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Project Portfolio Management

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Stakeholders for individual projects (project management) include ... Project portfolio management is the art and science of applying a set of ... – PowerPoint PPT presentation

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Title: Project Portfolio Management


1
Project Portfolio Management
  • Concepts
  • Theory
  • Practice
  • common/typical practices
  • 'best' practices
  • ideal practices that is, what the concepts and
    theory suggest could or should be done.

2
Analysis and Synthesis
  • We will review many of the analysis topics you
    studied in your other courses (cost analysis,
    risk analysis, earned value analysis, work
    breakdown structure, resource scheduling, etc),
    but in the context of synthesizing them into a
    PPM process
  • We will study decision making and prioritization
    (topics from DNSC 224) which will be helpful in
    performing synthesis required for many facets of
    PPM

3
Overview of Course (Blackboard)
  • Announcements
  • Syllabus
  • Grading percentages are approximate and may be
    modified to some extent.
  • Discussion Forums
  • Expect some changes

4
Overview of Course (Blackboard)
  • Outline
  • Dates
  • Topics
  • Grading/Deliverables (Tentative s)
  • Mid Term 20
  • Final 20
  • Project Choice Decision 20
  • Project Portfolio Project 25
  • Class Presentation of Specific Topic 10
  • Class Participation 5

5
Overview of Course (Blackboard)
  • Discussion Board
  • Personal Information
  • One Minute Summaries
  • General Discussion and Team Forming

6
PPM Doing the Right Things
  • Project Management
  • Doing things right
  • Enterprise Management
  • Doing things right throughout the enterprise
  • Project Portfolio Management
  • Doing the right things!

7
Stakeholders
  • Stakeholders for individual projects (project
    management) include
  • business owners, business sponsors, and often the
    end user of a projects output.
  • they are specifically concerned with satisfying
    their own business requirements and needs and
    controlling cost and schedule.
  • Stakeholders for the PPM processes include
  • financial management, senior business executives,
    and ultimately the stockholders of the
    organization.
  • they are concerned with optimal investment of
    scarce company resources and typically are
    interested in return on investment, strategic
    alignment, and the risk profile of the portfolio.

8
Integration / Synthesis
  • To satisfy both sets of stakeholders,
    organizations must define an integrated process
    that links project management and portfolio
    management practices.
  • by tying the executive decision process to
    resource allocation and day-to-day project
    execution.

9
Art and Science
  • Project portfolio management is the art and
    science of applying a set of (concepts,
    theories), knowledge, skills, tools, and
    techniques but to a collection (or portfolio) of
    projects in order to
  • meet or exceed the needs and expectations of an
    organizations investment strategy.

10
PPM enables businesses to..
  • Provide a structure for selecting the right
    projects and eliminating the wrong ones(But
    which ones are right and which ones are wrong?)
  • Allocate resources to the right projects, thus
    reducing wasteful spending(this is part of
    determining which are right and which are wrong,
    but not individually, as a combination or
    portfolio)
  • Align portfolio decisions to strategic business
    goals
  • Base portfolio decisions on logic, reasoning, and
    objectivity(As well as well informed subjective
    judgment)
  • Create ownership among staff by involvement at
    the right levels
  • Help project teams understand the value of their
    contributions

11
PPM is NOT just Enterprise Project Management
  • Levine pg 23 A critical mistake is to think
    that PPM is fundamentally the management of
    multiple projects. This is not so. PPM is the
    management of the project portfolio so as to
    maximize the contribution of projects to the
    overall welfare and success of the enterprise.
    This means that

12
PPM is NOT just Enterprise Project Management
  • Projects must be aligned with the firms strategy
    and goals.(AHP will be useful in accomplishing
    this)
  • Projects must be consistent with the firms
    values and culture(Subjectivity will be an
    important part and should not be overlooked)
  • Projects must contribute (directly or indirectly)
    to a positive cash flow for the enterprise(The
    portfolio of projects must contribute directly or
    indirectly to all of the enterprises objectives,
    not just cash flow. But a particular project
    need only contribute to one or a few of the
    objectives)
  • Projects must effectively use the firms
    resources both people and other
    resources(Resources will be considered at a
    macro level when making portfolio decisions and
    then at a micro level when performing projects.)
  • Projects must not only provide for current
    contributions to the firms health but must help
    position the firm for future success(Objectives
    such as corporate image, impact on the
    environment, ethics should be included in the
    Enterprises strategy.)

13
Making the Case for Project Portfolio
ManagementChapter 5.1
  • To make the case for PPM, it is necessary to
    demonstrate how PPM can address real and
    immediate problems.
  • This is best accomplished by soliciting the input
    of co-workers to isolate known problems, making
    interpretations, developing potential solutions
    and outlining benefits accruing from these
    solutions, and communicating these findings.
    Examples

14
Statement 1. Im overloaded with too much work
going on.
  • Who Says Any staff member.
  • Interpretation The staff member has too many
    projects.
  • Solution (AHP and Optimization) Improve
    prioritization and selection process.
  • Reduce the number of projects happening at one
    time by one part of the organization.
  • Benefit When the number of projects is reduced,
    project quality and performance increase as
    attention focuses on doing the right things. In
    addition, extra capacity is created for attending
    to emergencies or engaging in creative thought.

15
Statement 2. Im not sure how projects are
approved or prioritized, or if the decisions are
sound and the projects doable.
  • Who Says Any staff member.
  • Interpretation The staff member has too many
    projects.
  • Solution Improve prioritization and selection
    process.
  • Reduce the number of projects happening at one
    time by one part of the organization.
  • Benefit When the number of projects is reduced,
    project quality and performance increase as
    attention focuses on doing the right things. In
    addition, extra capacity is created for attending
    to emergencies or engaging in creative thought.

16
Statement 4. We made this commitment to the
client and must fulfill it.
  • Who Says The project manager
  • Interpretations
  • Someone has challenged the projects validity
    (rightly or wrongly) or attempted to add scope to
    the project based on new information.
  • In the absence of formal oversight of such
    requests, the project manager has decided to
    defend the project.
  • He/she probably feels judged based on whether
    he/she delivers on time, on spec, and within
    quality constraints.
  • This dynamic occurs in organizations that havent
    learned that project execution is subordinate to
    project relevance.
  • Meeting ones commitments is laudable only when
    the commitments make sense.
  • Demands and resulting commitments were made in a
    vacuum.
  • The clients needs have not been previously
    challenged.

17
Statement 4. We made this commitment to the
client and must fulfill it. (continued)
  • Solution
  • Remove the stigma associated with project
    redefinition by emphasizing and communicating the
    importance of considering the business benefit of
    proposed changes over traditional and rigid
    measures of project success.
  • Raise the visibility of the decision making
    process by holding regular portfolio management
    meetings.
  • Enable broad-based input and buy-in by ensuring
    that all projects are vetted by a centralized and
    empowered governance body with the capability to
    see the larger picture
  • Emphasize and communicate the importance of
    considering the business benefit of proposed
    changes over traditional and rigid measures of
    project success.

18
Statement 5. The project is a must-do
  • Who Says The client.
  • Interpretation There is the sincere belief of a
    client who has decided (often unilaterally) that
    his project must take precedence over other
    projects. The client has gotten away with this
    before and often is willing to threaten taking
    his project elsewhere
  • .

19
Statement 5. The project is a must-do
(continued)
  • Solution. All projects are assessed for their
    ability to meet strategic goals, which can then
    be articulated versus arguing, Because I say
    so
  • The governance body must apply scientific methods
    when evaluating projects while also allowing
    intuitive expressions , so the results are
    defensible and intuitive to system owners.

20
Statement 11. How can we make decisions with
incomplete information?
  • Who Says. A PPM governing body member.
  • Interpretation. PPM governing body members
    typically need three things in order to commit to
    a result
  • They need to agree on the criteria (objectives)
    that will be used to prioritize and select
    projects.
  • They need to have clear descriptive information
    about the projects (for example, the business
    case.
  • They need to have a mechanism for applying
    criteria to create project rankings. (measure the
    contribution of projects to the organizations
    objectives to derive ratio scale
    priorities).Continued

21
Statement 11. How can we make decisions with
incomplete information? Continued
  • The criteria (objectives) should be top down in
    nature, deriving from high-level performance
    goals in the organization. The ranking mechanism
    (prioritization mechanism) should be
    statistically (theoretically) sound and
    defensible and include an opportunity for open
    conversation that provides a forum for expression
    of the collective experience of the group.
  • Solution. The governing body (Governance) and its
    sponsors are charted to make top-down decisions
    about what the organization should do to meet
    strategic objectives. If the information is
    incomplete, make and document assumptions In
    order to move ahead. Then reconcile this plan
    with bottom-up data.

22
Statement 14. Portfolio management should be
simpler.
  • Who Says. Any staff member.
  • Interpretation
  • People often avoid change, and implementing
    responsible portfolio management is a big change
    for many staff.
  • A staff member may complain that PPM is too
    difficult in order to avoid accountability or out
    of fear that critical work will not get done in a
    timely fashion. (continued)

23
Statement 14. Portfolio management should be
simpler (continued)
  • Solution. Simplify as much as possible,
    recognizing that a number of assumptions can be
    made about the complex interrelationships that
    exist in order to make progress.
  • With PPM however, multi-variate criteria
    (multi-objective) analysis (and synthesis) yield
    superior results to single-variable decision
    making. It is possible (and we will learn how)
    to combine simplicity with multivariate
    techniques to achieve a more balanced portfolio.
    Organizations that implement this approach rank
    among the highest performing. Integrating
    qualitative and quantitative data improves the
    probability of success, since it entails the
    consolidation of both subtle and supporting
    factors that are important to project work.

24
Designing/Choosing Strategies
  • Enterprise and Business Unit Strategic Plans
  • Annual offsite to revise
  • Brown/Green/Red Book gathers dust on shelves
  • Bring to life by using it to make decisions!
  • Contrasting alternative strategies
  • Strategy Case analogous to business case
  • Specific objectives (high level)
  • Evaluating Strategies
  • Boston Consulting Group Model
  • Market Attractiveness (Market Growth)
  • Industry Competitiveness (Market Share)
  • NetMBA
  • ..ValueBasedManagement
  • BCG type AHP model for Enterprise
  • BCG type model for Business Unit

25
Chapter 4.1 Linking Strategy and Project
Portfolio Management (Y.C. Yelin)
  • Organizations are accustomed to investing in
    developing strategies to drive them forward
  • Multiple days of leaders and cross-functional
    teams time are spent each year in offsite
    meetings
  • Participants leave the meeting feeling they have
    raised options, hammered through them and
    achieved alignment among participants and the key
    methods that the organization will pursue to
    achieve its goals
  • The goals these strategies are intended to make
    happen are frequently NOT achieved
  • Cross-functional resource allocation and
    competing priorities cause drag on the
    organization
  • Over time, belief in the organizations ability
    to develop effective strategies and achieve goals
    lessens
  • Funding sources retreat and talented associates
    who want to contribute to a successful
    organization leave

26
What is Strategy?
  • (Tregoe Zimmerman in Top Management
    strategy)Framework that guides those choices
    that determine the nature and direction of an
    organization
  • (George Steiner in Strategic Planning) Strategy
    answers the questions
  • What should the organization be doing?
  • What are the ends we seek and how should we
    achieve them?
  • (Michael Porter, Competitive Strategy)Competitive
    strategy is a combination of the ends (goals)
    for which the firm is striving and the means
    (policies) by which it is seeking to get there.

27
Figure 4.1-1 link between strategy and project
portfolio
  • Assuming that leadership has identified the
    mission, goals, and strategies, the next level of
    detail is identification of specific projects
    that will carry out the strategies.
  • These projects become candidates for inclusion in
    the organizations project portfolio.

28
Figure 4.1.2 sample goals with links to
strategies and potential projects
29
Exhibit 4.1-1 Evaluating the degree of Linkage
and Criticality to the Strategies
  • The sum of the individual strategy impact ratings
    provides an overall project strategy value score.

  • This score is integrated with a projects ratings
    on other evaluation criteria, such as net present
    value or risk.
  • Such a total project score is often used to do
    the initial prioritization of project candidates.

30
No Explicit Strategy?
  • What if strategies do not exist for the
    organization?
  • German proverb Whats the use of running if you
    are on the wrong road?
  • Stop and find the right road.
  • Might be able to reverse engineer the
    organizations strategy by looking at
  • Where is the organization spending its
    money?What programs are funded?
  • What skills are being bought?
  • Gain concurrence from leadership to use the
    implied strategic criteria in the project
    evaluation process.

31
PPM as a Surrogate for Strategic Planning
  • If your organization does not do strategic
    planning today, instituting PPM will enable the
    discipline and process that defines the strategic
    process.
  • If your organization does do strategy work today,
    integrating PPM with it is a natural extension to
    strengthen it and increase rate of strategy
    realization (take the dust off the strategic
    plans sitting on shelves).
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