Project Portfolio Management
Holistic Approach to manage
Strategic Initiatives
Anand Subramaniam

“There are four things that hold back human
progress. Ignorance, stupidity, committees
and accountants.”
- Charles J.C. Lyall
2

Highlights
 Project Portfolio Management (PPM)
 PPM - Risk vs. Value
 PPM vs. Project Management
 PPM - Importance of Strategy Alignment
 PPM - Strategy Evaluation Process
 PPM Life Cycle
 PPM - Screening Process
 PPM - Selection Process
 Change Management Approach
 Link - PPM, Governance & Project Office
 PPM - Implementation
 PPM - Software Solution Vendors
 PPM - Reference Materials
3

Project Portfolio Management (PPM)

What is PPM?
Corporate Focus on Balance Risk Regulatory Changing Project
Strategy Value Vs. Value Compliance Priorities Changes
Ongoing Re-calibration
Align Plan Execute Measure
Core Operating Processes (Prioritisation, Governance, Monitoring, Resources)
Project
Optimal Work Output & Continuous
Net Value Approvals,
Resource / $$ Performance Improvement
Contribution Completions &
Utilisation Trends Recommendation
Cancelations
5

Symptoms calling for PPM…
Teams overworked / Seek accurate
Intense competition
under appreciated estimates based on
internally with regard
to financing / staffing firm’s history &
lessons learned
projects
Rework and “out of
control” costs with
Many projects are not
3rd party vendors
adding “strategic value”
Symptom to the organisation
No prioritisation s
process for Project benefits not
business requests captured or tracked
Excessive
Too many project
No tracking Frequent change of
small delays due
or status of projects
projects to lack of
accountabilit (active – on-hold –
underway resources
y for project priority – on-hold)
success
6

PPM – Hub & Spoke
Project
Business Control &
Performanc Opportunity
Resource Performanc
e Managemen
Allocation e
t
Project
Budget &
Manage Selection & Cash
Risk Portfolio Flow
Management
Scope
Demand
Change /
Resource Strategic (Internal
Cost
Availabilit & Tactical Projects)
Control
y Plans
7

PPM - Assumptions
 Roadmaps in place
 Technology transfer defined
 Strategic business drivers identified
 Key decision-making tools selected
 Cross functional teams work together
 Organisation Vision and Mission known
 Project portfolio is strategically balanced
 Project Management process are mature
 Knowledge Management process in place
 Process in place to handle resource utilisation
 Governance in place to monitor and kill projects
 Resource capabilities data base current and up to-date
 PPM process, driven Top Down by Senior Management
 Project Managers and functional managers have no control
 Detailed project reporting in place to support decision analysis
 Excellent communication, regular training and post investment reviews
8

PPM – Best Practice
Strategy to Using
prioritise cross-
and screen functional
projects teams
Responsiv
e to
PPM external
Customer
orientation Best environ-
mental
Practice change
Tough Go/
Allocate
Kill
scarce
decision
resources
points
9

PPM - Benefits
Justifies killing projects that do not Improves communication and supports
support organisation strategy agreement on project goals
Balances risk across Builds discipline into
all projects project selection process
Links project selection GRB & PMO jointly
Benefits
to strategic metrics execute PPM Processes
Prioritises project Provides executive
Allocates oversight of the firm
proposals across a resources to
common set of projects that
criteria, rather than align with Provides the structure/process
on politics or emotion strategic for project portfolio governance
direction & avoids duplication / waste
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PPM - Goals
 Helps the organisation to make the best use of its resources
 Enables the removal of low value projects from the portfolio
 Ensures that all new and existing projects are aligned with the organisation’s
mission, goals and objectives
 Produces and maintains a comprehensive listing of all projects which the
organisation is undertaking
 Develops a “bigger picture view” and a deep understanding of the project
collection as a whole
 Creates an “objective” methodology for identifying, ranking, prioritising and
selecting new projects
 Ensures that a healthy balance across different types of projects with different
cost, schedule, complexity and risk profiles is maintained
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PPM - Essentials
Project
Prioritisation
ROI / Value Capacity
Forecast Planning
Project
Portfolio
Opportunity Management Work
Identification Scheduling
Project Program/Project
Performance & Management &
Value Assessment Execution
12

PPM – Challenges
Resource
Conflicts and
Implementation Organisation
Multitasking
Gap Politics
Multi-project
The lack of Project selection is
understanding and environment
consensus on creates inter- based on the
strategy among top dependency persuasiveness and
management and relationships of power of people
middle-level shared resources advocating the
(functional) which results in the projects
managers who starting, stopping,
independently and restarting
implement the projects.
strategy.
13

PPM - Limitation
 Adds another layer of bureaucracy to organisations
 Difficult to perform in environments marked by frequent change
 Tendency to rely too heavily on PPM tools / software for decisions
 May cause conflict, confusion and stress (eg. due to shifting priorities and
resources)
 Could require a “cultural change” in the organisation (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, accurate
estimates of resource requirements and resources consumed
14

PPM - Recap
Activities Dimensions
Objectives
• Initiative categorisation • Financial, Customer,
• Maximising portfolio
Internal, Innovation
value
• Project / programme (BSC)
• Linking portfolio to selection
• Renewal,
strategy
• Monitoring and review transformation,
process
• Balancing the portfolio
improvement,
experiment
• Strategy, response,
opportunity, external
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PPM – Risk vs. Value

PPM - Value
Project
Portfolio
Management
Project Value Change
Management Management
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PPM – Balancing Risk Vs. Value
Do the projects contribute Alignment
to the strategic goals of
the company?
Is this project doable Value Is the company
receptive to and do
with the current they invest in
resources? Is the value received something New?
worth the effort / risk ?
Fit Innovation
18

PPM – Value in terms of Resources
Alignment
• Determine & align with strategy
• Decide on evaluation criteria
• Select prioritised projects Executive
• Allocate funds Management
• Re-scope
• Check resource needs • Re-classify
• Re-assign resources
• Cull projects not aligned
• Re-design (merge)
• Define monitoring process Functional • Re-move (eliminate a
• Impact on existing projects Management cancelled project)
• Re-evaluate new projects & • Re-schedule (delay, move to
cross project dependencies pipeline)
• Project execution
• Performance reporting
• Project information
archived & used to Project Management & Teams
improve the process
Fit Innovation
19

PPM vs. Project Management

Project / Portfolio Oriented Business
Project
Portfolio
• Effectiveness not efficiency
• Projects are used to achieve • A means of selecting projects
organisations’ strategic goals • Approach to project selection
• Projects are the primary based on investment when
vehicle for organisation compared to returns
change • Returns are not necessarily
• Need for multiple projects to financial
achieve strategic goals • Closing projects that are no
longer strategically important
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Project Portfolio Vs. Project Management
PPM PM
“Doing the Right Projects” “Doing Projects Right”
Alignment of projects with Consistent application of best
organisational objectives practices for improved efficiency
and effectiveness in project
Reduced risk of achieving oversight and execution
objectives through consistent
oversight of multiple opportunities Improved communication
between stakeholders resulting in
Financial effectiveness through higher rate of acceptance and
the controlled allocation of scarce client satisfaction
resources to projects based on
strategic priorities Alignment and coordination of
interdependent projects
22

Project & PPM – Triple Constraints
Scope Goals
Project
Project Portfolio
Managemen Managemen
t t
Process
Time Cost Culture
Maturity
23

PPM – Importance of Strategy
Alignment

Importance of Alignment
Align Execute Measure
Doing The Doing Things Exploit What
Right Things Right We Did
Holistic Approach to manage Strategic Initiatives
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# 1 Metric to Evaluate Project Success
Source – Gartner Inc. 2008
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PPM - Strategy Evaluation Process

Strategy Management - Planning Levels
Mission
Identify Objectives
Mission Business
Company Strategy Objectives Units
PRODUCT STRATEGY
Business Strategy • Alliance • Technical Categories
• Organisation Competencies
• Strategic Principles
Portfolio Strategy PRODUCT PORTFOLIO STRATEGY
• Project Mix Brands
• Resource Levels
• Milestones
Project PRODUCT DEVELOPMENT STRATEGY
Strategy • Resource Allocation • Timing Projects
• Technical Approaches • Deliverables
28

PPM - Types
Compliance
Projects
Strategic Operational
Projects Projects
29

PPM - Process
Review
/ Revise
Mission
Inter Exte
-nal r-nal
Mission, Goals, Objectives, Culture,
New Goals &
Structure and Infrastructure,
Objectives
Processes, Environment etc.
Comprehensive listing of all active,
Portfolio of Strategic on-hold and proposed projects at all
Choices levels of the organisation.
Multiple Assessment Criteria, Quali- Strategy
tative & Quantitative Tools, Software Implementation
Applications etc.
Maintain “balance” of projects to
Project Selection create “optimal mix” based on their
cost, return, risk, schedule etc..
Periodically review and modify port-
folio by retaining, modifying and
(when necessary) killing projects. Projects
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Link – PPM Process & Firm’s Strategy
Review
/ Revise
Mission
Inter Exte
Ch
Strategic Management -nal r-nal
an
eg
New Goals &
M
an
Objectives
ag
em
Portfolio Management Portfolio of Strategic
en
Choices
t Ap
pr
oa
Strategy
ch
Implementation
Program Management`
Project Selection
Project Management Projects
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PPM – Strategy Evaluation Process
Strategic
Management
Ch
an
Strategy /
g
Strategy
e
Portfolio
Translate
M
Reevaluate
an
ag
Portfolio
em
Mngt
en
t
Portfolio Portfolio
Ap
Mngt Planning
pr
oa
ch
Program Management
Project Management
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Recap - Portfolio Planning
Creation Selection Sequencing
Driven by
strategy
Desirability
How much value will the initiative In the
In response to
bring to the organisation? context of
an issue
all other
projects,
Feasibility when is the
An identified
best time to
opportunity Is the organisation capable of
deliver this
successfully delivering this
project?
initiative?
Driven by
external
causes
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Eg. Link Strategies to Potential Projects
34

PPM Life Cycle

PPM - Engagement Model
Initial Business
Tools Assessment
Prioritisation
Strategy
Innovation Re Prioritise
Process Engage Prioritise Plan Build Sustain
Sustain phase
Diagnosis and
often
Relationship prioritisation
Capability accompanied by
building phase phase to assess
Strategic development periodic diagnosis
during which the the company's
planning based phase with audits to assess
capabilities and capabilities in
on in-depth targeted use of any changes and
opportunities of relation to its
assessment of tools for business adjust the nature
the company are priorities and the
the company areas requiring of the intervention
preliminary environment
attention as appropriate;
assessed within which it
supported by
operates
mentoring
36

Screen - Ideas, Opportunities, Needs
Develop /
Strategise Capture Formulate Evaluate Define Promote Test
Fuzzy Front End
Analyse the Brainstorm & Business case Review and Build project & Review projects Design for X
business capture rationale/ score assign team Select Prototypes and
Set business Research & justification Portfolio Design, project(s) market testing
drivers initial proof of Cost benefit analysis marketing, legal Assign budget Manufacturing
Establish a concept assessment Proof of Customer & time horizon MRO
strategy Publish & share Reviews & rating concept feedback Approve & Reuse, recycle
funding promote
37

PPM – Life Cycle Process
Gates
Test & Validate
Business Case
Development
Relaisation
Scoping
Launch
Benefit
Idea /
Need
G1 G2 G3 G4 G5
Stages
Portfolio Management Project Management
38

PPM - Gates
 Gate 1 - Initial Screening
 Does the idea warrant any further work?
 Gate 2 – Second Screening
 Does the idea justify extensive analysis?
 Gate 3 – Business Case Decision
 Is the business case sound?
 Gate 4 – Post Development Review
 Is the project ready for pilot?
 Gate 5 – Pre-commercialise Business Analysis
 Is the initiative ready to support the market?
39

PPM - Stages
 Stage 1 – Idea / Need / Opportunity
 It fosters idea generation
 A perpetual process of crafting new products, processes & services
 It integrates partners, geographies, technologies etc
 Stage 2 - Scoping
 Quick investigation and shaping of the concept / definition
 Scope definition brings together cross functional team
 Litmus test - to ensure the new potential value and to deliver on the
promise
 Stage 3 - Build the Business Case
 Goes into detailed analysis where factual data is collected (costs,
profitability, service levels)
 Utilises advanced tools to model or simulate scenarios
40

PPM – Stages (Contd.)
 Stage 4 - Development
 Detailed process mapping & assigning the correct metrics
 Establish the new or altered relationships
 Stage 5 - Testing and Validation
 Undertakes pilot testing and verifies details with the business case
 Provides the feedback loop and lessons, to minimise risks
 Stage 6 – Launch
 Implements changes and fine tune to support full market demand
 Contingency scenarios activated in the event of a significant disruption
 Stage 7 – Benefit Realisation
 Examine benefits realised or not
 Use lesson leant for the next round of product or services innovation
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PPM - Screening Process

PPM – Functions
 Screen Ideas & Opportunities
 Select Projects for the Portfolio
 Manage the Project Pipeline
 Monitor Approved Projects for possible de-
selection, termination, or delay.
43

Project Screening Process
Project Proposal Idea
Review Strategic Fit /
Data Collection
ROI / Payback / Risk
Self Evaluate Project by
Cancel Project
Criteria
Project Team Evaluate Request for more
Periodic Assessment
Proposal & Review information
of Priorities
Portfolio & Risk
Reject Accept Assign Priority, Resources,
Project Manager &
Hold / Reject Project
Evaluate Progress
44

Eg. Project Screening Matrix
45

Project Portfolio - Matrix Dimensions
High
Bread & Butter Pearl
Technical Success
(revolutionary commercial
(evolutionary improvements to
advances using proven
current products and services)
technical advances)
White Elephant Oyster
(Projects that at one time (technological breakthroughs
showed promise but are no with high commercial payoffs)
longer viable)
Low
Reward (NPV) High
46

PPM - Selection Process

PPM - Selection Model
Project Source, Solicit Rank Proposal &
Model Selection Manage Portfolio
Classification Project Proposal Select Projects
 Deciding how  Applying a  Within the  Prioritising  Senior
well a strategic weighted scoring organisation requires management
or operations model to align discipline, input
project fits the projects with the  Request for accountability,
organisation’s organisation’s proposal (RFP) responsibility,  The priority team
strategy strategic goals. from external constraints, (project office)
sources reduced responsibilities
 Ensure the (contractors and flexibility, and
model selected vendors) loss of power
1. reduces the
number of
wasteful projects
2. helps identify
proper goals for
projects and
3. why a project
is selected
48

Selection Process – Detailed Steps
Resource
Periodic Risk Strategy
Availability & Balancing
Measure-ment Assessment Alignment
Allocation
 Schedule  Risk  Availability  Based on  Balancing
Identification (In-house, Strategy Plan different
 Cost Outsource) parameters types of
 Quantitative / for project projects by :-
 Resources Qualitative  Allocation selection –
Assessment (Committed, identifies  purpose and
 Scope soft needs / benefit
 Risk allocation) opportunities
Response  opportunity,
Planning  Optimal or  Set resource, benefits and
acceptable budgets need risk
 Risk size of the
Monitoring & project  Set Risk  purpose and
Control pipeline posture benefit
49

PPM – Selection Criteria
Financial Non –
Financial
Payback
Net Present Value Projects of Strategic
(NPV) importance to the firm.
Internal Rate of Return
(IRR)
Several weighted selection criteria could be used to
evaluate project proposals
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PPM Selection Model - Checklist
Approach  Will we build or buy?
Sponsorship  Who is the project sponsor?
Success metrics  How will we measure success?
Finance  What is estimated cost of the project?
Driver  What business problem does the project solve?
Training  Will staff training be required?
Strategy alignment  What specific organisation does this project align with?
Risk  What is the impact of not doing this project?
 What is the project risk to the organisation?
Benefits  What is the value of the project to this organisation?
Organisation  Is the organisation culture right for this type of project?
culture
Portfolio  How does the project interact / link with current projects?
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Pipeline Management
Project Status & Evaluate against Variance Stage Gate –
Pipeline Critical Reporting Go / No Go
Parameters
Schedule Earned Value Reporting items Applying stage
Analysis outside of gate techniques
Cost targets / limits / for continuation or
Milestone thresholds termination
Resources Analysis decisions
Identify
Scope Dashboard Charts consequences Set milestones
(Set Criteria & and action items (phases) & test
Tolerances) for follow through against criteria
Make Go/No Go
decisions
52

Eg. Project Selection - Criteria
Human and Physical Project’s “Strategic Fit”
Project’s “Strategic Fit”
Resource Requirements
Impact on Organisation’s
Employees and their
Environmental Impact Motivation & Estimated Cost and Time
Performance
Size and Composition of
Ethical Considerations Existing Program &
Complexity and Risk
Project Portfolio
Impact on Organisation’s Organisation’s
Experience With Similar Organisation’s
Image Competencies
Projects
Strategic Partnership Expected Benefits Temporal Distribution of
Building (Quantitative & Quantitative Returns
Qualitative)
53

Eg. Prioritisation Criteria
Sample
Weight
Financial – Economic Cost and Benefit 0.25
Business Impact – Contribution to Business Performance 0.35
Risk – Likelihood of Success/Failure 0.25
Architectural fit – Compatibility with Guidelines 0.15
1.00
Ranking Process
3. Simple Scoring – everyone votes, one to seven (favorable)
4. Case for score is presented – open to debate
5. Use the information at hand
54

Eg. Attractiveness Capability Matrix
Maximum Project Project
Score A B
Attractiveness
Strategic importance 40 33 25
Economic reward 40 35 17
Time to market 10 5 7
Robustness 5 3 5
Indirect benefits 5 5 5
Total 100 81 59
Capability
Validity of the idea 30 19 24
Adequacy of resources 25 20 19
Production/market skills 25 21 12
Readiness to scale-up 10 10 10
Quality of the proposal 10 7 5
Total 100 77 70
55

Eg. Risk Exposure
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Change Management Approach

Change Process
Change Management Process
Change Proposition Business Definition Management Infrastructure Execution and Control
Develop Change Focus on Priorities Ensure Benefits are obtained Programme Management
Proposition (Solution Delivery)
• Business Level Embed control mechanisms
• Business Strategy Objectives Stakeholder understand :
• Market Drivers • Business Level View of • Benefits Management
• Regulatory Portfolios Risk profile • Portfolio Prioritisation • Business Priorities
• Benefits Management • Risk Management • Risk Management
Process across portfolio • Project Management Office
Business owned & managed. • Benefits Management
Enable decision making • Project Portfolio Management
• Solution Delivery
Enable decision making
Develop Focus Ensure Project
Change on Benefits are Execution
Proposition Priorities Driven Out and Control
58

Link – PPM, Governance & Project
Office

PPM – Conceptual Overview
Strategic Governanc
Business e Process
Planning
Project
Continuous
Improvement Management
Office
Business
Process
Reengineering
Project
Maturity
Portfolio Models
Projects
Management
60

PPM Alignment – Strategy, GRB & PMO
Feedback
Direction
Governance Governance
Enterprise
Review Review
Board Strategy Board
Project
Portfolio
Management
Prioritisation Prioritisation
Project
Management
Program / Office
Project QA / QC
Manager
Project Status Reports, Time Sheets,
Expenses, Project Schedules
Feedback Feedback
61

PPM – GRB & PMO
GRB PMO
• Policy Centre • Information Center
• Make Decisions • Recommends
• Reviews and probes data • Prioritises projects
and recommendations • Maintains data on resources
• Interprets strategic plans and • Evaluates project performance
initiatives • Supports development of
• Provides enterprise budget project proposals
and resource parameters • Builds database of potential
• Responsible for the final and current projects
selection decisions • Recommends projects for
selection, de-selection, or
delay.
Governance Review Board (GRB) & Project Management Office (PMO) jointly
execute the Project Portfolio Management (PPM) Processes
62

PPM - Implementation

PPM – Implementation Challenges
 Resistance to change
 Isolated groups avoiding processes
 Lack of accountability and follow through
 Resistance to transparency and tracking
 No rigor around structured documentation
 Business’ reluctance to committing to ROI
64

PPM – Critical Success Factors
 Train, Train, Train
 Dedicated PMO Staff
 Commitment – C Level to All Levels
 Focus on business Benefits Realisation
 Consistency of the message at all levels
 Simultaneous communication at all levels
 Prioritising and managing project initiatives
 Communicate, Communicate, Communicate
 Experienced Leader that can prevent pitfalls
 Linking priorities to the current business objectives
 Developing an effective framework for managing a PPM Process
65

Strategy Alignment - Activities
 Ensure PPM is in-sync with strategy
 Develop long-term technology capability
roadmaps
 Manage the business requests queue
 Business Case Definition
 Costs
 Resources
 Classification
 Solution Evaluation
 Feasibility Study
 Identify and manage stakeholder expectation
66

Strategy Alignment - Deliverables
 Scope
 PPM Charter
 ROI Analysis
 Business Case
 Roles & Responsibilities
 Opportunity Assessment
 Project Screening, Selection & Scoring
67

PPM – Optimisation Activities
 Rank & prioritise based on value
 Balance portfolio – risk vs. value
 Matching bottom-up and top-down
 Overall resource capacity vs. demand
analysis
 Available budget vs. funding needs
analysis
68

Benefit Realisation
Benefits
Identified
Project
Management
Office
Responsibility
Matrix
Key Benefit Key
Measurement Success
Business Criteria Criteria Benefit
Benefits
Case Delivery
Delivered
Execution
Benefit
Progress
Ownership
Monitoring
Risk
Management
Communication
Plan
69

PPM – Management Activities
 Time & budget tracking
 Project issues mitigation forums
 Resource planning and allocation
 Project governance – stage gated funding
and approval
 Standardised project delivery methodology
 Ongoing portfolio re-calibration &
oversight
70

PPM – Management Reporting
 Distribution of effort
 On-time delivery rate
 Resource utilisation rate
 Project benefits realisation
 Project estimated vs. actual hours
 Distribution of effort / dollars by strategy
71

PPM – Software Solution Vendors

PPM - Software Solution Providers
73

PPM – Reference

PPM - Books
75

“You will never stub your toe standing still.
The faster you go, the more chance there
is of stubbing your toe, but the more
chance you have of getting somewhere.”
- Charles Kettering
76

Good Luck
http://www.linkedin.com/in/anandsubramaniam
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