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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