Russona Consulting presents:<br />Choosing the Right Projects<br />A Subset of Project Portfolio Management<br />
Why Is This So Important<br />“The greatest waste in business is <br />doing the wrong thing well”<br /><ul><li>Henry Ford...
Presentation Contents<br /><ul><li>Overview
The Life Cycle
Business Variables
Cyclical Variables
Scoring Individual Projects
Balancing The Portfolio
Summary</li></li></ul><li>Project Portfolio Management<br />To be effective, the portfolio assessment needs to incorporate...
Organizational Context<br />
Life Cycle Phases<br />here<br />
Portfolio Management<br />Project Portfolio Management covers 3 key areas:<br /><ul><li>Align the portfolio of projects ba...
Ensure the investment is being managed
Ensure the business achieved the expected benefits</li></ul>Most organizations have more “good ideas” than they have resou...
Roles in Portfolio Management<br />PMI’s – Portfolio Management Std. – 1st Ed.<br />
Impact of Too Many Projects<br /><ul><li>Delayed benefits
The expected benefits from the changes take longer to be realized
Projects take longer
Changes in business / technology / environment mean more “challenged” projects
Trying to cover too many bases means that nothing gets done well
Unhappy stakeholders, poor quality results</li></li></ul><li>Presentation Contents<br /><ul><li>Overview
The Life Cycle
Business Variables
Cyclical Variables
Scoring Individual Projects
Balancing The Portfolio
Summary</li></li></ul><li>Life Cycle Phases<br />Following TBS – EMF, key phases in the project life cycle are:<br />Busin...
Selection Process - Criteria<br /><ul><li>Ensure that the projects we select reflect the business criteria in terms of ach...
Transparency required to ensure support for the process
Needs to reflect the capacity of the organization to commit and deliver on selected projects</li></li></ul><li>Process Dem...
Ranking of key business objectives (KBOs) against each other
Selection of key criteria for evaluating proposed projects
Business factors
Technology factors
Risk factors
Financial factors
Using the criteria to weight the proposed projects
Provides a “weighted score” on which to prioritize
A two step assisted process to finalize the selected projects</li></li></ul><li>Inputs Required – 3 Levels<br /><ul><li>Bu...
Project Phases / Reviews<br />
Pre-Project Stage<br />
Roles / Responsibilities<br />
Portfolio Management Processes<br />PMI’s – Portfolio Management Std. – 1st Ed.<br />
Project Alignment Process<br />Portfolio selection follows a 7 step process<br />Identification<br />Categorization<br />E...
As New Initiatives Are Raised<br />Identification – someone has gone through the business requirements and developed a bus...
Presentation Contents<br /><ul><li>Overview
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Project Portfolio Selection Model - Voice narrated

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Narrated copy of "Project Portfolio Selection" presentation made to the PMI Symposium 2008 in Ottawa. Puts forward a scoring model for selecting projects which are best aligned against organizational strategies and goals.

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  • - Especially in these belt-tightening days, we have scarce resources, and we need to use them where they will best help the organization
  • - Need to provide reference for this slide (OPM3 or the Portfolio standard?)
  • Done in a piecewise, hierarchical fashion
  • Not that this is not directly using the results from the previous table….Should simplify
  • Project Portfolio Selection Model - Voice narrated

    1. 1. Russona Consulting presents:<br />Choosing the Right Projects<br />A Subset of Project Portfolio Management<br />
    2. 2. Why Is This So Important<br />“The greatest waste in business is <br />doing the wrong thing well”<br /><ul><li>Henry Ford </li></ul>Project management is about “doing the projects right”<br />Portfolio management is about “doing the right projects”<br />
    3. 3. Presentation Contents<br /><ul><li>Overview
    4. 4. The Life Cycle
    5. 5. Business Variables
    6. 6. Cyclical Variables
    7. 7. Scoring Individual Projects
    8. 8. Balancing The Portfolio
    9. 9. Summary</li></li></ul><li>Project Portfolio Management<br />To be effective, the portfolio assessment needs to incorporate both short and long term perspectives<br />The management of an effective PPM is about the selection and prioritization of projects to deliver the highest value, based on the pre-established portfolio business decision and priority criteria<br /> - “Best Practices for Project Portfolio Management” White Paper – Serena Mariner, August 2008<br />
    10. 10. Organizational Context<br />
    11. 11. Life Cycle Phases<br />here<br />
    12. 12. Portfolio Management<br />Project Portfolio Management covers 3 key areas:<br /><ul><li>Align the portfolio of projects based on highest value and business criteria
    13. 13. Ensure the investment is being managed
    14. 14. Ensure the business achieved the expected benefits</li></ul>Most organizations have more “good ideas” than they have resources to deliver on<br />Focus on “doing the right projects”<br />
    15. 15. Roles in Portfolio Management<br />PMI’s – Portfolio Management Std. – 1st Ed.<br />
    16. 16. Impact of Too Many Projects<br /><ul><li>Delayed benefits
    17. 17. The expected benefits from the changes take longer to be realized
    18. 18. Projects take longer
    19. 19. Changes in business / technology / environment mean more “challenged” projects
    20. 20. Trying to cover too many bases means that nothing gets done well
    21. 21. Unhappy stakeholders, poor quality results</li></li></ul><li>Presentation Contents<br /><ul><li>Overview
    22. 22. The Life Cycle
    23. 23. Business Variables
    24. 24. Cyclical Variables
    25. 25. Scoring Individual Projects
    26. 26. Balancing The Portfolio
    27. 27. Summary</li></li></ul><li>Life Cycle Phases<br />Following TBS – EMF, key phases in the project life cycle are:<br />Business case<br />Portfolio Selection<br />Project Initiation<br />Planning<br />Execution <br />Control & Monitoring<br />Close-out – Delivery<br />
    28. 28. Selection Process - Criteria<br /><ul><li>Ensure that the projects we select reflect the business criteria in terms of achieving business objectives
    29. 29. Transparency required to ensure support for the process
    30. 30. Needs to reflect the capacity of the organization to commit and deliver on selected projects</li></li></ul><li>Process Demonstration<br />This presentation demonstrates how to model this using MS Excel!<br /><ul><li>Series of slides demonstrating:
    31. 31. Ranking of key business objectives (KBOs) against each other
    32. 32. Selection of key criteria for evaluating proposed projects
    33. 33. Business factors
    34. 34. Technology factors
    35. 35. Risk factors
    36. 36. Financial factors
    37. 37. Using the criteria to weight the proposed projects
    38. 38. Provides a “weighted score” on which to prioritize
    39. 39. A two step assisted process to finalize the selected projects</li></li></ul><li>Inputs Required – 3 Levels<br /><ul><li>Business Management (> annual)</li></ul>Business criteria (and groupings)<br />Key Business Objectives (KBOs)<br /><ul><li>Executive (annual)</li></ul>Overall budget<br />Budget categories <br /> % Allocation of the budget to those categories<br /><ul><li>List of candidate projects (ongoing, regular basis)</li></ul>Category<br />Overall cost<br />For each candidate, a scoring against the business criteria<br />
    40. 40. Project Phases / Reviews<br />
    41. 41. Pre-Project Stage<br />
    42. 42. Roles / Responsibilities<br />
    43. 43. Portfolio Management Processes<br />PMI’s – Portfolio Management Std. – 1st Ed.<br />
    44. 44. Project Alignment Process<br />Portfolio selection follows a 7 step process<br />Identification<br />Categorization<br />Evaluation<br />Selection<br />Prioritization<br />Portfolio Balancing<br />Authorization<br />
    45. 45. As New Initiatives Are Raised<br />Identification – someone has gone through the business requirements and developed a business case. Decision made on which option to select<br />Categorization – in some organizations, budgets will have specific “categories” that need to be balanced (e.g. infrastructure, research and development, employee development)<br />Evaluation –collect the information required to do selection / prioritization<br />Selection – some projects may not meet required qualifications, be mandatory, or customer / contract driven<br />
    46. 46. Presentation Contents<br /><ul><li>Overview
    47. 47. The Life Cycle
    48. 48. Business Variables
    49. 49. Cyclical Variables
    50. 50. Scoring Individual Projects
    51. 51. Balancing The Portfolio
    52. 52. Summary</li></li></ul><li>Key Business Objectives (KBOs)<br />Not all KBOs have the same level of benefit for the organization<br /><ul><li>While there may be multiple key business objectives, they should have different relative weights to the organization
    53. 53. Our project selection process should reflect this in how we rank support of KBOs to candidate initiatives</li></li></ul><li>Ranking KBOs<br />
    54. 54. Convert KBOs To Numeric Weighting Factors<br />
    55. 55. Scoring the Strategic Alignments<br /><ul><li>Using the relative weights of the KBOs from before
    56. 56. We now select which KBOs the project supports
    57. 57. Notice that normally the weighted score would be hidden</li></li></ul><li>Business Drivers<br />There are a number of additional business drivers that most organizations factor in when determining the viability of new initiatives.<br />These typically do not vary from year to year, and there may be a lot of similarity between organizations within the same industries<br />Not all of these factors will have the same weight in scoring initiatives<br />Some examples of factors include:<br /><ul><li>Size of the initiative (people, investment capital)
    58. 58. Number of business units involved
    59. 59. Financial returns (pay-back period, NPV)</li></li></ul><li>Which Factors to Include<br />Determine the factors that you want to use in your organization<br />Determine the high level groups and their relative weighting<br />Create sub-sets if that is not granular enough for your organization<br /><ul><li>Calculates weighting based on combination of two levels</li></ul>All factors will be used to compute the total weighted score for each proposed project<br />Remember, all projects will have to provide a score for each of these criteria<br />
    60. 60. High-Level Categorization<br />
    61. 61. Provide More Granularity as Needed<br />
    62. 62. Calculated Weights for Sub-categories<br />
    63. 63. Presentation Contents<br /><ul><li>Overview
    64. 64. The Life Cycle
    65. 65. Business Variables
    66. 66. Cyclical Variables
    67. 67. Scoring Individual Projects
    68. 68. Balancing The Portfolio
    69. 69. Summary</li></li></ul><li>Annual Changes<br /><ul><li>Total amount of budget for the organization
    70. 70. Amount required for “keeping the lights on”
    71. 71. What’s left is the budget for “new initiatives – projects”
    72. 72. Possibly new strategies and goals – KBOs
    73. 73. Concept of “budget categories”
    74. 74. Allocation between them may change more frequently</li></li></ul><li>Presentation Contents<br /><ul><li>Overview
    75. 75. The Life Cycle
    76. 76. Business Variables
    77. 77. Cyclical Variables
    78. 78. Scoring Individual Projects
    79. 79. Balancing The Portfolio
    80. 80. Summary</li></li></ul><li>New Initiatives and Proposals<br />The categories are used to score a project as the independent initiatives come in:<br /><ul><li>Use of drop down menus to limit variance of input
    81. 81. Use a visible legend to assist with interpretation
    82. 82. Initiatives can be scored as they come in
    83. 83. Keep the “weighted score” invisible, concentrate on the objective score for the initiative
    84. 84. This data input could be done by a number of different areas:
    85. 85. Business analysts
    86. 86. PMO function
    87. 87. Portfolio secretariat</li></li></ul><li>Scoring the Independent Initiatives<br />
    88. 88. Presentation Contents<br /><ul><li>Overview
    89. 89. The Life Cycle
    90. 90. Business Variables
    91. 91. Cyclical Variables
    92. 92. Scoring Individual Projects
    93. 93. Balancing The Portfolio
    94. 94. Summary</li></li></ul><li>The Big Picture<br />- Combine all the new initiatives that have come in and determine where you need to “draw the line”<br /><ul><li>Shows a series of sheets that:
    95. 95. Add all the initiatives in one sheet, with weighted scores
    96. 96. Show them being copied / sorted in order
    97. 97. Show how the cumulative costs contribute to “pass 1” decision
    98. 98. For some organizations that’s enough
    99. 99. For others, they may want to apply “budget buckets”
    100. 100. Shows how you can take it one step further to balance the buckets</li></li></ul><li>Applying the Business Criteria Weighting<br />
    101. 101. First Pass at Balancing<br />
    102. 102. Second Pass at Balancing – “Categories”<br />
    103. 103. Selected Projects! – Balanced Approach<br />That is your list of projects to charter<br /> - that is when you know definitively that “it is a project”<br /> - “soft commit” pending the planning phase<br />The selection process followed will help in project success because<br /><ul><li>Only approve projects that you can deliver on
    104. 104. Methodology lends itself to ensure senior management support for projects selected
    105. 105. When resources become available, everyone is aware of the next project that should be selected</li></li></ul><li>Presentation Contents<br /><ul><li>Overview
    106. 106. The Life Cycle
    107. 107. Business Variables
    108. 108. Cyclical Variables
    109. 109. Scoring Individual Projects
    110. 110. Balancing The Portfolio
    111. 111. Summary</li></li></ul><li>Conclusions<br /><ul><li>Readily available tools
    112. 112. Techniques are simple to implement
    113. 113. Separate the “scoring” from the business weights
    114. 114. Project portfolio is selected from the highest scoring projects within the resources available
    115. 115. Easily extendible to provide for “budget categories” to ensure adequate funding to traditionally low scoring areas
    116. 116. Logical, methodical approach facilitates stakeholder focus on approval of projects that support the business objectives</li></li></ul><li>Benefits<br /><ul><li>Provides a quantitative, logical process to ensure projects selected best match the strategic direction of your organization
    117. 117. Ensures senior management support because the project is focused on tangible business criteria
    118. 118. Focuses everyone on making the right decisions based on the organization’s business drivers
    119. 119. Garners support the result because the process is both visible and fair</li></li></ul><li>
    120. 120. Thank you for your time!<br />Russ McDowell, M. Eng., PMP<br />Russona Consulting Corp.<br />E-mail: russ@russona.com<br />Phone: (613) 836-6182<br />
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