39. Justification of PMO

August 10, 2012

PMO Justification

A common question I am asked is help with the “justification of setting up a PMO”.  This stems from the facts that a PMO costs money to set up and there still is a perception that a PMO offers low value.

In blog post 31.  What is the benefit of a PMO, I listed some of the typical arguments / barriers to setting up a PMO and what are the related benefits.  However, sometimes what it takes is some real tangible, monetary, benefit of investing and setting up a PMO.  So I wanted to share some of the more tangible benefits that you can use when justifying the set-up of a PMO.

Wasted Time

It is typical for senior executives and other resources to be involved in many programmes.  If there is no source of high quality, centralised reporting, the resources will end up attending a lot of meetings.  This is not the best use of their time an costs money.  So you can build a case on the cost it will save by working out the number of people by the number of meetings.

It also has the added benefit that the senior management have more time for other work.

Decision Making Delays

Without a centralised and standardised way to communicate progress and seek decisions, it can take much longer to reach key decisions.  This will result to delays in the delivery of projects (meaning increased running costs) and delays in realising benefits.  It also compounds the issue of time with senior management attending more meetings.

Work out a model that calculates the extra running cost based on potential delays due to waiting for decisions.  Use historic project data where available.

Information Gaps

Without standards there will probably be gaps in the information available and the quality may not be the required level..  This means that senior management ask for more information, end up attending more update meetings and delays the decision process.

Conclusion

While this is a very quick list highlighting some good reasons to justify a PMO, the principle is taking a scenario and then finding a way to turn it into a monetary value.  This makes it very real for senior management and makes it easy for them to approve the set-up of a PMO.

Word of warning, be sensible on the scenarios you build.  If you over inflate the numbers or use over inflated number, the PMO justification paper will not be supported.

Any questions please drop me aline.

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About Simon

Founder of practical PMO with a passion to share insights on designing and building practical, pragmatic PMO's. Posted by Simon Wilkinson, PMP

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