Project Portfolio Management

1
Project Portfolio Management
2
Project Portfolio Management
Project Portfolio Management is often compared to
Financial Portfolio Management which is based on
the work of Professor Harry Markowitz from the
early 1950s and which provides insight into the
efficient allocation of financial resources among
financial investment opportunities such as stocks
and other financial assets. There are
similarities diversification and the pursuit of
selecting the best collection of stocks or
projects but there are differences too. A
financial portfolio manager can select stocks
across industries but a project portfolio manager
is limited to selecting projects which lie within
the capabilities of the organization.
3
What is Project Portfolio Management?
Project Portfolio Management (PPM) is a
management process designed to help an
organization identify new project opportunities,
acquire information about these opportunities,
and rank and prioritize them against a specified
set of criteria such as strategic fit, cost,
risk, expected return etc. PPM is also about
periodically and carefully reviewing all the
projects which have been selected for inclusion
in the portfolio and which are in various stages
of initiation, planning and implementation, with
a view to determining which projects should move
up on the priority scale (and thus get preference
for available resources), which ones should move
down and which projects should be considered for
modification and/or premature termination.
4
Goals of Project Portfolio Management

• Ensure that all new and existing projects are
  aligned with the organizations mission, goals
  and objectives
• Produce and maintain a comprehensive listing of
  all projects which the organization is
  undertaking
• Develop a bigger picture view and a deep
  understanding of the project collection as a
  whole
• Create an objective methodology for
  identifying, ranking, prioritizing and selecting
  new projects
• Enable the removal of low value projects from the
  portfolio
• Help the organization make the best use of
  resources which it has available for its projects
• Ensure that a healthy balance across different
  types of projects with different cost, schedule,
  complexity and risk profiles is maintained

5
When Is There A Need for Project Portfolio
Management?

• There is a recognition that resources are being
  misspent
• Many projects are not adding strategic value to
  the organization
• Too many small projects underway
• Excessive project delays are experienced due to
  lack of resources
• Frequent difficulty getting people to build
  project teams
• Project staff are involved in too many projects
  and putting in too much overtime work
• Intense competition (versus cooperation) between
  areas of the organization with regard to
  financing and staffing projects
• Frequent change of status of projects (active
  on-hold priority on-hold)

6
Benefits of Project Portfolio Management

• Ensures that all projects selected are properly
  aligned with the organizations mission, goals
  and objectives
• Utilizes a tested and effective process which has
  been acknowled-ged and accepted by the
  organizations key stakeholders
• Project selection and prioritization takes all
  relevant project assessment criteria and
  information into consideration
• Targets the best projects from the available pool
  of projects
• Prevents duplication of projects and consequent
  waste of resources
• Is integrated in a comprehensive information
  framework which permits the periodic
  performance monitoring of the projects in the
  portfolio and reevaluation of their relative
  priority
• Facilitates organizational learning

7
Limitations of Project Portfolio Management

• Tendency to rely too heavily on PPM
  tools/software for decisions
• Adds another layer of bureaucracy to
  organizations
• May cause conflict, confusion and stress (for
  e.g. due to shifting priorities and resources)
• Could require a cultural change in the
  organization (overcoming resistance by some
  managers and getting sustained commitment by
  senior management)
• Good project selection requires large amounts of
  quality information which is often not always
  available at the beginning of pre-selection stage
• Cannot be effective without well-documented
  project plans, accu-rate estimates of resource
  requirements and resources consumed
• Difficult to perform in environments marked by
  frequent change

8
Project Management Portfolio Management
Project Management is about doing projects
right after the projects have been accepted for
inclusion in the project portfolio.
while
Project Portfolio Management is about doing the
right projects, namely, ensuring that only those
projects are selected for subsequent inclusion in
the project portfolio which will add value to the
organization.
9
Project Portfolio(Example of a Non-Governmental
Organization)
Mission, Goals, Objectives
Training Courses for Making Embroidered Dresses
Knitting Workshops
An NGO seeks to contribute towards poverty
reduction of womenfolk living in deprived rural
areas of provice P by providing them with
opportu-nities to earn income independently or
through collective effort
Subsidized Credit Scheme
Equipment Leasing
Locate Sellers of cheap Raw Materials
Database of Prospective Buyers
10
Project Portfolio(Example of a Commercial
Organization)
Depending on its size, a commercial organization
may have hundreds (or even thousands) of
pro-jects in its project and programme portfolios
at any given point in time! A huge amount of
its financial, human and material resources will
be tied up over time in these portfolios.
Creation of a New Product Manufacturing Facilities
Techn. Upgradation or expansion of Existing
Manufacturing Facilities
New Product Development
Substantive Modification of Existing Products
Training of Managers and Employees in TQM
Redesign of Some Existing Process Assets
11
Project Portfolios Good and Bad
Bad Project Portfolio Many projects included in
the portfolio are of high risk with low expected
returns spread over a long period of time and
several projects do not align well with
organizations mission, goals and objectives
Projects will not add value to the organization
to the extent they could have if a PPM Process
was in place. The organizations growth and
(possibly) its survival may be jeopardized.
Good Project Portfolio All projects in the
portfolio are aligned with the organizations
mission, goals and objectives, and there is a
healthy mix of high and low risk projects with
comparatively high rates of return over the
short, medium and long-term.
Projects will add maximum value to the
organization for the resources made available for
the projects in its portfolio. This
organization is in a better position to face
internal and external challenges.
12
The Project Portfolio Process Framework(Example
Commercial Organization)
Organizations Mission, Goals Objectives,
Structure, Cul-ture, Priorities and Support
Infrastructure (e.g. PMO, Information Databases)
PPM Process
New Product Development
System of Project Classification and
Categorization
Process Modification /Reengineering
IT-Systems
Capacity Expansion
Mainenance and Renovation
Compliance
13
Criteria Which Determine Project Selection
Project Portfolios are dynamic entities whose
composition changes over time as completed
projects exit it, new projects are added and some
projects are modified or prematurely terminated
because they will no longer add value to the
organization.
Project Portfolios are heavily in-fluenced both
by the internal organizational factors (e.g.
mission, goals, objectives, structure, processes,
information systems, available resources etc.) as
well as by external considera-tions (competition
pressure, tech-nological innovation, changing
demands etc.).
Each project must be assessed according to the
same criteria relevant for its category
14
Some Asessment Criteria for Project Selection
Organizations Experience With Similar Projects
Projects Strategic Fit
Estimated Cost and Time
Organizations Institutional Informational and
Process assets
Complexity and Risk
Impact on Organizations Employees and their
Motivation Performance
Expected Benefits (Quantitative Qualitative)
Environmental Impact
Ethical Considerations and CSR
Temporal Distribution of Quantitative Returns
Human and Physical Resource Requirements
Strategic Partnership Building
Size and Composition of Existing Programme
Project Portfolio
Organizations Competencies
Impact on Organizations Image
Environmental Factors (Economic, Market, Social,
Legal, Political etc.)
15
The Project Portfolio Management Process
Mission, Goals, Objectives, Culture, Structure
and Infrastructure, Pro-cesses, Environment etc.
Context of Organization
Comprehensive listing of all active, on-hold and
proposed projects at all levels of the
organization.
Inventorization
Multiple Assessment Criteria, Quali-tative
Quantitative Tools, Software Applications etc.
Analysis Assessment
Maintain balance of projects to create optimal
mix based on their cost, return, risk, schedule
etc..
Determination of Portfolio
Periodically review and modify port-folio by
retaining, modifying and (when necessary) killing
projects.
Implementation
16
A Simple Scoring Model for Project Proposals
Criteria (0-10) Strategic Fit Core Compe-tencies Urgency RoI Weighted Total
Weightage 3 2 2 3

Project A 8 7 5 6 66
Project B 2 3 1 5 29
Project C 5 5 9 6 61

Project N
17
Projects and Project Portfolio Management
Projects
Project Portfolios

• Cause change beneficial for the organization
• Focus on project goal, budget, schedule,
  requirements and stakeholders
• Use a process- and tool-based methodology
• Compete with other projects for resources
• Are defined by their com-plexity, risk, cost,
  schedule, expected return and other factors
• May fail or be prematurely terminated

• Must add maximum value to organization for the
  resources provided
• Must be consistent with the organizations
  mission, goals and objectives
• Are based on a robust and consistently applied
  process for selecting and managing projects
• Need to be periodically monitored for performance
  and revamped if necessary
• Are holistic in outlook and aid senior mgt.
  decision-making

18
A Thing to Remember About Project Portfolio
Management
Project Portolio Management is an iterative
process. The performance of the projects selected
for inclusion in the portfolio must be
periodically monitored after they have been
initiated in order to determine whether in a
changing internal and external environment they
are still aligned with the organizations
mission, goals and objectives and, if this is no
longer the case, either modified accordingly or
prematurely terminated so that resources can be
redirected towards other (high value-adding)
projects.
19
Project Management Software Solutions
A large number of vendors, including Microsoft
and Primvera, offer advanced software programmes
not only for project management as stand-alone
solutions, but also as enterprise or
organization-wide packages which cater to the
needs of project portfolio managers. Project
portfolio software programmes offer various
levels of functionality and are very useful
tools. At the same time, they are simply a means
to an end and not intended as an end in
themselves!
20
Gartner Quadrant for Portfolio Management
Software Solutions in the IT-Sector
The Gartner Group is a large US-based consulting
organization whose focus is primarily the
IT-field. The Gartner Group periodically
reviews the Project Portfolio Management software
solutions which are available on the market and
ranks these in its acclaimed Magic Quadrant for
IT Project and Portfolio Management.
21
Project Portfolio Management Software(Selected
Vendor Overview)
22
Project Portfolio Management Software(Screenshots
Primavera 6)
23
Project Portfolio Management Software(Screenshots
Primavera 6)
24
Project Portfolio Management Software(Video Case
Study Primavera ProSight)
25
Literature on Project Portfolio Management
26
Literature on Project Portfolio Management