Overview of project portfolio management
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Project portfolio management is very much a multi-faceted management discipline. Portfolio management directly impacts strategic execution resulting in greater benefit to the organization and its ...

Project portfolio management is very much a multi-faceted management discipline. Portfolio management directly impacts strategic execution resulting in greater benefit to the organization and its customers. At the same time portfolio management focuses on increasing project value, often measured financially, by selecting the best projects with the right balance of risk. Portfolio management also provides much needed organizational infrastructure to enable the organization to launch more successful projects. At the same time, portfolio management is very much about people, the senior managers who make decisions, the project managers who provide key data, resource managers who play an integral role in resource allocation, and team members who participate on project teams and possess a variety of skills that can be utilized in multiple ways. Finally, the nuts and bolts of portfolio management centers around data—strategic data, financial data, resource data, schedule data, and performance data to name a few.

Based on the information above, project portfolio management can be broken down into four basic components: selecting the right projects, optimizing the portfolio, protecting the portfolio’s value, and improving portfolio processes. In order to implement portfolio management, we must understand PPM with these four components in view.

1) Select the Right Projects—selected projects must align with the business strategy and meet other important criteria. This results in the portfolio containing a higher percentage of winning projects.
2) Optimize Portfolio Value—all the steps necessary to construct an optimal portfolio given current limitations and constraints.
3) Protect Portfolio Value—during the execution of an optimized portfolio, the aggregate project benefits (portfolio value) must be protected. This occurs by monitoring projects, assessing portfolio health, and managing portfolio risk.
4) Deliver Portfolio Value—Ensure that portfolio value is delivered by comparing expected benefits with actual benefits. Drive PPM maturity which translates into a greater realization of the benefits of project portfolio management.

One of the primary goals of portfolio management is to execute strategy. There is an important distinction between strategy creation and strategic execution. Possessing a strategy (and spending the energy to create one) is meaningless if the organization cannot accomplish the strategic goals. Although many people acknowledge that strategic projects are vehicles for a accomplishing a strategy, senior leadership needs to make the right project decisions at the right time to advance the goals of the company. Hence, making smarter and better decisions is a precursor for solid strategic execution. In order to make smarter and better decisions, the right data needs to be available at the right time.

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  • We touched on the first two items briefly.PPM combined with good governance enables a management team to make better organizational decisions because the right data is in place. The mechanisms are in place to enhance decision making. Better processes + better data = better decisions. Another key is the timing of those decisions, a good leader will proactively collect/review the data to make good timely decisions.
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Overview of project portfolio management Presentation Transcript

  • 1. Leadership, Strategic IQ, and Organizational Health An Overview of Project Portfolio Management Tim Washington November 2013
  • 2. Overview of Project Portfolio Management Project portfolio management is a combination of various management disciplines: Business management General management Project and program management %Management Disciplines
  • 3. Overview of Project Portfolio Management Project portfolio management (PPM) is a senior leadership discipline that drives strategic execution and maximizes business value delivery through the selection, optimization, and oversight of project investments which align to business goals and strategies. Paradigm Shift #1: Projects are an important vehicle for executing strategy PMI Quote
  • 4. Overview of Project Portfolio Management “Portfolio management is the strategy-based, prioritized set of all projects and programs in an organization reconciled to the resources available to accomplish them.” Paradigm Shift #2: The single project view to a total portfolio view. Stanford Quote
  • 5. Overview of Project Portfolio Management “[PPM is about] managing [the] composite groups of projects with the same rigor, balance, executive leadership, and decision-making involvement as the company’s financial portfolio. Portfolio Management is an ongoing process that includes decisionmaking, prioritization, review, realignment, an d reprioritization.” Paradigm Shift #3: Projects are investments! Financial Portfolio Quote
  • 6. Overview of Project Portfolio Management The Purpose of Portfolio Management • Execute Strategy • Deliver Business Value • Enhance Decision Making • Manage Organizational Change
  • 7. Overview of Project Portfolio Management At the highest level, Project Portfolio Management has four basic components: Select the Right Projects Selected projects must align with the business strategy and meet other important criteria Deliver Portfolio Value Ensure value is delivered by comparing expected benefits with actual benefits; drive PPM maturity The Goal: Maximize value delivered to customers and stakeholders Protect Portfolio Value Project benefits must be protected in order to deliver maximum portfolio value Optimize Portfolio Value All the steps necessary to construct an optimal portfolio given current limitations and constraints
  • 8. Overview of Project Portfolio Management Select the Right Projects Optimize Portfolio Value Protect Portfolio Value Deliver Portfolio Value Ideation Opportunity Mgt Prioritization Work In-take Project Sequencing Decision Gates Portfolio Balancing Capacity Planning Efficient Frontier Project Monitoring Lessons Learned Portfolio Selection Portfolio Risk Mgt Improve Portfolio Maturity Portfolio Planning Portfolio Analysis Benefits Realization
  • 9. Overview of Project Portfolio Management Select the Right Projects Optimize Portfolio Value Deliver Portfolio Value Protect Portfolio Value Project Parking Lot 1 2 Management Employees IDEATION/ OPPORTUNITY MGT WORK IN-TAKE STAGE-GATE 3
  • 10. Overview of Project Portfolio Management Select the Right Projects Optimize Portfolio Value Protect Portfolio Value Deliver Portfolio Value Training Quality Project A Project C Project B Project D Project F Project E Prj G Standardize Training and Development Project H Prj I Project L Project K Project J Q1 Resource Utilization Project O Project Q Project N Project M Q2 Q3 Project P Q4 Q1
  • 11. Overview of Project Portfolio Management Select the Right Projects Optimize Portfolio Value Deliver Portfolio Value Protect Portfolio Value Training Quality Project A Project B Project F Project E Project D Prj G Sequencing based on: • Priorities • Dependencies • Resource Capacity Standardize Training and Development Project H Pr I Project L Project K Project N Project J Q1 Resource Utilization Q2 Project O Project P Q3 Q4 Q1
  • 12. Overview of Project Portfolio Management Select the Right Projects Optimize Portfolio Value Protect Portfolio Value Deliver Portfolio Value
  • 13. Overview of Project Portfolio Management Select the Right Projects Optimize Portfolio Value Protect Portfolio Value In a turbulent project environment, it is critical for the management team to drive future portfolio actions based on current project results Therefore…. Deliver Portfolio Value The goal is to deliver maximum business value “All efforts should now be put into safeguarding the value of the portfolio.” Drive the ship
  • 14. Overview of Project Portfolio Management Select the Right Projects Optimize Portfolio Value Protect Portfolio Value Current State Future State (expected benefit) Actual Benefit 1. What future state benefits are we expecting? (business case) Deliver Portfolio Value 2. What benefits have we realized? (benefits tracking) Benefit Gap 3. How do we ensure we realize full benefits on future projects? (lessons learned) Benefits realization becomes important if we want to close the gap!
  • 15. Overview of Project Portfolio Management Successful portfolio management is a combination of art and science Art Science
  • 16. Overview of Project Portfolio Management Art Science Governance Process Leadership Data Better Decision Making Strategic Execution
  • 17. Overview of Project Portfolio Management What Kind of Governance Do You Need? PPM is only bureaucratic if you have the wrong infrastructure
  • 18. Overview of Project Portfolio Management You need portfolio management when… Your organization acts like this Your Project Managers feel like this Employees react to organizational goals like this
  • 19. Overview of Project Portfolio Management Contact Information Name: Tim Washington Email: twashington@pointb.com @ppmexecution http://www.linkedin.com/in/timawashington www.ppmexecution.com