Manage the change

Most people don’t like change and introducing a PMO is a big change to how projects are run in a company.

As a PMO leader, to address this proactively, it is crucial to involve stakeholders early in the planning process, communicate the benefits of the PMO clearly, and provide ample training and support to help everyone transition smoothly.

Emphasize the benefits

By emphasizing how the PMO will enhance efficiency, reduce risks, and ultimately lead to better project outcomes, you can mitigate resistance and foster agreement from all levels of the organization.

I have done this by ensuring the “why” behind the PMO and what value it brings to the organization. You do that by interviewing key stakeholders and understanding the problems they are having around program and project execution and then put those Services in place to address those challenges for your PMO.

Yes, there are many challenges to getting support for a Project Management Office (PMO), but if your PMO effectively addresses current and future business challenges, it will increase its acceptance.

Secure the right resources

Another challenge that organizations often face when setting up a new PMO is the limitation of resources. Limited budget, inadequate staffing, or competing priorities can hinder the smooth implementation of the PMO.

For example, many PMOs are not just one person, they often start out with limited staff and then grow and grow based on the perceived value they are bringing to the organization. But the more staff you hire or move into the PMO, the more expensive it is going to be for the company. Executives don’t often want to put a large budget towards operating a PMO, which is a huge challenge.

To overcome this resource obstacle, it is important to identify resource gaps early on and prioritize allocation based on critical needs. By defining the service offerings and using my PMO Staffing Model RACI, you can identify the services the PMO will offer and determine the staff needed to perform those services.

Here is an example: your PMO is going to have a governance and intake process. Well, on the PMO Staffing Model, you would have Governance and then you outline the staff you need to perform the Governance Process.

Another example, your PMO will have dashboard and reporting, then you are going to need report developers. I have outlined this entire process in a lot of my materials, of course, the best being my book “The PMO Lifecycle: Building, Running, and Shutting Down” sold on Amazon today.

Be proactive

Navigating the complexities of setting up a new PMO, finding practical solutions to address challenges efficiently becomes huge and challenging for any new PMO leader. This means being proactive with your project management office and constantly searching for opportunities to grow in the future.

Embracing a mindset that values continuous improvement and agility ensures that your PMO remains adaptable and will continue to grow. I can’t stress that enough that you need to be continually looking to improve and mature your PMO.

Planning your PMO

When embarking on establishing your Project Management Office, the initial crucial step is to define clear and measurable goals and objectives for your organization.

Your PMO is a fully fledged organization and if you don’t treat it like that, you will only ever be a bunch of programs and projects. If you approach it like an organization, you will need to have clear statements about your purpose, your future direction, and your targets because that is what you typically do in any organization.

I strongly believe that your PMO is just as important as Finance, HR, IT…etc. So, when you align your PMO goals and objectives with overarching organizational goals and objectives, you create a roadmap for mapping your PMO to your company.

If you want more information on my tactical steps of building a PMO, check out my article on the steps to building a PMO. 

Building your PMO team

As you embark on establishing your Project Management Office (PMO), one critical aspect is building a strong and cohesive team. Identifying key roles and responsibilities within the PMO structure is vital to ensure that operations run smoothly and efficiently.

A PMO team plays a unique role in creating an amazing PMO, and your role is to ensure you build the best one possible.

Create a staffing RACI

I have a tool that I have been using for years that I think you might like as well. It is called the PMO Staffing Model RACI. I used it for years and what I love about it is that it gives you the roles and the services of the PMO and it outlines how you are going to staff those roles.

Consider the skills required

When determining the roles required for your PMO, consider the diverse skills and strengths needed to cover all aspects of the organization, not just project management.

For example, you may need a Governance Analyst that may or may not have project management skills and that’s ok. Or a Communication Specialist who ensures clear and effective interaction within the PMO. By assigning responsibilities that align with each team member’s skill sets, you are optimizing their performance and enhancing overall productivity.

Read next: How to create a powerful PMO Mission Statement

Build out people-based programs

Once you have your PMO staff in place, one thing that I have done for the last several PMOs was build out a series of people-based programs in the PMO.

Those programs include:

• PMO Leadership Program
• PMO Buddy System
• PMO Mentoring Program

It is these kinds of programs that will help you grow your staff, invest in their future and give them the hope they can keep growing and learning in your PMO.

Build a team

Imagine your PMO team as puzzle pieces fitting perfectly together to complete the bigger picture of an organization’s success. Each individual brings something valuable to the table, whether it’s technical expertise, leadership skills, or creativity.

By recognizing and capitalizing on these unique talents through thoughtful role assignments, you are not only ensuring optimal performance but also fostering a collaborative environment where everyone feels valued and motivated to contribute their best work.

Ultimately, building your PMO team is about creating a supportive ecosystem where each member can thrive and collectively drive projects towards successful outcomes.

Ok, I have lots and lot to share in the people side of running a PMO, but for now, let’s move onto another area where I feel is critically important, and that is standard operating procedures (SOPs). I love them; I think they are so important.

Developing Standard Operating Procedures (SOPs) for the PMO

As you think about creating a PMO, one of the smartest things that you can do is to ensure very early in the process that you have SOPs created for the particular services of your organization.

I love this idea and I have created SOPs before, so let me provide some details here so we can align on this process. When you think about what SOPs to create, it is going to be based on your PMO services you offer.

As I mentioned before, your PMO services they are going to be based on your PMO type (Directive, Controlling, Supportive etc), and when you think about creating SOPs, you need to think about the ones that make sense for the different services of your organization.

Here are some typical PMO SOPs you can create:

• Governance SOPs
• Portfolio Management SOPs
• Program Management SOP’s
• Project Management SOP’s
• Business Analysis SOP’s
• Training SOP’s

This is just some SOPs that you can create for your PMO, and again, it is going to depend on the Services, the type of PMO…etc. That will all drive which ones you will have in your organization.

Why SOPs?

The SOPs are like the guideposts to which the various roles in the organization follow for their particular area. You want everyone to follow repeatable steps to ensure standardization across the organization.

Imagine having a series of SOPs for all roles in the PMO and you know people are following the same processes and procedures where possible. Also, by having clearly defined SOPs, you eliminate ambiguity and ensure consistency across all roles.

Examples

For example, in executing projects, you could create a standard operating procedure that includes clear descriptions of important steps, goals, assigned tasks, and communication guidelines that apply to all projects.

This clarity not only defines expectations, but also facilitates smoother coordination among team members who are aware of what is expected at each stage of the project.

Another example could include having a standard procedure for risk management within your PMO ensures potential risks are identified proactively, mitigated effectively, and tracked consistently across projects.

Document your SOPs

Documenting these procedures in a user-friendly manner will make it easier for new team members to onboard quickly and align themselves with the established processes without unnecessary confusion or delays.

When documenting SOPs that are more comprehensive, you create valuable resources that can be referred to whenever needed by anyone inside and outside of the PMO.

By documenting lessons learned from past projects and incorporating them into future endeavors, this systematic approach not only enhances risk response mechanisms, but also contributes to building a culture of continuous improvement within your PMO.

These documented lessons become valuable resources that can be referred to whenever needed by anyone inside and outside of the PMO.

Many PMO leaders forget about having standard SOP’s in place, but when you do and you get these all setup, you are going to help move your PMO bar tremendously.

Implementing tools and technologies for Project Management Offices

Selecting the right project management software is a crucial step in establishing how you will report and show the data from your PMO.

You need to research and select tools that perfectly align with the unique needs of your organization and be clear, there is no one tool that solves everything you will need in your PMO.

For example, if your organization focuses on agile development methodologies, opting for software like Jira or Trello could be beneficial.

If your world runs both Agile and Waterfall software development projects, then traditional project management tools might work better. This is an organization specific decision and tools need to be right sized for your needs.

Ensure your team can use the software

Once you’ve chosen the software for your PMO, the next vital step is ensuring that your team members are well-equipped to use it effectively.

Imagine giving your PMO team members tools and expecting them to run their projects with those tools without training? We can expect that the results may not meet expectations.

Similarly, by providing thorough training sessions on using the selected software, your team members can sharpen and enhance their efficiency. This investment in training will pay off in the long run by streamlining processes and optimizing project delivery using tools and processes incorporated into these tools.

Popular tools

There are tons of tools on the market for PMOs that include:

• Microsoft Project Online
• Microsoft Planner Premium
• SmartSheet
• Asana
• Monday.com
• Wrike
• ClickUp
• Jira
• Trello
• Confluence
• AirTable
• Basecamp

The tool list is endless and grows daily, so keeping a full consistent list won’t be possible. However, the list above is some of the more popular tools and ones I would recommend.

Your company is going to have their own versions and opinions of what they recommend, so a lot of times PMO Managers need to deal with the tools the company gives them to use in their organization.

Choose tools that create your foundation

When selecting tools that complement your projects and offering comprehensive training to your PMO team, you’re not just modernizing project management within your organization – you’re laying down a foundation for future program and project success.

Remember, investing time upfront in choosing suitable software and empowering your team through training is key to unlocking maximum efficiency and success within your PMO structure.

Monitoring performance and continuous improvement

Once your Project Management Office is up and running, the next step is to think about monitoring performance and striving for continuous improvement.

I think it is so important to continue to determine how you are going to grow and mature your PMO that I wrote an eBook on the topic. It is called PMO Process Improvements eBook and you can grab the eBook here. In this eBook, you are going to find the tricks and techniques I have used for years in growing and maturing PMOs.

If you incorporate just some of these areas, you will go a long way in maturing your organization.

Establish KPIs

Another way, and this is not something I recommend you doing immediately when first building a PMO, but when the time is right, but that is establishing Key Performance Indicators (KPIs).

Align these KPIs with your organizational objectives and they should provide a clear snapshot of how well the PMO is functioning in meeting its goals.

For example, if one of your PMO’s objectives is to reduce project delivery time, a relevant KPI could be the average time taken from project initiation to completion. I have written an eBook on the topic called PMO Metrics eBook, and you can click the link to grab your copy.

Regularly review metrics

Regular KPI and metric reviews are essential in the monitoring of your PMO and allow you to identify areas that require attention and drive continuous growth within your organization.

By conducting these reviews at set intervals, you can create a feedback loop that enables you to adapt strategies, address challenges proactively, and capitalize on opportunities for improvement across your organization.

By defining specific KPIs unique to your PMO’s objectives and instilling a culture of regular performance reviews, you can cultivate an environment that thrives on data-driven decision-making and ongoing enhancement.

Monitoring performance allows you not only to measure success objectively but also empowers you to make informed adjustments towards creating a more efficient and effective project management ecosystem.

Embrace this step as a chance to refine and innovate within your PMO, driving sustainable growth while staying aware of emerging trends or changes in industry best practices that can enhance your operations.

Communicating effectively within the PMO and across teams

Effective communication is the cornerstone of a successful Project Management Office (PMO). Let me say that again, communications are key.

I wrote a book called Project Management Communication Tools a couple years back for project communications and I’m thinking strongly about writing a new book specifically for PMO Managers on communications.

Establishing clear communication channels within the PMO not only promotes transparency but also fosters collaboration among team members.

For instance, setting up regular team meetings, using project management software for updates, and encouraging an open-door policy can promote that information flows seamlessly within the PMO.

Transparency in communication helps in aligning everyone towards common goals and enhances overall productivity. When you think about various communication channels, here are the top ones I have found in running many PMOs.

Let’s look at what I use in my PMO.

PMO communication channels

• PMO Leadership to Executive Leadership
• PMO Leadership to Customers and Customer Leadership
• PMO Leadership to PMO employees
• PMO Leadership to other organizational employees

Does that resonate with your organization as well, because across several PMOs these have been the main interactions I have and therefore, should be roughly the same for you as well?

Emphasizing the importance of effective communication across the PMO is vital to minimize risks and address issues promptly across your organization.

Encouraging feedback loops where team members feel comfortable sharing concerns or suggestions can lead to quicker problem resolution and improved decision-making processes.

Sometimes, you are still going to go through the forming, storming, norming, and performing with people and that’s normal and expected, and really an important part of learning how to communicate with one another.

Collaboration tools and dashboards help PMO communications

Another trick and tool I have used across several PMOs is implementing tools like instant messaging platforms (for example, Microsoft Teams) and PMO Dashboards (like PowerBI) can facilitate real-time updates on project progress, ensuring that everyone is informed.

By fostering a culture of open communication both within the PMO and across teams, organizations can create a supportive environment where ideas are freely shared, leading to innovative solutions and smoother project executions.

This is a topic I could write about all day, and my advice as a PMO leader is that you have to focus on those different communication channels every day running your PMO. The more you communicate and get the PMO information out to your various audiences, the better position you are in running your PMO.

Running your PMO – How is that different than building!

We have covered the basic steps for building a PMO, but you are also going to be in a spot where you have to run what you have built. That differs from building a PMO and pulling everything together. I have lots of information that I can share, such as my “How to run a PMO webinar” that you can watch and get some information, because building and running is very different.

One of my best pieces of advice I can give you is that you need to continue to mature your PMO at a pace that is comfortable for you and your organization.

You will always have an executive who wants you to go faster and produce more, but the reality is that your organization will control the pace of change. Nothing else, so remember that as you think about maturing your PMO.

You yourself will also want to implement everything as fast as possible to show value, and I get that. I have done it before myself, but don’t forget to remember crawl, walk, run. Crawl, walk, run is something I talk about all the time in maturing PMOs.

Making incremental improvements is more important than trying to rush maturity on everything and in the end making little to no improvements.

Remember, your organization controls the pace of change, so understand that pace of change and you will do just fine running and maturing your PMO.

Your next steps

As we wrap up one of the most important areas I wanted to cover in this entire process is: you are not alone. I was exactly where you were, 20+ years ago and if there is anything I can make your journey easier, I am here for you.

To everyone embarking on this PMO journey: remember that successful implementation is not just about ticking off boxes – it’s about embracing each step as an opportunity for growth and improvement.

With determination, dedication, and a sprinkle of humor along the way, you are well on your path to achieving your end-goal of efficient and effective project management practices. Stay focused, stay resilient, and watch how these fundamental steps will help your PMO grow.