EPMO Ultimate Guide: What It Actually Is & How It Differs From A PMO
If you’re a member of a project management office (PMO) at a fast-growing organization, your day-to-day may feel like you’re running a race.
Sometimes, it gets so hectic that you barely have time for a bathroom break—let alone a lunch break—in between back-to-back meetings. Vacation? What’s vacation? Who would be able to answer executives’ questions in your absence?
What if I told you it doesn’t have to be this way? What if your organization took the time to set goals and priorities, thoughtfully selected projects in service of those goals, and set up robust reporting systems to monitor portfolio health? What if you spent your time on strategy instead of putting out fires?
This is the idea behind an enterprise project management office, or EPMO.
But what exactly is an EPMO, and what roles does it fill in the grand scheme of things? In this article, I go in depth and discuss everything you need to know about an EPMO, including how it differs from a traditional PMO.
What Is An Enterprise Project Management Office (EPMO)?
An EPMO operates directly beneath C-suite executives and the board of directors. It's composed of an executive leadership team that’s in charge of major decision-making about what projects the enterprise should or shouldn’t take on and who should oversee each one.
Instead of managing projects individually, the EPMO oversees a portfolio of projects simultaneously. It operates on a strategic level, ensuring each project undertaken within an organization aligns with enterprise goals.
The enterprise-level office is responsible for handling important functions, such as demand forecasting and resource planning, and financial evaluations, including budgeting, scheduling, and potential return on investment (ROI) for projects.
Before implementing a new system, it's important to understand the definition of enterprise project management.
Why is an EPMO Important?
As an organization scales and takes on a greater volume of more complex projects, an EPMO carries out several important functions:
- Sets organizational goals and operates a robust project selection process and workflow to make sure that the organization is choosing projects that align with strategic objectives
- Optimizes resource allocation using specific methods across projects
- Monitors portfolio health by implementing and tracking performance metrics that offer accountability for project success.
Who Leads the EPMO?
Typically, an EPMO director is responsible for managing a team of project managers that comprises the EPMO. The director is the primary point of contact for communication with the executive team.
EPMO Vs. PMO: What’s The Difference?
The major differences between an EPMO and a PMO have to do with: 1) scale and 2) project complexity. (It's similar to the differences between portfolio management vs project management.)
An EPMO operates at a larger scale than a PMO. An EPMO oversees projects across an entire organization, whereas a PMO takes on a smaller but similar role within a specific business unit, such as information technology (IT) or procurement.
Additionally, a PMO plays a more tactical role than an EPMO. While the EPMO strategizes to determine which projects are best aligned with the organization’s goals, the PMO oversees individual projects to ensure high-quality execution and successful delivery.
At a large organization, you might have an EPMO that works with the executive team on project selection, project planning, and resource allocation. They may support a PMO to guide projects in the right direction and offer strategic insights that give context to an effort.
Conversely, the PMO supports the EPMO to deliver the right projects and report on progress.
How Are EPMOs Structured?
Like PMOs, EPMOs can follow different organizational structures, depending on factors such as organizational size, maturity, growth trajectory, and project volume and complexity.
For example, in my current role, I am an EPMO of 1. In a prior role, I was part of a 15-person EPMO distributed throughout a growing organization (that was later disbanded in favor of embedding program managers within specific project teams).
EPMO Responsibilities
Although the structure of EPMOs may look slightly different across different organizations, their core functions remain vital to organizational success. Therefore, it’s critical to staff your EPMO with team members that understand the business context and the strategic role they’ve been hired to fill.
A traditional EPMO undertakes the following core functions and responsibilities:
- Cost management and analysis: EPMOs have to ensure that organizations finance projects effectively and that these projects stay on budget once they are funded.
- Resource management: EPMOs need to know which people belong at the head of which projects. They also need to ensure there are enough project managers and team members available to take on each project and manage any conflicts that might arise between team members.
- Risk management: Prior to approving any project and throughout project deployment, EPMOs must identify and assess potential risks and provide strategic plans to mitigate them.
- Performance management: EPMOs need to ensure the organization they serve is performing well. They may be in charge of defining and controlling key performance indicators and building reports that help C-suite executives or the board of directors see how well a project or project management team is performing.
- Project governance: EPMOs are tasked with defining and implementing project governance frameworks across their enterprises.
- Stakeholder communications: EPMOs must communicate with stakeholders to ensure the organization is achieving goals and meeting expectations.
- Strategic portfolio management: An EPMO needs to supervise project portfolio management (PPM), overseeing project investments and objectives to ensure project prioritization aligns with business goals.
4 Benefits of an EPMO
Implementing an EPMO brings several key organizational benefits, including:
- Strategic alignment and accountability for project goals and objectives
- Appropriate resource allocation and high-quality execution according to project schedule, budget, and scope
- The ability to monitor project health consistently across projects using a common set of key performance indicators and project management practices
- Centralized reporting for the executive team that maximizes the time that a traditional PMO can spend on tactical execution.
When To Transition To An EPMO
An EPMO is a great asset to an organization—at the right time in its development. If you implement an EPMO too early, it might become more of an administrative burden than a benefit.
In cases when a company is too young or too small to consistently manage or resource multiple projects at the same time, a PMO is usually a better way to keep projects on budget and on schedule.
Furthermore, if a business is limited to managing major projects within a single department, developing a PMO is most often a better choice than an EPMO.
As an organization grows, it can be hard to know when the time is right to transition to an EPMO. Here’s some signs that an organization may be ready to set up an EPMO:
- Project managers spend a majority of their time putting out fires instead of meeting project objectives and goals
- Executives lack insights on real-time project progress and execution at an appropriate level of detail for their function
- Project team members and other employees in the organization cannot clearly state (or don’t know) the business strategy
- Project team members are unsure how their work fits into this big picture strategy.
How To Transition To An EPMO
You can transition to an EPMO by elevating existing members of your PMO (or project management team if you don’t have a PMO) or by hiring externally.
If you’re creating your EPMO internally, work with other leaders to analyze project managers and other employees to see if they might have the skills and strengths to transition to a role within your EPMO.
The benefit of staffing your EPMO internally is that your existing project managers are already well-versed in the business context and project landscape at your organization. It may be easier to backfill their roles on a PMO with external hires where knowledge of the organization is less critical to project success.
On the other hand, you may want a fresh perspective when forming an EPMO that’s not clouded by “business as usual” preconceptions.
Or, your existing project managers may be happy with tactical delivery and don’t have the appetite to transition to a more strategic, less hands-on role. In this case, hiring externally may be a good way to go.
At minimum, you’ll want to look for candidates that have project management experience, business and strategic acumen, stakeholder management skills (including comfort in working with executives), and the ability to monitor and report on project performance metrics.
What Software Tools Should EPMOs Use?
The most important tools for EPMOs to use include those that enhance team collaboration. This includes software like Microsoft Teams or Google Drive to share documents, spreadsheets, and presentations asynchronously among team members. Other project management solutions, such as Workzone or Primavera, can help EPMOs oversee project finances and schedules.
Check out the best enterprise project management software for other programs that can help make your EPMO more efficient, and find out what EPM software might cost your org. For a more comprehensive approach, enterprise project portfolio management software might be an even better choice, as it can streamline the alignment of projects with strategic goals and improve overall efficiency.
Develop An EPMO For Enterprise-Wide Project Success
If your business is large enough, an EPMO is one of the best ways to ensure the projects you undertake align with the strategic goals put forth by your business. They help project managers and project teams stay on track and keep executives informed of what’s happening throughout the company.
Want to learn more about project management? Subscribe to The Digital Project Manager newsletter to stay in the loop about everything to do with EPMOs, PMOs, and other project management initiatives.
Also, don't miss our podcast episode on purpose-driven PMOs and digital transformation.
