Strategic Project Portfolio Management
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Strategic Project Portfolio Management

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Strategic Project Portfolio Management Strategic Project Portfolio Management Presentation Transcript

  • Strategic Project Portfolio Management Oscar de Lucio, MBA, PMP UMT Consulting Group Session ADV08 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Arriving to Portfolio Management “Portfolio Management is an approach to achieving strategic goals by selecting, prioritizing, assessing and managing… work based upon their alignment and contribution to the organization’s PM integration strategies and objectives” in Enterprise Portfolio Standard for Portfolio Management - PMI 2006 Management Widespread PM Widespread PM culture culture Lean Operations Lean Operations CMM (SEI) CMM (SEI) PMBOK PMBOK PMBOK PM process PM process PM process TQM SixSigma TQM SixSigma TQM SixSigma PDCA MBO PDCA MBO PDCA MBO PDCA MBO PERT CPM PERT CPM PERT CPM PERT CPM WBS WBS WBS WBS Gantt Chart Gantt Chart Gantt Chart Gantt Chart Gantt Chart 1910s 1950s-60s 1980s 1990s 2000s Time “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Portfolio links strategy & execution •Prioritization •Selection Strategy Portfolio Success: •Transparency •Control •Strategic Alignment •Risk management Portfolio Management •Value Maximization •Resource allocation •Governance •Decision making Project Execution •Balance … 3 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Building blocks of Portfolio Management 1 • Define an actionable strategy Strategy 2 • Generate the right work 1 Portfolio Management 3 • Select the optimal work 2 3 4 Project Execution 4 • Monitor Portfolio against objectives 4 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Poll – What do you do well? 1 Define an actionable strategy: We have clear objectives that we focus on. • 2 Generate the right work: We create project ideas and build business • cases consistently and well. 3 Select the optimal work: We prioritize and select work based on • priorities and within constraints well. 4 Monitor Portfolio against objectives: We track, report and monitor the • work well. 5 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Poll results What needs to be improved across organizations ( ), and What is currently done well ( ) What do you De fine a ctiona ble need to 1 stra te gy improve? What do you Ge ne ra te the right currently do 2 w ork w ell Se le ct the optim a l 3 w ork Monitor Portfolio 4 to de live r va lue 0% 10% 20% 30% 40% 50% 60% 70% 80% UMT Consulting Group poll responses from 75 participants in webcast November 8th 2006 webcast 6 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Building blocks of Portfolio Management 1 • Define an actionable strategy Strategy 2 • Generate the right work 1 Portfolio Management 3 • Select the optimal work 2 3 4 4 Project Execution • Monitor Portfolio against objectives “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 1 Define an actionable strategy • Which framework do organizations mainly use to do Strategic Planning? Balanced Scorecard 22% Strategic plans need to be “Portfolio actionable” Other standard framework 2% Portfolio Management Internally defined or combination of multiple 49% starts with defining an actionable strategy Don’t use a strategic 13% planning framework Need a way to focus The strategic planning on strategic objectives process is not clear 14% 0% 10% 20% 30% 40% 50% 60% UMT Consulting Group poll responses from 150 participants in webcast August 22nd 2006 webcast 8 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 1 Learning from strategy planning Learnings from strategy planning to apply in Portfolio Management: Hoshin Kanri Method / Compass / Control • Financial perspective is not enough, need strategic view • “What gets measured gets done “ 9 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 1 Example strategic Business Drivers Strategy Business Driver List Strategic Drivers: •Cover the strategy •Measurable •Actionable •Clear •Simple •5 to 12 statements 10 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 1 The difficulty of trade offs Michael Porter – article “What is strategy?”: • “Managers have become confused about the necessity of making choices… Taught by popular management thinkers that they do not have to make trade offs, managers have acquired a macho sense that to do so is a sign of weakness.” • “Organizational realities work against strategy. Trade offs are frightening and making no choice is sometimes preferred to taking blame for a bad choice... The failure to choose sometimes comes down to the reluctance to disappoint valued managers or employees.” “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 1 Make trade offs & priorities explicit Pairwise The Pairwise comparison comparison is a prime example of this consensus-building discussion Effectively Manage Risk is More Important than Enhance Effectiveness •Discuss priorities at a strategic level •Priorities are re-balanced periodically 12 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Building blocks of Portfolio Management 1 • Define an actionable strategy Strategy 2 • Generate the right work 1 Portfolio Management 3 • Select the optimal work 2 3 4 Project Execution 4 • Monitor Portfolio against objectives “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 2 Generate the right work Top Down: Annual Strategic/Budget Planning Work created directly from the Strategic Initiative 1 Strategic Initiative 2 Create a objectives Program 1 Project x Roadmap and Project 1 Baseline the Project … Portfolio Proposed Portfolio Link Top Down and Bottom Up Bottom Up: Follow a Portfolio Work generated to “Change Process” address new to add/change opportunity/needs work 14 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Building blocks of Portfolio Management 1 • Define an actionable strategy Strategy 2 • Generate the right work 1 Portfolio Management 3 • Select the optimal work 2 3 4 Project Execution 4 • Monitor Portfolio against objectives “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 3 Select the optimal work Budget and Proposed Resource Portfolio Constraints Optimal Portfolio Selected Tactics to select the optimal portfolio of projects: • Change the semantics of the conversation to talk value • Bring the right reliable data with analysis 16 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 3 Define Portfolio value of a project Business Drivers Project deliverables don’t Project link a project with the Proposals portfolio objectives… the project benefits do! Project value is defined based on contribution to strategic drivers 17 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 3 Selection data and analysis Use all dimensions of the business case (need valid data!) HVLC HVHC LVLC LVHC Cost 18 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 3 Selection data and analysis Strategic Total # Portfolio Value EBIT 1 2 3 1 Original Selection 51% $389 M 2 Optimal Selection 82% $564 M Final Selection (includes 3 mandated projects) 75% $526 M 2 3 1 Strategic Value Gain = 24% EBIT Increase = $137MM “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only 19
  • 3 Selecting projects NOT to do • The reality of cancelling/stopping projects: – Resource reallocation – Vendor contracts – Stop-Start additional costs – Culture and Morale • But the reality of continuing the wrong projects is even worse! • The best way to avoid cancelling projects is selecting the right ones to start with “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 3 Selection and resource capacity • It is tempting for organizations to look exclusively at resource capacity planning as THE solution to resolve selection: “Managers are under increasing pressure to deliver tangible, measurable performance improvements. Operational efficiency provides reassuring progress but superior profitability remains elusive” (M. Porter) • The demanding reality of selection driven by resource capacity: Required Optimal Available Resources Portfolio? Resources Resources Availability of Project Plans Project Plans Individuals in Skills, Teams, Assigned to Resources for Built Updated! Resource Pool Experience Project Work Project Work “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Building blocks of Portfolio Management 1 • Define an actionable strategy Strategy 2 • Generate the right work 1 Portfolio Management 3 • Select the optimal work 2 3 4 Project Execution 4 • Monitor Portfolio against objectives “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 4 Monitor Portfolio to deliver value Creating and selecting the optimal work is not enough. Budget and Proposed Resource Portfolio Constraints Optimal Ongoing Portfolio Management Portfolio to Maximize Value Selected 23 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • 4 End-to-end lifecycle management Projects are to Portfolio Management what… tasks are to Project Management Portfolio Dashboard: focus on key metrics, less is more 24 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Organizational adoption challenges • Short term needs for results can threat long term capability build • Silo efforts limit the value: – 50% of the portfolio performance is driven by project practices – Need to build and integrate the portfolio in its organizational context • Organizational resistance to make strategic trade offs “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Conclusions Strategy vision needs to be “operationalized”: 1 – Define an actionable strategy 2 – Generate the right work 3 – Select the optimal work 4 – Monitor Portfolio to deliver value 26 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • Contact Information Name: Oscar de Lucio, MBA, PMP UMT Consulting Group Email: odelucio@umt.com Phone: 212 965 0550 Session #: ADV08 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only
  • About UMT Consulting Group • Enterprise Project, PMO and Portfolio Management Consultants • Microsoft EPM Gold Certified Partner • 18 years of experience working with Global organizations • Headquarters in New York and London; with local offices across the US and Europe “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2008 Permission is granted to PMI for Congress attendee use only