The document outlines the current state of portfolio management at Rolls-Royce and discusses efforts to systematize project prioritization through enterprise portfolio management. It highlights a structured approach to rank projects based on various parameters and emphasizes the importance of understanding inter-relationships between business drivers for accurate prediction of project benefits. Rolls-Royce is implementing a new methodology to enhance the prediction accuracy of these driver impacts and their corresponding benefits.

1. Portfolio Management in
Rolls-Royce Today
03 Mar 2014
Presenter: Jim Luffman, Director, Project Management
Presenter: John MacGregor, Head of PM, Civil Large Engines
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2. Purpose of today
•
Understand the Rolls-Royce landscape and the
current state of portfolio management
•
Review the work done to explore systemising the
prioritisation of projects as part of enterprise
portfolio management (Jim)
•
Review some detail methods that underpin
weighted combination of project parameters used
for prioritisation (John)
2

3. Rolls-Royce Overview
3

4. P3M infrastructure status and organisation
Develop Strategy (DS)5
Sector/Function
Project &
Portfolio
Management
PM Capability
Assurance
A standard project and portfolio management/assurance system, joined
up between business and function, to drive business benefits realisation.
Rolls-Royce proprietary information
4

5. Strategic Projects Portfolio Landscape
Cost
Risk
Resources
Link to customer satisfaction
Project Type
Link to Strategy
Used some basic dimensions to prioritise against
from the CO (OGC) defined criteria.
5

6. Common systematic ranking of projects
Business Unit
Project Name
Rank
Energy & Nuclear
Energy & Nuclear
Marine
Energy & Nuclear
Civil Aero
Energy & Nuclear
Energy & Nuclear
Civil Aero
Civil Aero
Civil Aero
Civil Aero
Marine
Civil Aero
Energy & Nuclear
Engineering &
Operations
Project 1
Project 2
Project 1
Project 3
Project 1
Project 4
Project 5
Project 2
Project 3
Project 4
Project 5
Project 2
Project 6
Project 6
2
2
2.15
2.3
2.4
2.4
2.4
2.5
2.5
2.55
2.55
2.65
2.85
2.85
Project 1
2.9
Supply Chain
Supply Chain
Supply Chain
Supply Chain
Civil Aero
Defence Aero
Marine
Supply Chain
Group Property
Civil Aero
Civil Aero
Civil Aero
Defence Aero
Energy & Nuclear
IT
Marine
Project 1
Project 2
Project 3
Project 4
Project 7
Project 1
Project 3
Project 5
Project 1
Project 8
Project 9
Project 10
Project 2
Project 7
IT Project
Project 4
2.95
2.95
2.95
2.95
3
3
3.2
3.25
3.3
New
New
6
Projects given a single
score from the
combination of scores
in each dimension and
then ranked.
Notes:
-NPV has been excluded,
different time periods
-Resource – low resource
requirement = good score
-Not asking if resource is
committed

7. Prioritisation practicalities: Rank vs NPV (£M)
Outliers vs fidelity needs something more sophisticated
7

8. Portfolio Project Prioritisation
Gross
Project
Priority
Project
Cost
Rolls-Royce proprietary information
Net Project Priority

9. Portfolio prioritisation equation
Safety “trumps” all business drivers as a priority
Rolls-Royce proprietary information

10. Prioritization and Benefit Tracking
See the ranking of projects
Show what projects contribute
to a particular driver
Rolls-Royce proprietary information
View the forecast of benefit
delivery based on the projects
contributions

11. Prioritization and Benefit Tracking
See the ranking of projects
Forecast and Actuals systemically different
Show what projects contribute
to a particular driver
Rolls-Royce proprietary information
View the forecast of benefit
delivery based on the projects
contributions

12. Portfolio Project Prioritisation
Deterioration of Business Benefits comes from three main
areas
eality – always a degree of inefficiency (waste) when a
project is delivered
stimation – accuracy of benefits across the portfolio
usiness Driver impact – effect of one business driver
against another
Rolls-Royce proprietary information

13. Portfolio Forced Pair Ranking
Step 1 - Insert Business Driver Description Below [replacing A - F]
Back To MAIN PAGE
Business Driver
Business Driver 1
Business Driver 2
Business Driver 3
Business Driver 4
Business Driver 5
Business Driver 6
Business Driver 7
Note: This may be an option for a business decision, projects to invest in or a way of determining the relative importance of a number of strategies
Is the Business Driver below "more or less important" than the Business Driver ->
Business Driver 1
Business Driver 2
Business Driver 3
Business Driver 1
Business Driver 2
Business Driver 3
Business Driver 4
Business Driver 5
More Important
Equally Important
Equally Important
More Important
Less Important
Less Important
Equally Important
More Important
More Important
Business Driver 4
Business Driver 5
Business Driver 6
Business Driver 7
Forced Pair ranking assumes that impact of one driver on another is always positive
Rolls-Royce proprietary information
Extremely More Important

14. Portfolio Project Prioritisation
•
The process of forced pair ranking for portfolio management
business driver prioritization is too coarse for reliable prediction of
project benefits
•
It assumes that the impact of one driver on another is always
positive
•
The inter-relationship between the drivers needs to be better
understood for businesses to maximise the benefits across their
portfolios.
•
Rolls-Royce has developed and patented a more sophisticated
methodology for understanding the impact of business drivers on
each other to generate a more accurate understanding of their
relationship.
•
Currently comparing the performance of Business Drivers against
expectations using new methodology
•
Initial results indicate a much more accurate prediction of business
driver impacts and their benefits realisation.
Rolls-Royce proprietary information