How to Start a Project Management Office

Whether to form a project management office (PMO) with a consulting bent or one that’s centralized depends entirely on the track record of your IT department and where you want it to go. “The PMO shouldn’t exist within itself,” says Gary Davenport, vice president of information services at Hudson’s Bay Co. “You have to look at the overall IT operations first, determine what you want to accomplish and why, and figure out what improvements you need to make to achieve the company’s strategy.”

Bill Stewart, CEO of the Project Management Leadership Group, a project management training company in Atlanta, says that CIOs should ask themselves questions aimed at ferreting out both IT weaknesses and opportunities: Where do you want your IT department to be one year from now? How can IS contribute most to the organization—by helping to increase profits or by delivering projects on time? If IS could manage projects consistently, how would that affect the organization? How CIOs answer such questions determines which basic model of PMO will work best.

Explore whether there are critical activities at your organization that are falling through the cracks, and decide if a PMO is the appropriate entity to take them on. Due to budget restrictions, Schneider National nixed its PMO in November 2001. But remnants of a Balanced Scorecard approach used by the PMO lived on. Mark Mullins, Schneider National’s vice president of finance for IT, says the new arrangement was less effective than the PMO. Yet two large and impending IT projects prompted the CEO and CIO to resurrect a centralized PMO in January 2003. “Several important things—including standardizing process to use consistently across projects and establishing a groundwork for portfolio management—weren’t getting done,” says Mullins.