Question: Many large companies have a project management office responsible for portfolio and program management. When does a PMO make business sense?

Our Advice: As more IT shops apply project-management methodologies to their projects, companies are starting to see tangible implementation improvements. Once IT projects are consistently delivered on time, within budget, and with the promised usable functionality, often managers look for new approaches to take project-management efficiency to the next higher level. By taking a cautious approach to a PMO and project/program management organization, you can often leverage the knowledge gained during project execution, while minimizing the risk of wasting resources on an inappropriate (and expensive) office.

After a few successes, many organizations are eager to jump ahead to a more mature project-management methodology to improve management of other individual projects, or as part of a "portfolio" of interrelated projects. Gaining a better understanding of the advantages and disadvantages of each approach will help you decide which mix of practices is best for your company's needs, since the different approaches are related but can be put into practice independently.

Portfolio/Program Management
Portfolio/program management is the art and methodology of managing several related projects simultaneously. This means making sure that all projects within the portfolio are meeting their baseline goals, much the same way an individual project is integrated with a goal for delivery. In many organizations, portfolio/program management is the PMO's responsibility -- the thinking being that the PMO has the expertise and cross-organizational view to handle the function. It's possible, and often more desirable, for each individual area to do their own portfolio/program management, and rely on the PMO for guidance and support only.

The Project Management Office
Although PMOs are entrenched in the telecom, aerospace, and defense industries where multimillion dollar projects have long been the norm, many IT professionals were first introduced to the concept during Y2K remediation efforts. Ideally the PMO functions as a central office, coordinating the various project efforts throughout the organization. The PMO is responsible for developing and maintaining project management best practices, templates for critical project-management deliverables (charters, work-breakdown structures, change-control processes, etc.), and coordinating projects throughout the company. With its pool of expertise, the office can provide expert support to individual project managers, and only on occasion, project-management staffing.

Before investing in a formal PMO for your business, it's best to assess how well your organization is using existing project-management methodologies. It makes no sense to establish a PMO or portfolio/program-management process if your organization is just starting to employ project-management tools, and hasn't developed a history or comfort level with the methodologies. If your organization has a proven track record using project-management methodologies, then you can decide if and how to introduce a PMO and/or portfolio/program-management organization. Does it make sense to have one PMO and methodology for the whole enterprise, or should each individual business unit (IT, marketing, etc.) have its own PMO and portfolio/program management? Much will depend on specific industry practices and your basic organizational business model.

-- Sue-Rae Rosenfeld