Building a PMO

It's funny how the only PM is tasked with setting up a PMO. Who's doing project management whle that person is setting up a PMO?

This webinar may provide some of the answers you seek: https://www.projectmanagement.com/videos/7...ue-creating-pmo
I found it to be very helpful.

1) the PMO should have a seat at the table and have a voice in defining / supporting / implementing the organization's business plan and should definitely be involved in the prioritization of the projects as the PMO has the best view of the project landscape (the PMO can be (perhaps should be) an integrator and coordinator of project (value delivery) activities across the organization)
2) business value / customer value (value in general) could be useful mechanisms for prioritizing projects
3) my opinion is yes, the PMO should be involved in the project development process but after ideation (not every idea will result in a project...some will be tabled and some will not be worth pursuing. Unless you are the primary source of project ideation, you don't need to spend a lot of time in this realm. Other functionals may be better positioned to evaluate the ideas, but you can support idea evaluation if desired or if time permits.) and before PM assignment. The PMO should be in the PM recommendation or assignment role as part of the coordinating and integrating function.
Hope this helps. Good luck!

If you search for "Business Driven PMO", here on projectmanagement.com, you'll find a lot of good content. Mark Price Perry, author of some of the content and a class you can take, also has a book with this title.

Another approach I am partial to can be found on the PMO Global Alliance website. They have a free membership that gets you access to some of their tools and training. I found it useful at my last employer. I'm the only PM, currently (no PMO), so I'm borrowing some concepts, but taking it slow as I'm the first PM the company has had, and there is plenty to do.

In questions like this I keep going back to "why do this?". What problem are we trying to solve? An answer to this question goes a long way towards a solution.

Project management is a methodology applied to successfully deliver a project. It achieves this by identifying and mitigating risks and enhancing benefits in the delivery process. A Project Management Office provides structure so as to consistently deliver successful projects.

Building a PMO is the same as delivering a project (it IS a project) - define the objective (why?), identify the risks to all management elements (cost, schedule, scope, quality, procurement, risks, resources, communications, etc) and develop mitigating measures (processes and structure) that will address these risks.

To do this first you look at what is currently in place then see what improvements could be made by adopting processes and structures available from external sources such as PMI and others.

If, at any time, you don't see a benefit or can't convince others of a benefit, close it down. A poorly conceived PMO could be much worst than no PMO.