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Week 2-1218025656801810-9
- 1. Project Management 2. Portfolio Management
- 2. Week 2
- 3. Project selection and portfolio management
- 4. Project selection and portfolio management
- 5. Project selection and portfolio management What are the inputs that cause the project process to begin? What are the inputs that cause the project process to begin?
- 6. Unit Objectives Implement IT project planning and selection techniques Appreciate the importance of project portfolio management
- 7. Strategic Planning Identifying IT Projects Project Proposals Project Selection Methods Applying a Selection Model Project Selection Project Success
- 8. Strategic Planning Identifying IT Projects Project Proposals Project Selection Methods Applying a Selection Model Project Selection Project Success
- 9. But first
- 10. Assignment 1
- 11. Assignment 1 “Write a project plan”
- 12. Assignment 1 “Write a project plan” Topic: Week 3
- 14. Back to the programme…
- 16. Strategic Planning 1. What is strategy? 2. How do projects relate to strategy?
- 17. Strategy 2Strategy 2Strategy 1Strategy 1 Strategy 3Strategy 3 Strategy 4Strategy 4 Organisation MissionOrganisation Mission MoneyMoney CustomersCustomers Efficiency and EffectivenessEfficiency and Effectiveness AdaptabilityAdaptability
- 18. 5 Forces analysis Supplier power Supplier power Customer power Customer power Threat of New Entrants Threat of New Entrants SubstitutesSubstitutes Intensity ofIntensity of competitioncompetition Michael Porter’s ‘5 Forces’ – 1980’s
- 19. business model template VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL VALUE CONFIGURATION CORE CAPABILITIES PARTNER NETWORK REVENUE STREAMS INFRASTRUCTURE CUSTOMEROFFER FINANCE Osterwalder’s Business Model framework 2006 http://business-model-design.blogspot.com
- 20. Process efficiency Process efficiency ScorecardScorecard Customer satisfaction Customer satisfaction FinancialFinancial Learning and innovation Learning and innovation Balanced Scorecard Kaplan & Norton (1994?) HBR
- 21. Kaplan & Norton (1998?) HBR http://www.visual-literacy.org/periodic_table/pix/strategy-bsc-map.png Strategy Map
- 22. Strategy 2Strategy 2Strategy 1Strategy 1 Strategy 3Strategy 3 Strategy 4Strategy 4 Organisation MissionOrganisation Mission MoneyMoney CustomersCustomers Efficiency and EffectivenessEfficiency and Effectiveness AdaptabilityAdaptability
- 23. • Strategic Management Overview – Involves determining long-term objectives, predicting future trends, and projecting the need for new products and services – Provides the theme and focus of the future direction for the firm • respond to change • allocating scarce resources – Requires strong links among mission, goals, objectives, strategy, and implementation •
- 24. Set (SMART) GoalsSet (SMART) Goals Review MissionReview Mission Develop StrategiesDevelop Strategies Implement Strategies through projectsImplement Strategies through projects Align Strategies to goalsAlign Strategies to goals
- 25. Set (SMART) GoalsSet (SMART) Goals Review MissionReview Mission Develop StrategiesDevelop Strategies Implement Strategies through projectsImplement Strategies through projects Align Strategies to goalsAlign Strategies to goals
- 26. SWOT Analysis
- 27. SWOT = SITUATIONAL ANALYSIS Where are we now?
- 28. S T W O
- 33. Set (SMART) GoalsSet (SMART) Goals Review MissionReview Mission Develop StrategiesDevelop Strategies Implement Strategies through projectsImplement Strategies through projects Align Strategies to goalsAlign Strategies to goals
- 34. http://en.wikipedia.org/wiki/SMART_(project_managemen SS Specific MM Measurable AA Achievable RR Relevant TT Time-bound
- 35. Letter Major Term Minor Terms SS Specific Significant[3] , Stretching[3] , Simple MM Measurable Meaningful[3] , Motivational[3] , Manageable AA Achievable Agreed, Attainable[6] , Assignable[2] , Appropriate, Actionable, Action-oriented[3] RR Relevant Realistic[2] , Results/Results-focused/Results-oriented[6] , Resourced[7] , Rewarding[3] TT Time-bound Time framed[2] , Timed, Time-based, Timeboxed, Timely[6][5] , Timebound, Time-Specific, Timetabled, Trackable E[1] Exciting, Evaluated, Ethical R[1] Recorded, Rewarding, Reviewed[8] http://en.wikipedia.org/wiki/SMART_(project_managemen
- 37. Set (SMART) GoalsSet (SMART) Goals Review MissionReview Mission Develop StrategiesDevelop Strategies Implement Strategies through projectsImplement Strategies through projects Align Strategies to goalsAlign Strategies to goals
- 39. Set (SMART) GoalsSet (SMART) Goals Review MissionReview Mission Develop StrategiesDevelop Strategies Implement Strategies through projectsImplement Strategies through projects Align Strategies to goalsAlign Strategies to goals
- 40. Organisation MissionOrganisation Mission MoneyMoney CustomersCustomers Efficiency and EffectivenessEfficiency and Effectiveness AdaptabilityAdaptability Strategy 2Strategy 2Strategy 1Strategy 1 Strategy 3Strategy 3 Strategy 4Strategy 4
- 41. Set (SMART) GoalsSet (SMART) Goals Review MissionReview Mission Develop StrategiesDevelop Strategies Implement Strategies through projectsImplement Strategies through projects Align Strategies to goalsAlign Strategies to goals
- 42. Organisation MissionOrganisation Mission MoneyMoney CustomersCustomers Efficiency and EffectivenessEfficiency and Effectiveness AdaptabilityAdaptability projectsprojects projectsprojects projectsprojects projectsprojects Strategy 2Strategy 2Strategy 1Strategy 1 Strategy 3Strategy 3 Strategy 4Strategy 4
- 43. What are the goals of the projects?
- 44. Figure 2.1 Strategic Management Process (Gray & Larson, 2006, p25)
- 45. projectsprojects
- 48. PPPM Project Programme Portfolio Management The ‘O’ is for Organisational OPM3
- 51. One Portfolio or Several? One Portfolio or Several? CategoriesCategories Approaches to project portfolio management
- 52. One Portfolio or Several? One Portfolio or Several?
- 53. CategoriesCategories Venture: Projects that transform the business Venture: Projects that transform the business Growth: Projects that grow revenue or market share Growth: Projects that grow revenue or market share Core: Projects that help run the business Core: Projects that help run the business
- 54. What are the benefits of Project Portfolio Management?
- 55. Benefits of Project Portfolio Management Builds discipline into project selection process Links project selection to strategic metrics Prioritizes project proposals across a common set of criteria, rather than on politics or emotion Allocates resources to projects that align with strategic direction Balances risk across all projects
- 57. Different views from senior management on what (and how) should be done
- 58. Competition (& effective utilisation) for resources
- 59. How to Senior Management Input – provide guidance in selecting criteria that are aligned with the organization’s goals – decide how to balance available resources among current projects • The Priority Team Responsibilities – publish the priority of every project – ensure selection process is transparent – re-assess the organization’s goals / priorities – evaluate the progress of current projects
- 60. Figure 2.8 Sample project portfolio approach (Schwalbe, 2005, p51)
- 61. Figure 1.5 Project management compared to project portfolio management (Schwalbe, 2005, p15)
- 62. MoneyMoney CustomersCustomers Efficiency and EffectivenessEfficiency and Effectiveness AdaptabilityAdaptability projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects programmeprogramme projectsprojects projectsprojects projectsprojectsprojectsprojects programmeprogramme projectsprojects Strategy 2Strategy 2Strategy 1Strategy 1 Strategy 3Strategy 3 Strategy 4Strategy 4 Organisation MissionOrganisation Mission ProgrammeProgramme projectsprojects projectsprojects programmeprogramme
- 63. Short term Short term MidtermMidtermLong term Long term projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects projectsprojectsprojectsprojects projectsprojects projectsprojects Strategy 2Strategy 2Strategy 1Strategy 1 Strategy 3Strategy 3 Strategy 4Strategy 4 Organisation MissionOrganisation Mission projectsprojects projectsprojects projectsprojects projectsprojects
- 65. projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects projectsprojects projectsprojectsprojectsprojects projectsprojects projectsprojects Strategy 2Strategy 2Strategy 1Strategy 1 Strategy 3Strategy 3 Strategy 4Strategy 4 Organisation MissionOrganisation Mission projectsprojects projectsprojects projectsprojects projectsprojects
- 67. Identifying IT Projects • Many organizations follow a planning process for selecting IT projects which is aligned with business strategy • Research shows: – Supporting business objectives is the number one reason for investing in IT projects – Use of IT standards lowers development costs by 41 percent per user (Cosgrove Ware, 2002)(Cosgrove Ware, 2002)
- 68. Figure 2.1 Pyramid for the Project Selection Process (Schwalbe, 2005, p35)
- 71. Most business units have a strategic plan
- 72. Which SHOULD align with the organisation’s strategic plan Which SHOULD align with the organisation’s strategic plan
- 73. Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors)
- 74. When ranking proposals, consider; Discipline Accountability Responsibility Constraints Reduced flexibility Loss of power
- 75. Project Initiation forms Figure 2.4B Risk Analysis (Gray & Larson, 2006, p39) Figure 2.4A Major Project Proposal (Gray & Larson, 2006, p38)
- 76. Project Initiation forms Figure 2.4B Risk Analysis (Gray & Larson, 2006, p39) Figure 2.4A Major Project Proposal (Gray & Larson, 2006, p38)
- 78. Not all project proposals make it to initiation
- 79. Every project idea isn’t progressed. Why?
- 80. Time Money Focus
- 81. Methods for selecting projects include: - Focusing on broad organizational needs - Categorizing IT projects - Financial analysis - Using a weighted scoring model - balanced scorecard - Strategy mapping
- 82. Focusing on Broad Organizational Needs – E.g. Non-financial, but important benefits – Three important criteria: • need for the project • funds available for the project • will to make the project succeed
- 83. Categorizing IT Projects – Does the project provides a response to: •a problem •an opportunity •a directive – The time and date of expected completion – The overall priority of the project
- 84. Financial Analysis $$$ Net Present Value Net Present Value Payback modelPayback model Return on Investment Return on Investment (there are more)(there are more)
- 85. Financial Analysis $$$ Net Present Value Payback model Return on Investment (there are more)
- 86. Net Present Value Net Present Value (NPV) Model Uses management’s minimum desired rate- of-return (discount rate) to compute the present value of all net cash inflows positive NPV: the project meets the minimum desired rate of return and is eligible for further consideration negative NPV: project is rejected Net Present Value (NPV) Model cont’d… NPV Calculations determine estimated costs / benefits for the life of the project and products it produces determine discount rate (ask organization) calculate the NPV some organizations consider the investment year as year 0, others consider it year 1 some organizations enter costs as negative numbers, others do not (ask organization) Example: CP829_Lecture_Week2_NPV.xls Time to StopStop and turn to a new presentation pack Time to StopStop and turn to a new presentation pack
- 87. Payback model Figure 4.1 Charting the Payback Period (Schwalbe, 2006, p129) Measures the time it will take to recover the project investment Shorter paybacks are more desirable Payback occurs when cumulative discounted benefits and costs are greater than zero Limitations of payback: • ignores the time value of money • assumes cash inflows for investment period only • does not consider profitability
- 88. Return on Investment Return on Investment (ROI) Calculated by subtracting project costs from the benefits and then dividing by the costs Formula: ROI = (total discounted benefits – total discounted costs) / discounted costs Higher the ROI, the better. Many organizations have a set or minimum rate of return on investment projects Example: CP829_Lecture_Week2_ROI.xls (total discounted benefits – total discounted costs) discounted costs
- 90. $$$ Weighted scoring model A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria – Steps in identifying a weighted scoring model: • identify criteria for project selection • assign weights (%) to criteria add up to (100%) • assign scores to each criteria for each project • multiply scores by weights to get total scores – The higher the weighted score, the better – Example: CP829_Lecture_Week2_WeightedScore.xls $$$
- 91. $$$ Balanced Scorecard •Balanced Scorecard – Robert Kaplan and David Norton developed this approach to help select and manage projects that align with business strategy – Methodology that converts an organization’s value drivers, such as customer service, innovation, efficiency, and financial performance, to a series of defined metrics – See http://www.balancedscorecard.org for more information $$$
- 93. Applying a Selection Model • Project Classification – Deciding how well a strategic or operations project fits the organization’s strategy • Selecting a Model – Focus on competitive strategy and broad organizational needs – Perform net present value analysis or other financial projections – Use a weighted scoring model – Implement a balanced scorecard – Address problems, opportunities, and directives – Consider project time frame – Consider project priority
- 95. The Business Case Impacts Costs & Benefits Clearly compares alternatives Objective Systematic
- 96. The Business Case Elevator pitches?
- 97. Table 3.4 Sample business case (Schwalbe, 2005, pp74-76) Example business case
- 98. Contents of a Business Case 1. Introduction/Background 2. Business Objective 3. Current Situation and Problem/Opportunity Statement 4. Critical Assumptions and Constraints 5. Analysis of Options and Recommendation 6. Preliminary Project Requirements 7. Budget Estimate and Financial Analysis 8. Schedule Estimate 9. Potential Risks 10.Exhibits
- 99. Figure 2.3 The Process for Developing a Business Case (Marchewka, 2003, p34)
- 100. Project Success
- 101. By the way, Things are getting better
- 102. Source: CHAOS Report 1995 by the Standish Group Access it here: http://net.educause.edu/ir/library/pdf/NCP08083B.pdf Not even completed Typically 189% over budget OTOBOS 53% Challenged 16% Success 31% Critical Failures 1994
- 103. Not even completed Still way over budget OTOBOS 51% Challenged 34% Success 15% Critical Failures 2002 Source: CHAOS Report 2002 by the Standish Group Access it here: http://www.standishgroup.com/quarterly_reports/index.php
- 105. $0 $50 $100 $150 $200 $250 1994 2005 Wasted money as a share of total project spend Billions of dollars
- 106. What happened?
- 107. “The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.” (Standish Group cited in Schwalbe, 2004, p13)
- 108. “The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.” (Standish Group cited in Schwalbe, 2004, p13) Smaller projects Smaller projects Better tools Better tools Better training Better training
- 110. Things you should have (if you want to succeed) 1. Executive support 2. User involvement 3. Experienced project manager 4. Clear business objectives 5. Minimized scope 6. Standard software infrastructure 7. Firm basic requirements 8. Formal methodology 9. Reliable estimates 10. Other criteria, such as small milestones, proper planning, competent staff, and ownership
- 111. incrementalBut, change has been…
- 112. There is still plenty of room for improvement.
- 113. ? What do you think is still going wrong?
- 114. BetterProjects.net Title page pic care of jpellqen & CC @ Flickr http://flickr.com/photos/jpellgen/444946201/
Editor's Notes
- Changes to organization’s mission and strategy Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission Strategic Management Overview Involves determining long-term objectives, predicting future trends, and projecting the need for new products and services Provides the theme and focus of the future direction for the firm respond to change allocating scarce resources Requires strong links among mission, goals, objectives, strategy, and implementation SWOT analysis Strengths, Weaknesses, Opportunities, and Threats Strategic planning process should Review and define the organizational mission Set goals and objectives (see Doran’s SMART) Analyse and formulate strategies to reach objectives Implement strategies through projects
- Strategic Management Overview Involves determining long-term objectives, predicting future trends, and projecting the need for new products and services Provides the theme and focus of the future direction for the firm respond to change allocating scarce resources Requires strong links among mission, goals, objectives, strategy, and implementation
- Strategic planning process should Review and define the organizational mission Set goals and objectives (see Doran’s SMART) Analyse and formulate strategies to reach objectives Implement strategies through projects
- Strategic planning process should Review and define the organizational mission Set goals and objectives (see Doran’s SMART) Analyse and formulate strategies to reach objectives Implement strategies through projects
- SWOT analysis Strengths, Weaknesses, Opportunities, and Threats
- SWOT analysis Strengths, Weaknesses, Opportunities, and Threats
- SWOT analysis Strengths, Weaknesses, Opportunities, and Threats
- SWOT analysis Strengths, Weaknesses, Opportunities, and Threats
- SWOT analysis Strengths, Weaknesses, Opportunities, and Threats
- SWOT analysis Strengths, Weaknesses, Opportunities, and Threats
- Strategic planning process should Review and define the organizational mission Set goals and objectives (see Doran’s SMART) Analyse and formulate strategies to reach objectives Implement strategies through projects
- Doran’s characteristics of objectives S Specific Be specific in targeting an objective M Measurable Establish a measurable indicator(s) of progress A Assignable Make the objective assignable to one person for completion R Realistic State what can realistically be done with available resources T Time related
- Strategic planning process should Review and define the organizational mission Set goals and objectives (see Doran’s SMART) Analyse and formulate strategies to reach objectives Implement strategies through projects
- Strategic planning process should Review and define the organizational mission Set goals and objectives (see Doran’s SMART) Analyse and formulate strategies to reach objectives Implement strategies through projects
- Strategic planning process should Review and define the organizational mission Set goals and objectives (see Doran’s SMART) Analyse and formulate strategies to reach objectives Implement strategies through projects
- Many organizations support an emerging business strategy of project portfolio management Organizations group and manage projects as a portfolio of investments that contribute to organizations success Managing the Portfolio Senior management input Priority team responsibilities
- Sample Approaches for Creating a Project Portfolio One approach is adopting a large portfolio for the entire organization. Sections of the portfolio are broken down into groups IT projects are broken down into three categories: Venture: Projects that help transform the business Growth: Projects that help increase revenues Core: Projects that help run the business
- Sample Approaches for Creating a Project Portfolio One approach is adopting a large portfolio for the entire organization. Sections of the portfolio are broken down into groups IT projects are broken down into three categories: Venture: Projects that help transform the business Growth: Projects that help increase revenues Core: Projects that help run the business
- Sample Approaches for Creating a Project Portfolio One approach is adopting a large portfolio for the entire organization. Sections of the portfolio are broken down into groups IT projects are broken down into three categories: Venture: Projects that help transform the business Growth: Projects that help increase revenues Core: Projects that help run the business
- Implementation Gap lack of understanding and consensus on strategy among top management and middle-level (functional) managers who independently implement the strategy
- Resource Conflicts and Multitasking Multi-project environment creates interdependency relationships of shared resources which results in the starting, stopping, and restarting projects
- Changes to organization’s mission and strategy Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects Project managers who understand their organization’s strategy can become effective advocates of projects aligned with the firm’s mission
- Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors) Ranking Proposals Discipline Accountability Responsibility Constraints Reduced flexibility Loss of power
- Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors) Ranking Proposals Discipline Accountability Responsibility Constraints Reduced flexibility Loss of power
- Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors) Ranking Proposals Discipline Accountability Responsibility Constraints Reduced flexibility Loss of power
- Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors) Ranking Proposals Discipline Accountability Responsibility Constraints Reduced flexibility Loss of power
- Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors) Ranking Proposals Discipline Accountability Responsibility Constraints Reduced flexibility Loss of power
- There are a variety of methods to assess whether a project is a good idea. Strategic alignment is one of them But there are several ways to address strategic plans, so a more detailed assessment process is needed.
- Methods for selecting projects include: Focusing on broad organizational needs Categorizing IT projects Financial analysis Using a weighted scoring model Implementing a balanced scorecard Focusing on Broad Organizational Needs It is often difficult to provide strong justification for many IT projects, but everyone agrees they have a high value Three important criteria for projects: need for the project funds available for the project will to make the project succeed Categorizing IT Projects One categorization assesses if the project provides a response to: a problem an opportunity a directive Another categorization is based on the time and date of expected completion Another categorization is the overall priorityof the project
- Successful organizations initiate projects to meet business needs, and a common business need is to spend money wisely A business case is a document that provides justification for investment It is a good idea to have one of the company’s financial managers review the information for accuracy – not formally part of the project management plan Attributes of a Good Business Case Details all possible impacts, costs, benefits Clearly compares alternatives Objectively includes all pertinent information Systematic in terms of summarizing findings
- Successful organizations initiate projects to meet business needs, and a common business need is to spend money wisely A business case is a document that provides justification for investment It is a good idea to have one of the company’s financial managers review the information for accuracy – not formally part of the project management plan Attributes of a Good Business Case Details all possible impacts, costs, benefits Clearly compares alternatives Objectively includes all pertinent information Systematic in terms of summarizing findings
- Source: CHAOS Report 1995 by the Standish Group Access it here: http://net.educause.edu/ir/library/pdf/NCP08083B.pdf Since 1995 several subsequent versions have been published. Project performance has improved… incrementally.. Over the subsequent decade. There is still significant improvement opportunities for the IT projects industry. What do you think is going wrong at your workplace? What can be done to improve things? The 1995 Standish (CHAOS) report found the following factors common to successful projects1. User Involvement 15.9% 2. Executive Management Support 13.9% 3. Clear Statement of Requirements 13.0% 4. Proper Planning 9.6% 5. Realistic Expectations 8.2% 6. Smaller Project Milestones 7.7% 7. Competent Staff 7.2% 8. Ownership 5.3% 9. Clear Vision & Objectives 2.9% 10. Hard-Working, Focused Staff 2.4% Other 13.9%
- Improved Project Performance Standish Group’s CHAOS studies show improvements in IT projects in the past decade