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Higher isn't always better. It simply depends on the needs of the organization and the type of project office you are setting up.
There are really three types of project offices.
The first type, what I'll call the central project office, came into existence in many companies when they set aside hefty reserves for restructuring (read re-engineering) and they wanted top management visibility of these large (usually very expensive) cross functional projects. These CPOs usually report to the VP of finance or the COO and concentrate primarily on portfolio management.
The second type of project office is what is commonly referred to as a Project Support office. The PSO is responsible for methods, tools and best practices. They are usually most effective if they report within a line of business or functional area (i.e. IT or product development, etc) and are usually the quintessential staffies. Within the line of business they could report to the Sr. VP but I’ve never seen it happen. They usually report to someone one level down who is responsible for administrative tasks.
The third type of project office is the Center of Excellence for Project Management. Their charter includes methods, tools and best practices, but their real raison d'être is the centralization of some or all of the project management resources. The most common way I’ve seen this implemented is that the “pros from Dover” are centralized, with the charter to run the big, hairy, ugly projects and to mentor all the rest of the other project managers as time allows. In smaller organizations all the PMs could be centralized. This group also owns the portfolio of projects and usually reports to the C-level person in the line of business (the CIO, since I’ve only seen this done in IT environments).
I would be curious to here the specifics on your experience as well as the success or failure around the project offices you set up.
I am working for a client helping them resolve the relationship between change management and the project office. In this case the project office reports into the division which houses the main projects and provides project services such as tools, training and coaching but does not run any projects nor to the PMs report to the PMO. This model has been successful so far. They are planning to make the PSO a corporate resource, (because there are other divisions running projects), and the question is where is should report. I don't have the answer but read with interest the other comments in this thread.
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