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Project Portfolio Management
 

Project Portfolio Management

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Here's your guide to Project Portfolio Management. Explains how PPM aligns to business strategy and how to implement PPM in an organization. Full of skills, processes and key steps to get Project ...

Here's your guide to Project Portfolio Management. Explains how PPM aligns to business strategy and how to implement PPM in an organization. Full of skills, processes and key steps to get Project Portfolio Management going in your organization. If you would like a copy, drop me an email, floyd@floydsaunders.com.

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  • Hi, this is a great set of slides. Please can you send me a copy of this so I can share with my team. My email address is Khalil_Aslam@lineone.net .

    Much appreciated.
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  • sir, can u send me a converted copy in word document before 10:a.m. tomorrow
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  • Floyd very well done, can you email me a deck. nick.vitarelli@g4sinc.com
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  • Hi Floyd, this is a great deck. Please could you send a copy to me? rachel180502@yahoo.co.uk
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  • Hi Floyd,
    Interesting information. Can you send me a copy of this deck and your companion article on Implementing PMO's to me at mitch.cofman@macys.com. Thank you.....
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  • Project portfolio management starts with blending the practices and processes into business strategies and goals to achieve the right project selection mix so that project execution helps achieve those business goa.s
  • Sample Approaches for Creating a Project Portfolio One approach is adopting a large portfolio for the entire organization. Sections of the portfolio are broken down into groups IT projects are broken down into three categories: Venture: Projects that help transform the business Growth: Projects that help increase revenues Core: Projects that help run the business
  • Organizations implement project within limited time and budget
  • Level 1 If a formalized project portfolio management unit exists in the enterprise, it is very modest and not very sophisticated. It will probably be commissioned to develop basic practices for project selection and project performance. Level 2 The PPM unit will develop some standard processes and practices for PPM. This unit will probably handle project prioritization processes as well as cross-project critical processes. Further, the PPM unit will probably attempt to institutionalize the PPM practice across the entire enterprise. Level 3 The PPM unit will establish and monitor use of a complete project portfolio management methodology. Extensive training will be provided to all personnel who would be involved in this process. Level 4 The PPM unit will promote the use of a comprehensive, and possibly singular, portfolio management system across the enterprise. PPM will be fully integrated into business processes as part of the adoption of the management-by-projects concept. Level 5 The PPM unit will monitor the enterprises portfolio, which will probably be running at peak efficiency, for opportunities to recommend continuous improvements in models, indices, processes, and procedures.
  • The goal of linking portfolio management to the strategy is to balance the use of resources to maximize value in executing strategic and operational activities
  • The goal of linking portfolio management to the strategy is to balance the use of resources to maximize value in executing strategic and operational activities
  • To guide the “ Management of Authorized Programs & Projects ” , a project portfolio is created, linking the organizational strategy to a set of prioritized programs and projects.
  • The ultimate goal of linking portfolio management with organizational strategy is to establish a balanced, executable plan that will help the organization achieve its goals.
  • As the components move into initiation, their respective areas use their management processes to manage deliveries. During execution, portfolio management maintains relationships among the components to monitor progress and maintain alignment with strategic goals. At the highest level, strategic and ops portfolios are managed as a single comprehensive portfolio.
  • Changes to organization ’ s mission and strategy Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects Project managers who understand their organization ’ s strategy can become effective advocates of projects aligned with the firm ’ s mission Strategic Management Overview Involves determining long-term objectives, predicting future trends, and projecting the need for new products and services Provides the theme and focus of the future direction for the firm respond to change allocating scarce resources Requires strong links among mission, goals, objectives, strategy, and implementation SWOT analysis S trengths, W eaknesses, O pportunities, and T hreats Strategic planning process should Review and define the organizational mission Set goals and objectives (see Doran ’ s SMART) Analyse and formulate strategies to reach objectives Implement strategies through projects
  • SWOT analysis S trengths, W eaknesses, O pportunities, and T hreats
  • Strategic Management Overview Involves determining long-term objectives, predicting future trends, and projecting the need for new products and services Provides the theme and focus of the future direction for the firm respond to change allocating scarce resources Requires strong links among mission, goals, objectives, strategy, and implementation
  • Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors) Ranking Proposals Discipline Accountability Responsibility Constraints Reduced flexibility Loss of power
  • Methods for selecting projects include: Focusing on broad organizational needs Categorizing IT projects Financial analysis Using a weighted scoring model Implementing a balanced scorecard Focusing on Broad Organizational Needs It is often difficult to provide strong justification for many IT projects, but everyone agrees they have a high value Three important criteria for projects: need for the project funds available for the project will to make the project succeed Categorizing IT Projects One categorization assesses if the project provides a response to: a problem an opportunity a directive Another categorization is based on the time and date of expected completion Another categorization is the overall priority of the project
  • Successful organizations initiate projects to meet business needs, and a common business need is to spend money wisely A business case is a document that provides justification for investment It is a good idea to have one of the company ’ s financial managers review the information for accuracy – not formally part of the project management plan Attributes of a Good Business Case Details all possible impacts, costs, benefits Clearly compares alternatives Objectively includes all pertinent information Systematic in terms of summarizing findings
  • In this figure, the controls that comprise organizational governance cascade to the domains of portfolio, program and project management. These controls maximize the likelihood of success of the organization ’ s strategy.
  • Total Quality Management, Continuous Quality Improvement. Six Sigma, introduced by Motorola in 1981, seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes
  • PMO is the Project Management Office. Alternative terms include Project Center of Excellence (COE), Program Office.
  • Portfolio metrics are less concerned with lifecycles and more focused on monitoring progress toward achieving an organization ’ s goals. Project management metrics illustrates the health at a given point in time and progress toward meeting deliverables. Program metrics consolidate and summarize performance of constituent projects, still maintaining a focus on the life cycle.
  • A portfolio manager needs to design, develop, implement, and maintain a portfolio management information system but how the available solutions look like and how their performance. These information systems not only provide data acquisition and management but also decision support, and reporting and graphing. In addition to making project portfolio data entry, change and review easy, the tools may include features to support project selection, project management, and resource allocation. Available tools differ considerably in how well the accomplish each of these functions. A look at the best practices, or more to the point, the most complete practices organizational model for a PMO, shows that there are up to five separate functional roles that constitute program management and as many as 15 different activities, such as portfolio analytics or dashboard reporting . Optimal PPM tool selection occurs when your firm's unique PMO configuration — a hybrid subset of the full-function PMO model — forms the basis for assessing and scoring the tool functions that will support that configuration. PPM vendors have gone out of their way to invent or acquire software that is attached to virtually every one of these PMO activities.
  • We can see that all these attributes are associated with resource allocation, ranking of each project, and the investment and hence provide a dashboard in a visualized way. With the exception of tools that include general-purpose modeling and analysis platforms, most tools have limited flexibility to accommodate different value measurement models. Considering ease of use, ability to import/export data from your other systems, customer service, vendor financial status, cost, ability to grow with your evolving needs, etc. a tool for organisation ’ s need may be chosen. Below is the description of some of the tools available in the market
  • After examining past research, user need assessments, and vendor and expert interviews, we developed a comprehensive set of evaluation criteria (see Figure 1). We evaluated vendors against approximately 95 criteria, which we grouped into three high-level buckets: Current offering. Strategy. Market presence. Forrester included 14 vendors in the assessment: Artemis International Solutions, CA, Cardinis, Compuware, Daptiv, HP, IBM, ITM-Software, Microsoft, Oracle, Planview, Primavera, SAP, and Serena. Each of these vendors has (see Figure 2): Tools capable of enterprisewide (though in some cases IT-centric) deployments. Documented implementations across several industries/sectors. The evaluation uncovered a market in which (see Figure 3): CA, Planview, HP, Primavera, and IBM lead the pack. Compuware, Oracle, Serena, and Microsoft offer competitive options. SAP and Daptiv lack the expected full suite of out-of-the-box offerings. This evaluation of the PPM market is intended to be a starting point only. Readers are encouraged to view detailed product evaluations and adapt the criteria weightings to fit their individual needs through the Forrester Wave Excel-based vendor comparison tool.  

Project Portfolio Management Project Portfolio Management Presentation Transcript

  • Project Portfolio Management From Kick Start to ImplementationSaunders Learning GroupProject and Program Management Training709 Autumn Ridge CourtAndover, KS 67002316-680-6482 email: floyd@floydsaunders.comAll rights reserved Saunders Learning Group, LLC Andover, KS
  • Where Project Portfolio Management Starts Strategic Indices Financial Funding Indices Category Constraint Saunders Learning Group, LLC, Andover, KS
  • What is Portfolio Management?“Doing the right work, not doing the work right.” • A portfolio consists of projects or programs and other work grouped together to facilitate the accomplishment of business objectives strategic goals of the organization • It consists of current components and planned/future work. • A portfolio, unlike a project/program, is not temporary • reflecting the Portfolio management includes processes for: – Identifying organizational priorities – Making investment decisions – Allocating resources Saunders Learning Group, LLC, Andover, KS
  • What is Portfolio Management?Portfolio Management is: The management of components to achieve organizational objectives Using its tools to identify, select, prioritize, govern, monitor, & report a component’s contribution to, and alignment with org objectives Not concerned with managing the components Saunders Learning Group, LLC, Andover, KS
  • 1. Executive support 2. User involvement 3. Experienced project manager Clear business objectivesWhat you 4. 5. Minimized scope 6. Standard softwareNeed to 7. infrastructure Firm basic requirementsSucceed 8. 9. Formal methodology Reliable estimates 10. Other criteria, such as small milestones, proper planning, competent staff, and ownershipSaunders Learning Group, LLC, Andover, KS
  • What Project Portfolio Management Covers Goals Manage the Enterprise by Projects Portfolio of Projects Objectives Programs Individual Initiative Projects Saunders Learning Group, LLC, Andover, KS
  • Portfolio, Programs, & Projects Relationships All portfolio components:  Represent investments made or planned  Are aligned with strategic goals  Have distinguishing features for grouping  Can be measured, ranked, prioritized (i.e. quantifiable) Saunders Learning Group, LLC, Andover, KS
  • Portfolio, Programs, & Projects Relationships Saunders Learning Group, LLC, Andover, KS
  • Portfolio, Programs, & Projects Saunders Learning Group, LLC, Andover, KS
  • Approaches to Project Portfolio Management One Portfolio or Several? Venture: Projects that Growth: Projects that grow Core: Projects that help transform the business revenue or market share run the business Saunders Learning Group, LLC, Andover, KS
  • Why Project Portfolio Management Helps organization align its project workload to meet strategic goals Cost Control with central oversight of budget Improved risk and issues management Demand and investment management with standardization investment procedure, rules, and plans Improved ability to deliver project Faster response to the changing circumstances Easier to find dependencies among projects Do the right work, and do it faster Improve resource utilization Identify problems and solve it easily Saunders Learning Group, LLC, Andover, KS
  • Project Portfolio Management Maturity Levels  Level 1 If a formalized project portfolio management unit exists in the enterprise, it is very modest and not very sophisticated.  Level 2 The PPM unit will develop some standard processes and practices for PPM. This unit will probably handle project prioritization processes, cross- project critical processes, and PPM practice across the entire enterprise.  Level 3 The PPM unit will establish and monitor use of a complete project portfolio management methodology. Extensive training will be provided to all personnel who would be involved in this process.  Level 4 The PPM unit will promote the use of a comprehensive, and possibly singular, portfolio management system across the enterprise. PPM will be fully integrated into business processes as part of the adoption of the management-by-projects concept.  Level 5 The PPM unit will monitor the enterprises portfolio, which will probably be running at peak efficiency, for opportunities to recommend continuous improvements in models, indices, processes, and procedures. Saunders Learning Group, LLC, Andover, KS
  • Stakeholder Analysis Typical Stakeholders  Finance  Marketing  Human Resources  Information TechnologyA corporate stakeholder is a party that can affect or be affected by the actions of thebusiness as a whole and includes any group without whose support the organizationwould cease to exist. Or for projects, may result in failure. Saunders Learning Group, LLC, Andover, KS
  • 1. Builds discipline into project selection process Benefits of 2. Links project selection to strategic metrics Project 3. Prioritizes project proposals across a common set of criteria, rather than on Portfolio 4. politics or emotion Allocates resources to projects that align withManagement 5. strategic direction Balances risk across all projects Saunders Learning Group, LLC, Andover, KS
  • Implementation Process - Scoping Manage the implementation of Project Portfolio Management just like a project Saunders Learning Group, LLC, Andover, KS
  • PPM Implementation Process - Organizing Saunders Learning Group, LLC, Andover, KS
  • PPM Implementation Process - Planning Saunders Learning Group, LLC, Andover, KS
  • PPM Implementation Process - Operational Saunders Learning Group, LLC, Andover, KS
  • Organizational StrategyCapitalizes on opportunitiesMinimizes the impact of threatsResponds to market changesReinforces focus on critical ops activities Saunders Learning Group, LLC, Andover, KS
  • Portfolio Management and Organizational Strategy Organizational Strategy  Is the result of the strategic planning cycle  Translates vision and mission into strategic plan  Consists of initiatives influenced by market dynamics, customers, shareholders, regulations, competitors  Drives what is included in portfolio management Saunders Learning Group, LLC, Andover, KS
  • Relationship between Strategic and Operations Vision Targets Mission Organizational Strategy and Objectives High-Level Project Portfolio Initiatives Operations Planning Planning and and Management Management Management of Approved Management of Programs and Projects Activities (increasing value production Operations capacity) Organizational Resources Saunders Learning Group, LLC, Andover, KS
  • Portfolio Management and Organizational Strategy Impact of portfolio plan on strategy is achieved by: 2. Maintaining portfolio alignment 3. Allocating financial resources 4. Allocating human resources 5. Measuring component contributions 6. Strategic risk management Saunders Learning Group, LLC, Andover, KS
  • Building a Comprehensive Project Portfolio Organizational Strategy & Objectives (communicated through a strategic plan) Operations Planning Strategic Planning (continuing to run the business) (responding to environmental changes) Initiatives (defined to accomplish strategic and operational objectives) Project Portfolio (consisting of prioritized strategic and operational programs and projects) Organizational Resources Saunders Learning Group, LLC, Andover, KS
  • Strategic Planning1. What is strategy?2. How do projects relate to strategy?3. Tools to Use for Strategic Planning Saunders Learning Group, LLC, Andover, KS
  • Tools to Use for Strategic Planning 5 Forces analysis Threat of New Entrants Supplier Intensity of Customer power competition power Substitute s Michael Porter’s ‘5 Forces’ – 1980’s Saunders Learning Group, LLC, Andover, KS
  • Tools to Use for Strategic Planning business model templateINFRASTRUCTURE OFFER CUSTOMER PARTNER CUSTOMER NETWORK RELATIONSHIP CORE VALUE TARGET CAPABILITIES PROPOSITION CUSTOMER VALUE DISTRIBUTION CONFIGURATION CHANNEL COST FINANCE REVENUE STRUCTURE STREAMS MANAGEMENT KEY PERFORMANCE PROJECT PORTFOLIO MANAGEMENT INDICATORS (KPIs) Saunders Learning Group, LLC, Andover, KS
  • Tools to Use for Strategic Planning Balanced Scorecard Financial Process Customer Scorecard satisfaction efficiency Learning and innovation Saunders Learning Group, LLC, Andover, KS
  • Tools to Use for Strategic Planning SITUATIONAL ANALYSIS = SWOTWhere are we now? Positive NegativeStrengths InternalWeaknessOpportunities S WThreats External O T Saunders Learning Group, LLC, Andover, KS
  • Strategic Management Overview  Involves determining long-term objectives, predicting future trends, and projecting the need for new products and services  Provides the theme and focus of the future direction for the firm  respond to change  allocating scarce resources  Requires strong links among mission, goals, objectives, strategy, and implementation Saunders Learning Group, LLC, Andover, KS
  • Aligning Projects to Strategy and Organizational Goals Strategy 1 Strategy 2 Strategy 3 Strategy 4Money projectsCustomers projects projectsEfficiency and EffectivenessAdaptability projects Saunders Learning Group, LLC, Andover, KS
  • Saunders Learning Group, LLC, Andover, KS
  • Project selection and portfolio managementWhat are the inputs that cause theproject process to begin? Saunders Learning Group, LLC, Andover, KS
  • Project Proposals When ranking proposals, consider; Discipline Accountability Responsibility Constraints Reduced flexibility Loss of powerSaunders Learning Group, LLC, Andover, KS
  • Project Initiation Forms Figure 2.4B Risk Analysis (Gray & Larson, 2006, p39) Saunders Learning Group, LLC, Andover, KS
  • Project Selection MethodsNot all project proposals make it to initiation Time Money Focus Saunders Learning Group, LLC, Andover, KS
  • Project SelectionMethods for selecting projects include: Categorizing IT - Focusing on broad organizational needs Projects - Categorizing IT projects — Does the project provides a - Financial analysis response to: - Using a weighted scoring model  a problem - balanced scorecard  an opportunity - Strategy mapping  a directive — The time and date of expected completionFocusing on Broad Organizational NeedsNon-financial, but important — The overall priority of thebenefits Three important criteria: project 1. need for the project 2. funds available for the project 3. will to make the project succeed Saunders Learning Group, LLC, Andover, KS
  • Financial Analysis Payback model Return on Investment $$$ (there are more) Saunders Learning Group, LLC, Andover, KS
  • Payback modelMeasures the time it will take to recover the project investmentShorter paybacks are more desirablePayback occurs when cumulative discounted benefits and costs are greater than zeroLimitations of payback:• ignores the time value of money• assumes cash inflows for investment period only• does not consider profitability Saunders Learning Group, LLC, Andover, KS
  • Return on InvestmentReturn on Investment (ROI) Calculated by subtracting project (total discounted costs from the benefits and then benefits – total dividing by the costs Formula: discounted costs) ROI = (total discounted benefits – discounted costs total discounted costs) / discounted costs Higher the ROI, the better. Many organizations have a set or minimum rate of return on investment projects Saunders Learning Group, LLC, Andover, KS
  • Non-financial Analysis – Weight ScoringA weighted scoring model is a tool thatprovides a systematic process for selectingprojects based on many criteria — Steps in identifying a weighted scoring model:  identify criteria for project selection  assign weights (%) to criteria add up to (100%)   assign scores to each criteria for each project multiply scores by weights to get total scores $$$ — The higher the weighted score, the better Saunders Learning Group, LLC, Andover, KS
  • Applying a selection model  Project Classification —Deciding how well a strategic or operations project fits the organization’s strategy  Selecting a Model —Focus on competitive strategy and broad organizational needs —Perform net present value analysis or other financial projections —Use a weighted scoring model —Implement a balanced scorecard —Address problems, opportunities, and directives —Consider project time frame —Consider project priority Saunders Learning Group, LLC, Andover, KS
  • Project Selection The Business Case Impacts Costs & Benefits Clearly compares alternatives Objective SystematicSaunders Learning Group, LLC, Andover, KS
  • Contents of a Business Case 1. Introduction/Background 2. Business Objective 3. Current Situation and Problem/Opportunity Statement 4. Critical Assumptions and Constraints 5. Analysis of Options and Recommendation 6. Preliminary Project Requirements 7. Budget Estimate and Financial Analysis 8. Schedule Estimate 9. Potential Risks 10. Exhibits Saunders Learning Group, LLC, Andover, KS
  • Portfolio Management and GovernanceGovernance Guides the execution of organizational activities Maximizes delivery of value Minimizes risk Directs and controls operations and strategic activities Responds to the rights, expectations and desires of stakeholders An organization prioritizes, selects, and allocates resources to accomplish its activities Saunders Learning Group, LLC, Andover, KS
  • Portfolio Management and GovernanceRelationships among Organizational Governance, Operations, and Portfolio Management Organizational Governance Strategic Planning Management by Projects Portfolio Management Program Management of Management Operations Project Management Process Tools Metrics Saunders Learning Group, LLC, Andover, KS
  • Role of the Portfolio Manager Saunders Learning Group, LLC, Andover, KS
  • Role of the Portfolio Manager, cont. Saunders Learning Group, LLC, Andover, KS
  • Portfolio Manager Skills Strategic Alignment — Participates in corporate strategy development — Monitors execution of initiatives in support of strategy Portfolio Management Methods — Project selection methods — Decision support tools, e.g ROI, IRR, simulation techniques, etc. — Prioritization algorithms — Capability/capacity modeling tools — Project/program auditing techniques — Organizational & Portfolio risk management Saunders Learning Group, LLC, Andover, KS
  • Portfolio Manager Skills, cont. Program and Project Management Methods Process Development & Continuous Improvement, e.g Six Sigma, CMMi General business skills — Understand key financial principles — Use KPIs in portfolio performance measurement — Analyze financial info and trends — Analyze business cases for portfolio selection Stakeholder management General management skills — Goal setting — Performance management — Recruitment — Employee development, mentoring, coaching, training Risk and opportunity management Saunders Learning Group, LLC, Andover, KS
  • Portfolio Reporting and the PMOThe PMO may report effectiveness of components via dashboards, e.g.  Portfolio Overall Health  Strategic Goal Achievement  Organization Risk Profile  Resource capability  Financial information Saunders Learning Group, LLC, Andover, KS
  • Portfolio Management Metrics Quantitative measures  Increase in revenue  Development of new markets  Cost reductions  Change in NPV of the portfolio  ROI from the portfolio  IRR of the portfolio  Risk reduction degree  Resource Availability  Change in quality improvement scoresQualitative benefits include degree of strategic alignment and recognition of legaland regulatory compliance Saunders Learning Group, LLC, Andover, KS
  • Project Success Better training Better Smaller tools projects Strategic Alignment Better PortfolioSelection Mgt Saunders Learning Group, LLC, Andover, KS
  • Project Portfolio Management Tools A tool to facilitate your portfolio management office function by — providing data acquisition and management — reporting project selection, resource allocation — reporting and graphing Start Your Tool Selection With The Capabilities Of Your PMO Saunders Learning Group, LLC, Andover, KS
  • What PPM Tools Must Deliver Accurately portray the status of investments Readily enable human and financial resources allocation across the investment portfolio Meaningfully interact with stakeholders Make the solution as intuitive as possible Saunders Learning Group, LLC, Andover, KS
  • Project Portfolio Management ToolsForrester Wave™ Saunders Learning Group, LLC, Andover, KS
  • Project Management Support Saunders Learning Group provides a number of training and advisory services and the most sought after are the following:  Project Management Training courses – We provide a range of courses in project management, and can custom develop training to meet your specific needs  Project Office Development – determining the right style and form of project office for various organizations (enterprise program offices, centers of excellence, strategic project support offices, etc.)  Coaching – with executive sponsors, project manager(s) and teams to optimize project or program performance. Saunders Learning Group, LLC, Andover, KS Proprietary, all rights reserved
  • Thank youSaunders Learning GroupProject and Program Management Training709 Autumn Ridge CourtAndover, KS 67002316-680-6482 email: floyd@floydsaunders.comAll rights reserved Saunders Learning Group, LLC