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From Balanced Scorecard to Project Portfolio Management
The document discusses project portfolio management and alignment with organizational strategy. It introduces the Balanced Scorecard as a tool to help with strategic planning and implementation. The Balanced Scorecard provides a framework to classify objectives across four perspectives: financial, customer, internal processes, and learning and growth. It can then be used to identify projects and initiatives that will help achieve strategic goals.
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From Balanced Scorecard to Project Portfolio Management
- 1. From the BalancedScorecard to a Project Portfolio Roberto Toledo, MBA, PMP Alpha PM Consulting, Inc. “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2010 Permission is granted to PMI for PMI® Marketplace use only
- 2. Agenda Background: ProjectPortfolio Management in an Organizational Context PMI’s Standard for Portfolio Management Strategic Planning The Balanced Scorecard Alignment Processes Prioritization Processes The Strategic Questionnaire An Investment Map Conclusions “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 3. Tools you cantake with you from this presentation… Project Portfolio Management The Balanced Scorecard The Strategic Questionnaire An Investment Map A Project Portfolio System “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 4. The Big Picture Strategic Plan Initiatives Financial New Products Customer Learning Internal SELECT STRATEGY PRIORITIZE Cancelled Initiatives Postponed Initiatives Resources and Budget Project Portfolio Authorized Projects (Project Charter) “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 5. Organizational Context Goals and Objectives Vision Definition Rule every Mission organizational Organizational Strategy effort and Objectives Processes to High-Level Project establish Operations Portfolio proper actions Planning and Management Management PPM to accomplish Compo- goals and nents that Management of On- Management of objectives guarantee Going Operations Authorized Programs and an (recurring activities) Projects (projectized activities) efficient and effective Organizational Resources execution ©2008 Project Management Institute “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only ©2009 Project Management Institute
- 6. What is aProject Portfolio? A collection of projects and/or programs -and other related work- , grouped to facilitate effective management of that work to meet strategic business objectives. The “portfolio components” (projects and programs) may not necessarily be interdependent or directly related PMI’s Portfolio Management Standard. ©2008 Project Management Institute “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only ©2009 Project Management Institute
- 7. PMI® Standard forPPM Strategic Aligning Controlling Components Identify Prioritize Monitor & Strategic Components Components Control Component Plan: Risks Execution and Reporting •Goals Categorize Develop Risk •KPI’s Components Responses Review •Capacity Portfolio Performance Evaluate Balance Components Portfolio Monitor Bus. Strategy Select Communicate Changes Components Portfolio Adj. No Risk ID & Authorize Significant Analysis Change Components ©2008 Project Management Institute Yes “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 8. Strategic Planning: TheBasics Mission • What we do. Our guiding objectives as an organization. Vision • Our desired position and Strategic Intent. Values • Guiding principles that will help members from the organization in their decision-making process SWOT Analysis • Internal: Strengths and Weaknesses (+,-). • External: Opportunities and Threats (+,-). Resources • Budget linked to the strategy defined People • Incentives linked to the strategy defined “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 9. Balanced Scorecard (BSC).-A helpful tool A strategic management and planning system to align business activities to the vision and mission of the organization Helps to improve internal and external communications, and monitor organizational performance against strategic goals Used extensively in business and government organizations worldwide The Balanced Scorecard Institute “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 10. In a fewwords… The BSC gives structure to the strategic plan A structure you can use to plan and manage the evolution of your company or organization A tool to improve Communication A tool that helps with Strategic Planning, but most importantly with Strategic Implementation “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 11. The Road toa BSC Strategy • Mission, Vision, Values and Long-term business plan Objectives • Develop the strategic Objectives and classify them in the 4 perspectives Metrics • Develop metrics and targets that measure progress towards the strategy Initiatives • Identify the projects that move the organization towards its mission and its vision “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 12. The Four Perspectives Financial Customer Internal Learning Processes & Growth “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 13. The Strategy Map Strategy Map CUSTOMER FINANCIAL Increase value of Increase Cash Increase Cash flow the company Increase revenue flow margin Increase sales Increaseclient Increase client retention Increase customer satisfaction retention INT. PROCESSES Fulfill customer’s Minimize financial Improve our customer expectations risks contact and recognition always Improve our subcontractors Improve our Improve internal administrative team subcontractors team services Improve our LEARNING & Improve the systems and Best in GROWTH organizational Increase the culture class participation of technology Improve our systems and technology team the team in Improve our sales improvement sand customer infrastructure infrastructure projects “PMI” is a registered trade and service mark of the Project Management Institute, Inc. 13satisfaction kills ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 14. Bridging the StrategicGap Mission Vision Strategy Strategic Strategic Strategic Map Objectives Objectives Objectives InitiativesInitiativesInitiativesInitiativesInitiativesInitiativesInitiatives Project Portfolio “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only 14
- 15. An Example… Goal Métricas 2011 2012 2013 C1.1 % of yearly sales increase 30% 30% 30% 150 per 170 per 190 per C1.2 RFPs of Projects greater than $300k year year year Increase C1 Sales C1.3 Projects greater than $300k 25% 30% 33% % of contracts awarded vs. RFPs greater C1.4 33% 33% 33% than one million C2.1 Clients want to work with us again 95% 100% 100% 100% of 100% of 100% of Increase BK, 7 BK, 3 BK, 5 client C2.2 Brokers wanting to work with us times per times per times C2 retention per year year each year each (focus on each Top 35) C2.5 Contracts awarded with Top 35 client list 60% 70% 80% % of Returning clients on the Contract C2.6 60% 70% 80% Schedule Results of the customer satisfaction Increase C3.1 85% 90% 92.5% C3 Client’s survey satisfaction C3.2 Recommendation letter issued 70% 80% 90% “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 16. Align “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 17. Identification of Projects Of all the initiatives identified in the BSC, we must select those which will be included in our Project Portfolio At this point in the process it is important to have an structured and documented approach • Defined and supervised by the PMO or another specific group in the organization The use of a Selection Committee is the best practice • Diverse composition • Usually comprised of all or part of the Senior Management team • Could be more than one Committee, at different levels of the organization “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 18. Consider 2 typesof Components Inventory of Inventory of actual and new project running proposals projects Identifying these components is usually a discrete task that may be performed periodically (annually, bi- annually, quarterly) Or it may be a continuous task during the year Identifying actual projects is not a trivial task, especially in large corporations “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 19. Project Inventory “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 20. Prioritize “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 21. A Strategic Questionnaire One of the easiest ways to create alignment between the Strategic Plan and the Project Portfolio Provides an objective selection mechanism, using both objective and subjective criteria Deals with subjects that are difficult to evaluate, such as: • Implementation complexity • Added value • Strategic consistency • The four perspectives “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 22. An Example… How will the project impact the Customer perception our customers have of 100 Perspective 18 4 us? Positive high impact 100 Moderately high impact 60 Null Impact 5 Negative Impact 0 What impact will the project have Financial on the company’s EBITDA? 30 Perspective 18 5 (considering a 2 year horizon) High (more than 5%) 100 Medium (between 3% and 5%) 60 Low (between 0% and 2%) 5 Null or Negative 0 How many internal resources will 30 6 be assigned as FTEs to the project? 4 or less 100 Between 5 and 8 60 Between 9 and 12 20 13 or more 0 What is the capital investment in this project? 40 7 Only recurring costs (NCI) 100 Low <= $500k 80 Medium between $500k and 2 MM 60 High >= 2 MM USD 20 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 23. Another Example: Financiera Independencia • Mexican Financial Institution: Microcredits of up to $2,000 dollars • Founded in 1995, IPO in 2007 with great success in Mexico’s stock market • In 2009 reaches 4 million credits • 9,500 employees, 200 branch offices all across Mexico • In 2011 applies to obtain a license to to to become a full-service chartered Bank “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 24. Strategic Objectives Objectives Low Med High Reduce dependency on outsourced 3 5 7 contracts Differentiate our products and services 3 5 7 portfolio Grow our client’s database 3 5 7 Increase our payment reception points 3 5 7 Attract, develop, and retain the best 3 5 7 talent in the Mexican financial system Develop alternative sales outlets 3 5 7 Invest in brand building 3 5 7 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 25. Versus Operating andChange Impact… Impact Low Med High Significantly changes our core processes 5 2 1 Requires new skills from our staff 5 2 1 Changes the way we approach our clients 5 2 1 Represents a move towards a new core 5 2 1 capacity different from our traditional Generates dependency from an outside 5 2 1 company (know-how) Impacts our customer service 5 2 1 Reduces our number of employees 5 2 1 “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 26. Investment Map Impacto Estratégico Impacto Operativo Size of bubbles represent size of Project Budget “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 27. Prioritized Portfolio Priority “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 28. Consider… The prioritizedportfolio should be established at the beginning of each period, but is by no means static The organization’s budget and the available resources are the major defining constraints Balancing the Portfolio? Easiest way: Pareto Rule Risk analysis may be another factor to include in the analysis, along with implementation complexity All projects should be made official by Senior Management before execution • Main purpose of the Project Charter “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 29. A final thought…Portfolio Report “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 30. Conclusions Strategic Planningis of paramount importance in current environment Establishing simple mechanisms for Strategic Planning and PPM processes is much more efficient and effective Organizations must know at all times where their resources are being invested PPM does not necessarily mean having a new department, but it does mean assigning the responsibility to someone! “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 31. Tools you cantake with you from this presentation… Project Portfolio Management The Balanced Scorecard The Strategic Questionnaire An Investment Map Project Portfolio System “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only
- 32. Questions??? Roberto Toledo, MBA,PMP Alpha PM Consulting, Inc. rtoledo@alphapmconsulting.com www.alphapmconsulting.com Tel. +1.956.519.4862 Twitter: @robertoledo “PMI” is a registered trade and service mark of the Project Management Institute, Inc. ©2011 Permission is granted to PMI for PMI® Marketplace use only