Project Portfolio Management Pills

05.07.2019

Do Portfolio Managers and Executives Speak The Same Language?

Nowadays, companies are looking not only for projects that are managed well but also for projects that are right for their business.

Portfolio Managers usually focus on schedule, costs, resource utilization and scope changes.

Even if these are important aspects of a project, they don’t always reflect the projects through impact on the business.

When Portfolio Managers talk with executives should focus more on benefits revenue and return on investment then on costs.

Keep in mind: For each person with whom you, as Portfolio Manager, communicate think about how that person gets measured and views success.

28.06.2019

The Project Portfolio Supports The Strategic Plan

Usually, projects incur costs during execution and generate revenue, or reduce costs, on completion.

Projects in the project portfolio have to support the strategic plan of the firm.

These projects can have a significant impact on the financial condition of the firm.

Project reporting has traditionally focused on costs. Whereas other financial items have been ignored, such as revenue and cash flow.

To know the current value of projects, it is important that Project Portfolio Managers update revenue and cash flow data periodically based on project status and performance.

Keep in mind: the project portfolio is part of the tactical planning of the firm that has the objective to support its strategic plan.

21.06.2019

The PMO and The Governance Council

To place a project in the project portfolio it is important to evaluate many factors, such as: the value of the project, the potential contribution of the project to the welfare of the company and so on.

Periodically, the PMO prepares a report and recommendations on projects in the portfolio for consideration by the governance council.

After receiving the report, the governance council will check risk issues, project priorities and project revenues.

The governance council has the responsibility to decide if a specific project should be terminated, delayed or continued.

Keep in mind: the PMO and the governance council should remember that they are not the owners of the projects or the portfolios. PPM should balance the needs of projects and portfolios owners with the strategy of the organization.

14.06.2019

Senior Management Roles

Project Portfolio Management (PPM) requires a strong participation from senior management roles.

At the upper end, the leadership and direction must come from the highest level of the organization (CEO, COO, CFO etc).

Although these senior management roles must have full responsibility for PPM, and approve all major decisions, the process can be centered just below this level.

In these cases, the governance council can consist of any of the senior positions in the organization.

The senior officers, in adopting a PPM process, must provide the overall leadership of the process.

Keep in mind: the PPM governance council have the responsibilities for the key decisions that affect the project portfolio.

08.06.2019

PPM Implementation

Project Portfolio Management (PPM) is a process that involves a wide range of participants (e.g. strategic planners, financial managers and other senior officers).

PPM is useful to:

Select which projects to undertake
Select which projects to terminate
Establish projects priorities
Align projects with strategic objectives of the company
Project revenue and cash flow
Ensure balance among various types of projects
...

The way a company implements the PPM process can determine its success for a long period of time.

Keep in mind: PPM implementation needs strong sponsorship by the senior executives.

31.05.2019

Performance Targets and Metrics

IT projects and projects that create new products often are projects with a high degree of uncertainty.

To manage these types of project within a project portfolio is important to set performance targets and metrics by phase (long and short term targets).

The long-term targets are based on the business case and are useful to determine if the project will not deliver the expected benefits.

Whereas, the short-term targets are useful to verify the performance of each phase and to set the objectives for the next one.

Short-term targets are updated at the end of each phase to avoid the risk of measuring the project against an obsolete set of metrics.

Keep in mind: managing projects with a high degree of uncertainty, in a portfolio, requires two set of targets by phase.

24.05.2019

The Bounding Box Approach

There are some projects that cannot be managed by using the Stage-Gate approach.

These projects can have overlaps between phases or looping components.

In this case, Portfolio Managers can use the bounding box approach.

Basically, the governance council approves a set of limits (boundaries) such as delivery dates, cash flow, performance metrics and so on.

So long as the project stays within those limits the project team can control most of the decisions.

If a critical target is compromised, the Portfolio Manager must bring the issue to the governance council and let them decide the actions to take (e.g. project termination).

Keep in mind: the bounding box approach can be used when it is not possible to use the Stage-Gate approach.

17.05.2019

The Stage-Gate Process

Portfolio Managers use the Stage-Gate process for managing Project Portfolios.

In the Stage-Gate process, each phase (stage) is divided by a decision point (gate).

It can be applied across the entire project life cycle. It is important to define conditions for passing through a gate.

In fact, at each gate a cross-functional team evaluates the project status against the pass/no-pass conditions.

So, active projects within the portfolio are subject to the Stage-Gate control process. Each gate will have a set of metrics by which projects will be evaluated.

Keep in mind: Portfolio Managers review each project at each gate before making a go/no-go recommendation to the governance council.

10.05.2019

Managing the Project Pipeline

New product development (NPD) is a process of taking a product or service from conception to market.

The process sets out a series of stages that new products typically go through, beginning with ideation and concept generation, and ending with the product's introduction to the market.

The typical NPD project consists of a series of phases. Each phase will have a number of activities starting with project conception and leading to product delivery.

Keep in mind: In most cases, a phased approach to the product development process will help to keep schedule, resources and costs under control.

03.05.2019

Managing the Project Pipeline

Project Portfolio Management (PPM) is the process of selecting the projects to add in the portfolio of projects.

The project selection is based on the assumptions about the value of candidate projects.

To select the right set of projects it is important to balance opportunities against potential risks and predict the revenues, cash flows and costs for each project.

Unfortunately, business environments are dynamic and open to change.

For this reason the Portfolio Manager should constantly manage the project pipeline.

Keep in mind: project pipeline should be monitored and managed because assumptions may become less valid over time and projects do not always go as planned.

26.04.2019

Maximize the Contribution of Projects

Project Portfolio Management (PPM) helps companies to reach business success.

In the past, the focus of project management was on completing projects and satisfying project stakeholders.

Project Managers paid significant attention to the triple constraints: time, cost, scope (and quality).

But over the years, companies have noticed that project success does not always mean business success.

In fact, being on time and within budget is not enough to produce the results that senior management requests.

Project Portfolio Management (PPM) is the process of selecting, and managing, the best combination of projects for the company’s success.

Keep in mind: PPM helps to maximize the contribution of projects to the overall welfare of the company.

19.04.2019

Project Status and Performance

Projects that have been selected to be in the pipeline of projects are continually checked.

This is because projects and business environment are dynamic.

Once projects are in the pipeline, it is important to periodically measure project status and performance.

On the business side, it is crucial to periodically validate and adjust strategies about value, risk, resources and budget.

There are some techniques that can be used to manage the project pipeline (e.g. earned value analysis).

Keep in mind: PMO periodically publishes reports indicating where defined limits and threshold have been violated. Thanks to this information, the PPM governance committee evaluate each project in the pipeline for continuation or termination.

12.04.2019

Formal Project Authorization

Project Portfolio Management (PPM) requires a well defined process towards project initiation.

In fact, this is critical to managing a portfolio of projects successfully.

Everything should start with a formal project authorization.

This can be done by creating a project charter for each project.

The project charter contains project objectives, project sponsor, budget, funding source, etc.

According to this information, executive committee approves projects.

Keep in mind: the project charter is also used for spending authorization.

04.04.2019

Prioritise Each Project

To define Project Portfolio Management process it is crucial to prioritise each project.

The act of prioritizing all projects that a company could potentially start requires a structured process.

This structured process can help to eliminate the tendency to select projects by power plays and emotions.

There is a similarity between the items selection for an investment portfolio and projects selection to create a pipeline.

In fact, project portfolio is an investment portfolio because a company invests in projects with the goal of maximizing the return.

Keep in mind: probably the most important ranking factor is expected return on investment (ROI).

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Companies need to work very hard to survive in the fierce business world. Everyday, companies look at their competitors to understand the future trends and take action beforehand. They constantly try to innovate by taking into account their budgets and the risks of their actions. At the same time, market conditions change fast, so companies need to adapt accordingly to stay one step ahead of competition. To reach their goals organizations need to analyze the market, then they need to define effective strategies.

How to improve business performance and impact organizational culture

To deploy strategies companies need to focus on their business processes in order to reach their goals and create value. The culture of a company is part of its processes as a result of its established values, behaviors, and beliefs. As organizational culture changes over time, companies need to consider it when they need to align their strategies. Improving strategy alignment can improve business performance and impact organizational culture through increased job satisfaction.

Developing a healthy and productive company culture

Some of the most successful companies in the world are able to create environments their employees love to go, and job seekers desire to work from. Identifying and developing a company culture that is healthy and productive can make a huge impact on an organization’s success. Organizational culture is the set of values, expectations, and practices that guide the actions of all people in the company. A great culture leads to improved performance, while an ineffective company culture can damage even the most successful organizations.

How to improve organizational culture with PPM

Project Portfolio Management (PPM) helps companies select the right projects that align with their strategies to achieve their objectives. Thanks to PPM, companies are able to allocate the resources to support those projects. Even if PPM is usually used to improve project success probability and to achieve success, companies need also to consider the connection between PPM and organizational culture. Alagaraja and Shuck (2015) argue that companies can improve organizational culture by improving stakeholder involvement and strategy alignment.

How to align project portfolio with business strategy

The definition of strategy is a long-term plan of action used to reach a specific goal or a set of objectives. To get the most out of their resources, companies should link strategy and new product resource allocation. In addition, depending on their strategies, companies need to decide whether to focus on specific markets, technologies, and products. In the same way, once the strategy has been set, the majority of projects and spending should be focused on those markets, products, and technologies.

How to create a balanced Project Portfolio

Companies can maximize project benefits and minimize overall project risks by balancing project portfolios. Executives have to analyze and balance the portfolio to reach these goals. The objective is to fund worthy efforts in order to produce the highest payback from each investment. A project portfolio can be considered like an investment fund, where the fund manager tries to create the best investment portfolio by choosing the most appropriate stocks (high risk stocks and blue chip stocks) to reach the goal.

How to create a project portfolio

Companies today have a lot of projects they could be working on but a limited amount of resources. Instead of just trying to figure out how to get through as many of them as quickly as possible, organizations can use Project Portfolio Management (PPM) to prioritize those projects. There are many methods to achieve this goal, varying from financial models to scoring models. Each method has its strengths and weaknesses. All these methods produce a prioritized list of projects to execute.

How to choose the right projects

Project selection is very important to effectively apply Project Portfolio Management (PPM) . For this reason, it is worth exploring the essential tools and techniques to choose the right projects for the portfolio. It is also useful to say that having an official process to set project priorities could not be enough for the success of a portfolio. Over the years, experts have identified the methods and tools for project portfolios selection. For instance, Taylor (2006) states that any model should have six attributes.

Problems companies face when using PPM

Organizations can benefit from using Project Portfolio Management practices. In fact, PPM allows companies to allocate resources, schedule, analyse, and manage projects and business. At the same time, companies also encounter problems when using PPM. What type of problems companies face in using PPM? One of the problems that companies face when using PPM is that Portfolio Managers see some portfolio evaluation techniques to be too difficult to use. They fail to recognize the connection between projects and the resources.

PPM the logical decision process

Project portfolio management is considered to be a logical decision process. To execute PPM effectively it is important to consider some other aspects. In fact, there are characteristics of PPM that have a great impact on its implementation. Let’s analyze some of the most important assumptions that can have a great influence on PPM execution. To achieve strategic objectives companies need first to develop the strategic plan. Afterwards, to fulfill the strategic plan objectives, they have to select and prioritize their projects.

How to manage the complexity of project portfolios

In a world that is becoming more and more complex, companies can use Project Portfolio Management to manage the complexity of their portfolios. In fact, as projects increase in number and size, the complexities and management challenges rise exponentially. Everyday, new market and strategic opportunities can arise. As a result companies need to make fast decisions such as deciding which projects to include and which to exclude from the project portfolio. Complexity has different meanings and it depends from the context.

How to identify projects for strategy implementation

Strategic management helps companies to innovate their processes and products. Strategy allows organizations to determine the best configuration of systems, processes, products, and resources to reach their objectives. To implement their strategies companies can use Project Portfolio Management. In fact, they can use PPM to identify projects and portfolios that best align with their objectives. Strategic analysis starts from exploring the innovation space by identifying where innovation can take place and if it is worth doing so.