Pmo best practices
This document discusses portfolio management and the project management office (PMO) value model. It describes two models - the cost containment model which focuses on reducing costs, and the throughput model which aims to meet objectives by eliminating waste. The document also covers portfolio selection techniques like triage, prioritization, sequencing and optimization. It discusses the challenges of managing multiple related projects and how various approaches, standards, roles and maturity models help address these challenges.
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Pmo best practices
- 2. PMO VALUE MODEL •Cost Containment Model: Focus on Containing Cost • Throughput Model: Meeting organisation Objectives. Any cost that is not contributing to throughput is considered a waste. • Options • There is a limit to cost cutting or cost containment. • There is no limit to throughput. Faster Completion aster ROI and less interest accrued on the project investment until the return is achieved
- 3. Portfolio Selection Triage Prioritisation Sequencing Optimisation Portfolio Monitoring andControlling Verification Performance Benefits Risks and Issues Economic drivers – NPV, ROI, etc Non-economic drivers – value creation and capability improvement Resource limitations Logical interdependency Mandatory imperatives
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- 5. Links with deliverymanagement Comparative Dimension Project Management Program Management Portfolio Management Key imperative Doing things right Doing things right Doing the right things Delivery scope A set of specific deliverables A business problem or opportunity Organizational strategic objectives Management focus Task performance Project performance Aggregate performance Management tools Detailed schedules based on work products High level schedules based on projects Value indicators based on aggregations of performance, risk and benefits data Success measures Within budget, on time, to specification New business capability Strategic objectives and value
- 6. Shifting strategic focus •Innovation and differentiation versus standardisation and repeatability • Investment versus cost containment • Flexibility and responsiveness versus size and stability • Knowledge assets versus property, plant and machinery
- 7. 7 multi-project challengesfor PMO 1. Demand exceeds capacity 2. Competition between projects 3. Complex interdependency 4. Autonomy and control 5. Innovation and predictability 6. Accessing project knowledge 7. Disruption of traditional structures
- 8. Area Response ProblemAddressed Delivery methods Program management, change management disciplines Coordinating and marshalling project-based activity Governance Project portfolio management (PPM) Investment oversight Functions Steering Committees, PMOs Driving cross functional integration Structure Matrix organisations, skunk works, project based organisations (PBOs) Managing both dynamic and static contexts Roles Project managers, change managers, business owners, sponsors, etc Performing project activity Standards PMBOK, Prince2, MSP, P3M3, etc Improving predictability and performance Maturity models OPM3, PMMM, CMMM-I, etc Making change business as usual New methods, standards, roles etc
- 9. Types of approach •Intuitive – management judgment, “gut feel” • Reactive – reacting to external influences, contingencies and constraints • Proactive – strategic marketing to identify projects to develop new products, etc • Analytical – – financial return – multi-attribute models – optimization models
- 10. Barriers to adoption •Too complex and require too much input data • Inadequate treatment of risk • Failure to recognize interrelationships • No framework for organizing techniques within an easily useable and flexible process • No consensus on which techniques are most effective
- 11. • Strategic investmentselection process groups comprise: – Triage – Prioritisation – Sequencing – Optimising (or Risk Balancing) Process groups
- 13. Essential techniques • Portfoliomatrices – – Quadrant approaches – – Banding approaches – • Strategic alignment measures • Financial hurdle rates
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- 16. Strategic alignment measures 0 5 10 15 20 25 30 35 Customer Score CostScore Cross Sell Score Revenue Score Employee Score Strategic Priorities Project A Project B
- 17. Financial hurdle rates •Based on initial high level cashflow estimates • Examples include Internal Rate of Return (IRR) and Accounting Rate of Return (AAR)