Project Portfolio Management
Managing the Project Pipeline
Project portfolio management is the coordinated and controlled management of a portfolio of projects to achieve a set of business objectives.
Every year there is a mad scramble by most companies to secure budgets internally for projects they intend to do for the following financial year. Typically, companies are flooded with requests from various departments to deliver capabilities and benefits through a variety of projects and programmes. However, companies are acutely aware that there has to be a balance between the long wish list of things to do, and the organisation's actual ability to deliver them. The purpose of this article is outline a number of techniques which on their own or collectively can assist companies to overcome this dilemma.
The face of product and portfolio management has changed enormously over the last 25 years and the tools that are now available enable product managers to work more quickly and efficiently than ever before. Speaking at the recent Pipeline 2011, the online product development conference, Louise Allen and Carrie Nauyalis of Planview discussed what they see as the latest five 'game changers' in product management and why each one is critical in bringing a project or product to market.
From R&D to Customer Service, effectively serving the Value Chain is an integral part of an organisation's success when bringing new products to market. The fact is, many organisations run their New Product Development (NPD) projects in siloed environments not taking into account all of the elements that can impact a product's success. NPD projects do not only live in the world of marketing and engineering. NPD projects in many cases need to incorporate the strategic objectives of executives, the demand of customers and the bottom line of operations and finance in order to realise their success.
If you don't know the values and costs of not executing your projects then you're probably not maximising the value of your project portfolio and you may be working on the wrong projects. Most project portfolio managers are not including the actual values and costs of not executing a project in their project portfolio analyses. Hence, they may be dramatically over or under estimating their actual portfolio value and cost and choosing the wrong set of projects.
CNN recently published an article about the aftermath of the recession, claiming that the economy is "finally back in gear." What does this mean for businesses like yours? Projects that were sidelined for the past year or two could come off the bench, and there might be more money to go around. Great news, right? It depends on how ready you are to make the most of this new opportunity. Are you confident that you will be able to put the right people on these projects and make the right decisions about how to spend this money?
Project ranking is at the heart of project portfolio management (PPM). A good project portfolio ranking system should not only make the job much easier and faster, but also yield a superior result over doing it manually or with simple spreadsheets.
Corporate budgeting is an obscure process. Usually it involves padding budgets to accommodate for across-the-board cuts, and committees of corporate officers finalising figures for projects executed far below them. Unhappily, the team making funding choices tends to lack the information needed to accurately analyse what they are actually financing. The team must answer questions that directly affect corporate strategy. Which projects are critical to corporate goals? Which provide the best "bang for the buck?" How should the projects be prioritised to maximise utilisation of resources? What is the risk of each project and how should it be handled?
According to a recent article in a leading technology magazine, the demand for project and portfolio management (PPM) solutions is rising in response to the weakened economy. Many businesses are choosing to implement PPM solutions in order to "identify which IT projects are mission critical and to help them execute those projects as efficiently as possible." These customers have also found that PPM solutions offered as software-as-a-service (SaaS) are both more affordable and easier to deploy than traditional ones.
In my last article I mentioned that there are project management solutions to alleviate some of the pains that corporations can endure during a time of financial concerns. Strong project management leadership should be involved in the project selection process. In this article, I will review business drivers and project assessments that may be considered in project selection. While the project selection process is viable and repeatable, it requires support from the top down in order to be successful.
For most service departments the demand for new projects will occasionally outweigh the department's capacity to do them. Whether it's due to financial constraints or skills being completely exhausted elsewhere, sometimes you just have to say "no." Saying "no" is easy, it's deciding who to say "no" to. Projects that bring the highest return on investment from the scarce resources available must be pushed forwards. Projects that drain resources and eat up the budget must be discarded, or at the very least, put on hold. So how do you decide which projects stay and which ones go?
There is often a misunderstanding, and hence a mixed and overlapping use of terms, when it comes to programme management. Sometimes a programme is called a project. Sometimes a project is called a programme. In addition, sometimes project portfolio and programme are mistakenly used interchangeably. This article is intended to clarify the main differences and to distinguish the unique aspects of project portfolios, programmes, and projects.
Regardless of where your IT organisation has progressed in the evolution from a utility like service to a executor of business strategy, the bread and butter of most IT organisations is the successful execution of projects: non-recurring, limited duration activities designed around completing a defined task. As organisations have grown savvier about project management, successful execution is on the rise, however choosing the right projects to deliver remains a challenge for many companies.
You've got a ton of projects. You can't do them all at once because you don't have the people to do them. You know better than to ask people to multi-task on more than one project, no one will get anything done. One tactic is to organise the projects into a portfolio and rank them by priority.
Project Portfolio Management is about more than running multiple projects. Each portfolio of projects needs to be assessed in terms of its business value and adherence to strategy. The portfolio should be designed to achieve a defined business objective or benefit. Project management guru Bob Buttrick summarised it when he said; "Directing the individual project correctly will ensure it is done right. Directing 'all the projects' successfully will ensure we are doing the right projects."
Project based organisation have become more common over the last decade, meaning the work they do is split into programmes of projects designed to deliver the organisation's strategy. Good management of these projects is essential if the organisation is going to succeed.
As project portfolio management continues to gain momentum in all sectors of the economy, one question that continues to plague my thoughts is whether PPM represents a significant departure from traditional management techniques, or does it reflect an evolutionary step, a natural addition to traditional project management techniques?
The Portfolio, Programme and Project Management Maturity Model (P3M3) is a reference guide for structured best practice. It breaks down the broad disciplines of portfolio, programme and project management into a hierarchy of Key Process Areas (KPAs). The hierarchical approach enables organisations to assess their current capability and then plot a roadmap for improvement prioritised by those KPAs which will make the biggest impact on performance. Most articles on portfolio, programme and project management maturity models focus on the 'accreditation' aspects of the model. This article focuses on how to use the model as a framework for process improvement by applying change management techniques from Six Sigma.
The P3M3 describes the portfolio, programme and project-related activities within key process areas that contribute to achieving a successful project outcome. The P3M3 recognises not only the programme and project management activities being carried out at the individual programme and project level, but also those activities within an organisation that provide focus and help sustain effort to build a programme and project infrastructure of effective programme and project approaches and management practices. In the absence of an organisation-wide programme and project infrastructure, repeatable results depend entirely on the availability of specific individuals with a proven track record and this does not necessarily provide the basis for long-term success and continuous improvement throughout the organisation.
"Project portfolio management organises a series of projects into a single portfolio consisting of reports that capture project objectives, costs, timelines, accomplishments, resources, risks and other critical factors. Executives can then regularly review entire portfolios, spread resources appropriately and adjust projects to produce the highest departmental returns." - Unknown Author