PORTFOLIO MANAGEMENT:                                                                                                     ...
ensure that organizations get the most value                its life cycle                            to have strong upper...
new projects and then rank           them so that they can be                  The keys to success           presented in ...
Corporate Headquarters11 Canal Center Plaza   HeadquartersAlexandria, VA 22314   11 Canal Center Plaza                    ...
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PORTFOLIO MANAGEMENT:
MAKING THE MOST OF LIMITED RESOURCES

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  1. 1. PORTFOLIO MANAGEMENT: WhitePaperM AKING THE M OST OF L IMITED R ESOURCESAs state and local government officials feel the may be coming into the portfolio that providespinch of budget cuts and increased demand greater value to the enterprise. In this way,for service, they have begun looking for ways officials can compare and contrast projectsto make better and more informed investment to determine not only individual project per-decisions. formance, but also link overall benefit to the organization according to predetermined val-One method for making the most of lim- ues and business objectives.ited resources is portfolio management, anincreasingly popular process that allows orga- Portfolio management is actually an exten-nizations to roll their various projects up into sion of project management methodology buta portfolio. There is a holistic way to approach is very different in its practice and conclu-these initiatives in the strategic context of the sions. Current project management pursuitsorganization’s mission and goals with visibility are cost-based, work at prioritizing projectover all competing initiatives. The question is, schedules, manage risks across the project,“What does it mean to manage with a strate- manage scope, and attempt to answer thegic portfolio perspective?” The first step is to question: Are we doing things right?gain a total view of all assets and initiativesacross the enterprise and seek a purposeful Portfolio management, by contrast, is invest-prioritization and balance among them. This ment-based, focuses on scheduling priorityhas been termed “taking a portfolio view” of projects, and answers the question: Are wethe business. The concept has actually been doing the right things? The notion of “doingrefined into a disciplined portfolio manage- the right things” reflects the strategic align-ment process. ment with the mission and goals. Projects need to be judged against how they meet thePortfolio management gives decision mak- organizational goals and how they compareers visibility into their organization because to each other. Portfolio management helpsa portfolio of projects allows for compari-sons. The operative concept is “comparison.”Instead of seeing only individual projects The question is, “What doesmeeting cost and schedule goals on their own it mean to manage with a Solution used:separate tracks, the tracks can be compared.This means that a project may be performing strategic portfolio perspective?”adequately in its own right, but something else
  2. 2. ensure that organizations get the most value its life cycle to have strong upper management supportfrom the projects they invest in because the discover and eliminate duplicate and involvement. projects;selection process helped to align them in recognize earlier in the processthe first place. In short, portfolio manage- To begin the portfolio management process, those projects destined to come inment offers an organized and effective way the following steps are required: over budget or schedule.to select and prioritize which projects to pur- Take an inventory–Governmentsue—rather than simply choosing according In the end, operational excellence is achieved officials need to develop anto emotion, the same way of doing business, as organizations pursue and devote resources inven-tory of projects; this effort alone will help decisionor guesswork. to only those projects offering high-qual- makers discover redundancies ity, reliable, and predictable outcomes. Once and start the discernment ofPortfolio management is a facilitated pro- these projects are selected, they become part what is important.cess that leads to a structured, repeatable of the portfolio and are monitored and evalu- Create Selection Criteria–The objectives defined in the strate-approach. Through this process, Robbins- ated throughout their life cycles, allowing deci- gic plan will form theGioia works with executive leaders to define sion makers to see how investments can be basis for creating weighted selection criteria. Some objec-what they think is important and determine maintained, reprioritized, or even eliminated. tives will have more value towhat decisions they want to make. A selection an organization than others.process cannot be created without the active TAKING A CTION Robbins-Gioia will work with decision makers to developinvolvement upfront of people with authority to Technically, portfolio management is defined agreement on which criteriamake decisions about what they value most. as the dynamic decision process of assessing are more important. OnceThese values lead to the construction of the value and allocating resources to meet key the agreed-upon selection criteria are in place, projectsselection criteria. The portfolio management business objectives in which an enterprise are scored against them. Theprocess forces executives to decide first analyzes and competitively selects investment resulting project scores are used to rank projects.which values and objectives are most impor- initiatives, controls the resulting investments Validate the Project Portfolio–tant to the organization and then align those throughout their life cycles, and constantly Robbins-Gioia provides score-priorities with appropriate investments. evaluates their effectiveness in meeting stra- cards that rate existing and tegic objectives.As a result, state and local government offi- In short, portfoliocials can optimize the balance of their invest- Portfolios can be set up any number ofments across business functions and accord- ways, including by project type, division, or management offers aning to risk levels, short-term versus long-term geographic region or even across the entire organized and effectiveneeds, innovations, and project life cycles. enterprise. It is a methodology that can fit inPortfolio management offers state and local anywhere. way to select and prioritizegovernment officials—especially those deal- which projects to pursue—ing with budget shortfalls—a number of other By the same token, portfolio management isbenefits as well. It enables them to: a cyclical process. As such, the methodology rather than simply choosing can be implemented whether an organization focus limited resources on projects according to emotion, the has yet to begin planning projects or has that further the organization’s most important goals more than a thousand underway. It does not same way of doing business, keep close tabs on a project’s matter when you start, but one fact remains effectiveness and value throughout or guesswork. constant: The key to success at any stage is
  3. 3. new projects and then rank them so that they can be The keys to success presented in investor maps. Investor maps enable decision are senior management makers to quickly see where projects fall in terms of risk, commitment, consensus, return, “go live” date, cost, schedule, or geographic region, and the ability and function, or division. This is especially powerful because decision makers can test “what willingness to define and if” scenarios to determine the possible impact of reallocating communicate strategic funds on a periodic basis. objectives.As an organization becomes ready to performits first portfolio analysis, it should begin bymapping each of the investments to each or new, more effective projects enter into theof the weighted objectives. In doing this, portfolio.an organization might conclude that certainprojects meet its immediate business needs C ONCLUSIONwhile others do not. Some may provide too Portfolio management is a process that useslittle business value; some may be too risky, simple management techniques to bring orderexpensive, or time-consuming; and some may to the investment selection process. Just asbe redundant or depend too much on another an investor would look over a stock portfolioproject. for balance, risk, and long-term value, so too can an organization assess and manageNow that the data has been turned into real, a portfolio of projects to effectively allo-usable information, the organization needs cate resources and optimize business valueto enter the manage, control, and evaluate against one or more key objectives.phase. At this point, Robbins-Gioia in conjunc-tion with executives will recommend corrective The keys to success are senior managementactions, such as go/kill, no-go, or resource commitment, consensus, and the ability andreallocation decisions, and begin implement- willingness to define and communicate stra-ing project management discipline for those tegic objectives. As state and local govern-projects going forward. Projects that have ments implement portfolio management withbeen selected through the portfolio manage- senior management support, they will realizement process have the best chance at suc- tremendous benefits in delivery of projectsceeding and providing value to the business. to citizens, despite limited budgets. The cost of failure is too high to attempt a lesserAlthough this first iteration has been complet- approach.ed, the portfolio management process neverstops. Projects must continue to be screenedagainst KBOs and tweaked and refined overtime, as projects can lose their overall value
  4. 4. Corporate Headquarters11 Canal Center Plaza HeadquartersAlexandria, VA 22314 11 Canal Center Plaza Robbins-Gioia has been dedicated to delivering managementt:Alexandria, VA 22314 800.663.7138f: t: 800.663.7138 703.684.5189 f: 703.684.5189 solutions to government agencies and Fortune 500 companiesCanadian Headquarters Anniston180 Elgin Street 608 Noble StreetSuite 1402 36201 Anniston, AL since 1980. We help our global customers optimize their 256.235.2827Ottawa, OntarioCanada K2P-2K3 Charlottet:201 South Tryon Street 613.236.3773f: Suite 1050 613.236.5584 business processes, accelerate change, and establish time, Charlotte, NC 28202 704.714.6200 Dayton cost, and quality improvements to transform their businesses. 1360 Technology Court Suite 200 Beavercreek, OH 45430 937.426.8081 Detroit 26555 Evergreen Road Selected Past & Current Clients Suite 1115 Southfield, MI 48076 COMMERCIAL CIVIL AGENCIES 248.359.7800 AOL Department of Agriculture American Red Cross Department of Commerce Huntsville AT&T Department of Homeland Security 555 Sparkman Drive Avaya Customs & Border Protection Bldg 1200, Suite 1202 AXA Financial Federal Emergency Management Agency Huntsville, AL 35816 Bank of America Secure Border Initiative 256.830.6813 Colonial Bank Transportation Security Administration DaimlerChrysler Department of Interior Sacramento 777 Campus Commons Road Delphi Department of Justice Suite 200 EDS Department of Transportation Sacramento, CA 95825 Fannie Mae Department of Veterans’ Affairs 916.565.7419 Fifth Third Bank Environmental Protection Agency Ford Motor Company National Aeronautics and Space Administration Warner Robins FuGen 1100 Park Drive General Motors DEFENSE AGENCIES Warner Robins, GA 31088 Hewlett-Packard Defense Logistics Agency 478.329.0009 Johnson & Johnson U.S. Air Force Landmark, a subsidiary of Halliburton U.S. Army Lockheed Martin U.S. Marine Corps Ottawa U.S. Navy Lucent Technologies 180 Elgin Street Merrill Lynch Office of the Secretary of Defense Suite 1402 Ottawa, Ontario Canada PricewaterhouseCoopers K2P-2K3 Public Service Electric & Gas Qwest INTERNATIONAL 613.236.3773 Regions Bank Agriculture Canada United Airlines British Ministry of Defence www.robbinsgioia.com Verizon Canadian Department of National Defence Wachovia Canadian Blood Services info@robbinsgioia.com Wells Fargo 800.663.7138 www.robbinsgioia.com STATE AND LOCAL GOVERNMENT info@robbinsgioia.com New York City Police State of California 800.663.7138 State of Maryland State of Michigan©2007 Robbins-Gioia, LLC® ©2007 Robbins-Gioia, LLC® All rights reserved All rights reserved

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