F.L.F. Beekman<br />CAPM Global Competence Center<br />October 2007<br />Project Portfolio Management<br />
2<br />This presentation contains topics in a mix<br /><ul><li>of theory
and practice
supplemented by ideas
and thoughts
with hopefully some logic</li></ul>Frank.Beekman@philips.com<br />Manager CAPM Global Competence Center<br /> = <br />Shar...
3<br />What is PPM?<br />Project Portfolio Management (PPM) is a significant advance over traditional PM methods, (which f...
4<br />Project Portfolio Management<br />The objective of PPM is to create the mix of projects most likely to:<br />suppor...
5<br />Why is it important to Philips? Make Philips’ growth ambition happen<br />“The company at large is now geared for p...
6<br />Growth<br />Will it be bought ?<br />Break Away<br />Innovation<br />MarketInnovation<br />new<br />The Growth Fram...
7<br />Assignment<br />Problem description<br />Project portfolios are managed using Excel and PowerPoint. <br />Projects ...
8<br />Percentage of businesses that embrace each best practice<br />Role of R&D <br />in Business Goals<br />Use strategi...
9<br />The pipeline<br />Initiation        Definition       Design        Preparation        Realization        Delivery  ...
10<br />Why is an active Go/Kill policy important?<br />
11<br />Money spend is never an excuse for spending more money<br />
12<br />
13<br />POrtfolio Management Process<br />Transparency<br />POMP<br />  Co-operation<br />          AOP<br />
14<br />Selection<br />Determination of the optimal or acceptable size of the project pipeline<br />Surveys show: <br />ge...
Resource availability
Alignment with strategies
Risk/Reward (Net present Value NVP)</li></ul> Identification, probability, impact, mitigation -> risk WBS<br /><ul><li>Sco...
Check lists</li></li></ul><li>15<br />Criteria for reporting a project in POMP<br />
16<br />Distributed Portfolio Management model<br />Business <br />Planning<br />Philips Vision, Mission & <br />Corporate...
17<br />Why is “doing the projects right” important?<br />What if 99% went right???<br />
18<br />406.000 passengers per year who depart on <br />the wrong airplane from Schiphol airport<br />
19<br />700 people will receive the wrong medicine <br />from the pharmacist per day<br />
20<br />161 baby's per month return home with<br />The wrong parents.<br />
21<br />Why is doing the things right important?<br />90%   x   90%   x   90%   x   90%     x     90%    x    90%    =  53...
22<br />Why is “doing the right projects” (=PPM) important?<br />100%<br />50% value lost<br />PPM<br />66%<br />Selecting...
23<br />Process steps<br />PREPARE<br />DECISION<br />MAKING<br />DECISION<br />MAKING<br />COMMU-<br />NICATION<br />GATH...
24<br />Project & portfolio definition<br />Project definition<br />“Strategic bucket” {Must Do legal or technical, Busine...
25<br />Percentage Strategic Bucket <br />
26<br />Attractiveness versus chance of success<br />
27<br />Attractiveness is the outcome of market attractiveness and strategic fit<br />Market attractiveness<br /><ul><li>M...
Market growth
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Portfoliomanagement pm presentation digitalboardroom public final

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PPM presentation for DigitalBoardroom, still actual although done in 2007.

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Portfoliomanagement pm presentation digitalboardroom public final

  1. 1. F.L.F. Beekman<br />CAPM Global Competence Center<br />October 2007<br />Project Portfolio Management<br />
  2. 2. 2<br />This presentation contains topics in a mix<br /><ul><li>of theory
  3. 3. and practice
  4. 4. supplemented by ideas
  5. 5. and thoughts
  6. 6. with hopefully some logic</li></ul>Frank.Beekman@philips.com<br />Manager CAPM Global Competence Center<br /> = <br />Shared Service Center for Project- and portfolio-<br />Management for Philips Medical Systems<br />
  7. 7. 3<br />What is PPM?<br />Project Portfolio Management (PPM) is a significant advance over traditional PM methods, (which focuses primarily on project execution).<br />PPM addresses a common problem where scarce resources (money, people, facilities) are allocated to the wrong projects.<br />PPM, therefore, goes beyond the art of "managing projects right" and focuses on "doing the right projects".<br />
  8. 8. 4<br />Project Portfolio Management<br />The objective of PPM is to create the mix of projects most likely to:<br />support the achievement of the organization's goals,<br />aligned with the preferred strategies, and<br />within the organization's resource (people and funding) constraints.<br />… studies reveal that as many as 70% of IT projects either significantly <br />fall short of deadline and budget goals or they are abandoned altogether <br />prior to completion. –IT Business Edge 2007-09-20<br />
  9. 9. 5<br />Why is it important to Philips? Make Philips’ growth ambition happen<br />“The company at large is now geared for profitable growth. It needs to extend leadership in existing markets, explore and develop new markets, accelerate change. We’ve talked for long enough. Now we must devote ourselves to successful execution (Kleisterlee)”.<br />This requires:<br />Grow by ultimately starting new businesses<br />Increase profitability through re-allocation of capital towards higher return opportunities<br />Leverage the Philips brand and our core competencies in the areas of Healthcare, Lifestyle and Technology to grow in selected categories and geographies<br />
  10. 10. 6<br />Growth<br />Will it be bought ?<br />Break Away<br />Innovation<br />MarketInnovation<br />new<br />The Growth Framework<br />sustainable<br />competitiveadvantages<br />applied marketing<br />CostInnovation<br />Feature<br />Innovation<br />temporarycompetitiveadvantages<br />existing<br />existing<br />new<br />applied technologies<br />Can it be made ?<br />
  11. 11. 7<br />Assignment<br />Problem description<br />Project portfolios are managed using Excel and PowerPoint. <br />Projects are managed in Clarity<br />Clarity supports project portfolio management<br />Why not manage project portfolios in Clarity<br />Basic requirement:<br />Focus on communication and insight Charts<br />Scatter (X: Chance of success, Y: Attractiveness)<br />Pie (Budget percentage per Strategic Bucket)<br />
  12. 12. 8<br />Percentage of businesses that embrace each best practice<br />Role of R&D <br />in Business Goals<br />Use strategic buckets<br />Sr Mgt strongly committed to R&D<br />Business Climate supports innovation<br />Formal & systematic PPM in place<br />Balance resources across projects<br />Portfolio contains high value projects<br />Excellent quality of execution<br />Tough, rigorous Go/Kill Decision process<br />Customer focused<br />
  13. 13. 9<br />The pipeline<br />Initiation Definition Design Preparation Realization Delivery Aftercare<br />Concept&feasibility Planning Development Execution Implementation Operation<br />idea<br />opp<br />tech<br />proj<br />Which projects<br />to terminate?<br />Which projects<br />to continue?<br />wish<br />Which projects<br />to initiate?<br />screening<br />Project management<br />Select projects <br />Manage project portfolio pipeline<br />Concept phase <br />selection filter<br />
  14. 14. 10<br />Why is an active Go/Kill policy important?<br />
  15. 15. 11<br />Money spend is never an excuse for spending more money<br />
  16. 16. 12<br />
  17. 17. 13<br />POrtfolio Management Process<br />Transparency<br />POMP<br /> Co-operation<br /> AOP<br />
  18. 18. 14<br />Selection<br />Determination of the optimal or acceptable size of the project pipeline<br />Surveys show: <br />get more projects done with less people by doing fewer projects<br /> - resources scattered over projects; changeover losses<br /> - project delays<br />Ranking projects; By Value and Benefits, such as<br /><ul><li>Financial models
  19. 19. Resource availability
  20. 20. Alignment with strategies
  21. 21. Risk/Reward (Net present Value NVP)</li></ul> Identification, probability, impact, mitigation -> risk WBS<br /><ul><li>Scoring Models
  22. 22. Check lists</li></li></ul><li>15<br />Criteria for reporting a project in POMP<br />
  23. 23. 16<br />Distributed Portfolio Management model<br />Business <br />Planning<br />Philips Vision, Mission & <br />Corporate Strategy<br />PMS Vision, Mission &<br />Business (PD) Strategy<br />Integral Roadmapping<br />“Doing the projects right”<br />Product plans<br />“Doing the right projects”<br />Portfolio<br />management<br />Innovation project<br /> portfolio management<br />Pipeline and<br /> project management<br />
  24. 24. 17<br />Why is “doing the projects right” important?<br />What if 99% went right???<br />
  25. 25. 18<br />406.000 passengers per year who depart on <br />the wrong airplane from Schiphol airport<br />
  26. 26. 19<br />700 people will receive the wrong medicine <br />from the pharmacist per day<br />
  27. 27. 20<br />161 baby's per month return home with<br />The wrong parents.<br />
  28. 28. 21<br />Why is doing the things right important?<br />90% x 90% x 90% x 90% x 90% x 90% = 53%<br />Initiation Definition Design Preparation Realization Aftercare<br />What does 53% mean for your product quality, for your Time to market?<br />
  29. 29. 22<br />Why is “doing the right projects” (=PPM) important?<br />100%<br />50% value lost<br />PPM<br />66%<br />Selecting<br />the right<br />Investment<br />‘Do the right<br />things’ <br />50% value realized<br />PM<br />75%<br />100%<br />Delivering the investments right<br />‘Do the things right’<br />
  30. 30. 23<br />Process steps<br />PREPARE<br />DECISION<br />MAKING<br />DECISION<br />MAKING<br />COMMU-<br />NICATION<br />GATHER<br />DATA<br />SELECT<br />PROJECTS<br />ANALYZE<br />DATA<br />EXECUTION<br />Who<br />What<br />
  31. 31. 24<br />Project & portfolio definition<br />Project definition<br />“Strategic bucket” {Must Do legal or technical, Business necessity, Bottom line performance improvement, Top line competitive advantage, Innovation}<br />“Project attractiveness” with sub-fields<br />Net Present Value over three years<br />Payback period<br />Alignment of project with business strategy<br />“Risk / Chance of success” with sub-fields<br />Business risk<br />Organizational risk<br />Project / technology risks<br />Portfolio definition<br />Portfolio with POMP projects<br />3 scenarios on how to lower the POMP budget<br />3 program portfolios with existing projects<br />
  32. 32. 25<br />Percentage Strategic Bucket <br />
  33. 33. 26<br />Attractiveness versus chance of success<br />
  34. 34. 27<br />Attractiveness is the outcome of market attractiveness and strategic fit<br />Market attractiveness<br /><ul><li>Market size
  35. 35. Market growth
  36. 36. Market profitability
  37. 37. Market life cycle
  38. 38. Competitive intensity
  39. 39. Volatility of demand
  40. 40. Market predictability
  41. 41. …</li></ul>Strategic fit<br /><ul><li>Contribution to strategic objectives
  42. 42. Fit with brand promise (brand pillars)
  43. 43. Contribution to financial and non-financial targets
  44. 44. Contribution to one Philips
  45. 45. …</li></li></ul><li>28<br />Chance of success is the outcome of commercial and technical chance of success<br />Commercial chance of success<br /><ul><li>Commercial competitive strength
  46. 46. Relative market position (RMS)
  47. 47. Relative brand position
  48. 48. Relative marketing investments
  49. 49.
  50. 50. Ability to market and sell
  51. 51. Fit with marketing capabilities
  52. 52. Fit with sales organization
  53. 53. Fit with the required distribution channels
  54. 54.
  55. 55. Specific commercial risks
  56. 56. Lead-customer identification
  57. 57. Proven end-user acceptance
  58. 58. ….</li></ul>Technical chance of success<br /><ul><li>Technical competitive strength
  59. 59. Relative IP position
  60. 60. Relative R&D investment
  61. 61.
  62. 62. Ability to develop and create
  63. 63. Fit with development skills
  64. 64. Fit with manufacturing/sourcing skills
  65. 65. Fit with supply chain capabilities
  66. 66. Fit with technical know-how
  67. 67. Team maturity
  68. 68.
  69. 69. Specific technical risks
  70. 70. Availability of fall back scenario’s
  71. 71. Level of supplier risk
  72. 72. …</li></li></ul><li>29<br />Attractiveness versus chance of success (2)<br />
  73. 73. 30<br />Other exciting graphs<br />
  74. 74. 31<br />Project maturity models at PMS (1/2)<br />Classical business (operational) driven bottom up model<br />Markets & Strategy<br />No aggregation<br /> to this level<br />Roadmapping; process & practice<br />R<br />E<br />P<br />O<br />R<br />T<br />S<br />PPM; process & practice<br />RM; process & practice<br />PM; process & practice<br />Basic PM & Time registration; process & practice<br />Basics: Commitment, HW, infra<br />
  75. 75. 32<br />Project maturity models at PMS (2/2)<br />Top-down model<br />Basics: Commitment, HW, infra<br />R<br />E<br />P<br />O<br />R<br />T<br />S<br />Markets & Strategy<br />Roadmapping; process & practice<br />PPM; process & practice<br />Program mgt; process & practice<br />PM; process & practice<br />
  76. 76. 33<br />PPM Maturity Model (1/2); Adoption of PPM<br />
  77. 77. 34<br />PPM Maturity Model (2/2); Quality of PPM<br />

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