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The document outlines the principles of project portfolio management, defining key components such as projects, programs, and portfolios, and explaining how they can be managed collectively for strategic benefits. It discusses the characteristics of projects, the role of portfolio managers, and presents research goals and methodologies aimed at improving portfolio management practices. Additionally, it includes metrics, decision-making methods, and examples relevant to project performance management.
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- 1. PROJECT PORTFOLIO MANAGEMENT Prepared by: Reza Masoumi Nov. 2014
- 2. Project Hierarchy 2 Portfolio Portfolio 1 Program Project Program 1 Project 1 Project 2 Portfolio Programs Portfolios Projects Projects
- 3. Project Hierarchy TransitPortfolio Highway Portfolio Airport Portfolio 3 massDOT Accelerated Bridge Program Bridge 2 Project Bridge 1 Project Highway Program ... State Rail Program Green Line Extension Project MBTA Projects
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- 5. Characteristics of Projects • Temporary • Unique and unrepeatable • Restrictions • Definitive objective 5
- 6. What is aProgram? 6 A group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. Program Project 1 Project 2 Project 3 Program 1 Project 4 Project 5 Project 6 Reference: PMI (2008), A Guide to Project Management Body of Knowledge, 4th Edition
- 7. What is aProject Portfolio ? A collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives. 7 Portfolio Portfolio 1 Program 1 Program 2 Project 1 Program 3 Project 2 Project 3 Project 6 Project 7 Project 8 Project 4 Project 5 Project 9 Program 4 Project 10 Project 11 Project 12 Reference: PMI (2008), A Guide to Project Management Body of Knowledge, 4th Edition
- 8. 8 Portfolio Manager Common Career Path Technical – Leadership – Management – Communication Reference: 2014 CII annual conference – RT 303 implementation session
- 9. Research Title Managinga Portfolio of Projects 9 – Metrics for Measure Supported by:
- 10. Research Team 10 No. Owners 1 Charlie O’Hanlon (Chair) Architect of the Capitol 2 Frederick Delie Georgia Pacific LLC 3 Roger Haynes ConocoPhillips 4 Roger Holtzclaw BP Alternative Energy 5 Richard Ikasalo SABIC 6 John Logan Irving Oil Limited 7 Shaun Tatum Southern Company 8 Timothy Wolf Anheuser-Busch InBev 9 David Wilson BP Project Performance No. Contractors 1 Marie Robinson (Vice Chair) Jacobs 2 Scott Bergoon Hargrove Engineers 3 James Dyer WorleyParsons 4 Mohamed El-Mehalawi Faithful+Gould 5 Robert Bailey Fluor Corporation 6 Vincent Huang Parsons 7 Gary Lanier URS Corporation 8 Sandra MacGillivray Coreworx, Inc.
- 11. Research Goals 11 • Understand the portfolio management problems • Identify techniques, tools, metrics and processes recommended for portfolio management • Recommend practices to help improve overall portfolio management
- 12. Research Methodology 12 Collect Data • Survey • Interviews • Case Studies Analyze Data • Identify Business Drivers • Identify Recommended Practices Develop Tool • Portfolio Management Playbook
- 13. Recommended Process forPortfolio Performance Management 13 1. Determine Key Results Areas (KRAs) 2. Establish Key Performance Indicators (KPIs) 3. Collecting Data and Reporting Results 4. Evaluating the Portfolio Performance Management Process
- 14. Key Result Areas(KRAs) for PPM 14 • Schedule • Cost / Cash Flow • Safety and Environment • Change Management / Scope • Resource Allocation • Procurement and Supply-Chain Management • Quality • Risk Management • Client Satisfaction
- 15. Proposed KPIs forKRAs 15
- 16. Sample Dashboard 16 $30 m CURRENT YEAR $25 m Planned vs Actual / Reforecast (Current Year) BaseLine Forecast #### #### #### ### ### ### ### ### ### ### ### ### Actual Re-Forecast #### #### #### ### ### ### ### ### ### ### ### ### Cumulative Base Forecast #### #### #### ### ### ### ### ### ### ### ### ### $20 m Cost ($m) Gross Cumulative Base Re-Forecast #### #### #### ### ### ### ### ### ### ### ### ### $15 m Next 12 Months $10 m $5 m Actual Base Forecast Actual Re-Forecast Cumulative Base Forecast Cumulative Base Re-Forecast Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 2 2 2 2 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 2 2 2 2 2 2 2 2 2 2 3 3 2 2 2 2 3 3 3 3 3 3 3 4 2 2 2 2 2 2 2 2 2 3 3 3 1 4 4 4 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 4 4 4 4 4 4 1 1 1 1 1 2 2 2 2 2 2 2 1 1 2 2 2 2 2 2 2 3 3 3 1 1 1 1 2 2 2 2 2 2 2 3 1 1 1 1 1 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 2 2 2 Schedule Performance HCFC Replacement Tiger Decommissioning Baku Cond Lines Timber Gas Lift Beachfield Flare GH Platform Removal Marine Vapour Management NE Decommissioning Sun Decommissioning Prep for wells (BD50) NH500 QD Project Risk Management Potential High Consequence Risks (D+) (Held by Projects) ID 1 Incident occurring during Hot Work D 4 2 Collision: Vessel Operations D 4 3 West crane removal: Dropped objects D 3 4 PAU Collision with live plant D 3 5 Loss of control over live plant D 4 6 Incident occurring during Hot Work D 4 7 HLV proximity to platform C 3 8 Dropped module/collision - HLV lifting operations D 3 9 D 3 10 D 4 11 D 2 12 C 2 13 D 4 14 D 4 15 C 3 16 D 4 PDRI PDRI 1PDRI 2PDRI 2iPDRI 3 Target 550 450 300 150 Actual 700 625 330 180 Stage 2 11 Legend Cost Performance (Current Month - Cumulative) Actual / Re-forecast No of Project Stage Stage 1 Stage 3 Stage 4 7 10% Planned No of Months Stage 1 Stage 2 Stage 3 Stage 4 Risk Table Cost ($m) Planned Actual Variance Cost Performance (Year End - Cumulative) Planned Forecast Variance Severity Severity Freq'y Project Stage Freq'y 5 6 Stage 2 F G H Failure of Personnel Transfer System Active Active Active Active Stage 2 Stage 2 Stage 2 Stage 2 Stage 2 Stage 2 Active Active Active Active Active Active Active Active Active Active Cost Performance 0 D E Stage 2 Stage 2 Stage 2 Active Project Title Baku Cond Lines Project Listing Enhanced Power Upgrade Insecure HLV anchoring HLV Loss of Stability: HLV Capsize Active $211.4 $217.7 2.98% A B C Stage 2 Risk Status Variation 9 11 16% Schedule Index Stage 4 Stage 2 Stage 2 Stage 2 Stage 2 Leading Indicators Front End Loading (Stage 2 & Stage 3) Overall Cycle Time (Stage 2 to Stage 4) 13 -11% 7 17% 1 2 3 4 GH Platform Removal GH Platform Removal GH Platform Removal Prep for wells (BD50) Sun Decommissioning Sun Decommissioning 5% 1.15 0.87 8% -20% 0.80 46 51 20 41 54 19 26 21 Overall Cycle Time (Stage 1 to end Stage 4) Cost Performance (Current Month) Cost ($m) Planned Actual Variance $19.5 $16.2 -16.92% Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 $147.6 $141.0 -4.47% Cost ($m) Jun-14 May-14 Jul-14 Aug-14 Sep-14 Leading Indicators Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 BW Gas Separation GS Fire & Gas Project XP900 Accommodations Quad 205 Polymer Project DRAMP Prep for wells (BD50) 7 8 Prep for wells (BD50) HCFC Replacement HCFC Replacement HCFC Replacement Beachfield Flare Beachfield Flare Beachfield Flare Timber Gas Lift Risk Title Primary barrier against gas-lift pressure failure: Casing Bursts Dredging: Platform stability compromised HLV Loss of Stability: HLV Capsize Failure of Personnel Transfer System E-W Crane move: DroppedObjects $211 $218 $ m Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 BaseLine Forecast $ 14.6 m $ 14.6 m $ 14.6 m $ 15.1 m $ 15.1 m $ 15.1 m $ 19.5 m $ 19.5 m $ 19.5 m $ 21.3 m $ 21.3 m $ 21.3 m Actual/Re-Forecast $ 15.6 m $ 13.4 m $ 12.1 m $ 16.5 m $ 15.3 m $ 19.4 m $ 15.9 m $ 16.6 m $ 16.2 m $ 24.0 m $ 25.1 m $ 27.6 m Cumulative Base Forecast $ 14.6 m $ 29.2 m $ 43.8 m $ 58.9 m $ 74.0 m $ 89.2 m $ 108.6 m $ 128.1 m $ 147.6 m $ 168.9 m $ 190.1 m $ 211.4 m Cumulative Actual/Re-Forecast $ 15.6 m $ 29.0 m $ 41.1 m $ 57.5 m $ 72.9 m $ 92.2 m $ 108.2 m $ 124.8 m $ 141.0 m $ 165.0 m $ 190.1 m $ 217.7 m PDRI 1 PDRI 2 PDRI 2i PDRI 3 800 700 600 500 400 300 200 100 0 Actual 700 625 330 180 Target 550 450 300 150 Score Project Definition Rating Index (PDRI) 4 1 2 5 6 7 8 9 11 3 10 12 13 14 16 15
- 17. 17 Implementation Report-FinalProducts Three documents: • IR - Implementation Report • RS - Research Summary • RR - Research Report Reference: https://www.construction-institute.org/scriptcontent/index.cfm
- 18. 18 Dissertation ProjectPortfolio Formation Goals: • Alignment with organizational goals • Portfolio Balance (project types, risks, and markets) • Maximize the value of portfolio • Choose the optimal next project
- 19. 19 Decision-Making Methods Decision Analysis Methods Single Criterion Decision Making Decision Making Groups Multi-Criteria Decision Making (MCDM) Influence Diagram (ID) Decision Tree (DT) Multiple Objective Decision Making (MODM) Multiple Attribute Decision Making (MADM) PROMETHEE ELECTRE Multiple Attribute Utility Theory (MAUT) Analytical Hierarchy Process (AHP) Benefit-Cost Analysis Elementary Methods Pros and Cons Analysis Maximin and Maximax Methods Conjunctive and Disjunctive Methods Lexicographic Method Outranking Methods Simple Multi- Attribute Rating Technique (SMART)
- 20. 20 PROMETHEE PreferenceRanking Organization METHod for the Enrichment of Evaluations http://www.promethee-gaia.net/software.html
- 21. 21 Example 12 3 4 5 6 Price ($) Fuel Consumption (mpg) Power (hp) Guarantee Period (yrs) Trunk Volume (ft3) Finance Rate (%) 1 Ford Focus 18,615 27 160 3 13.2 2.90 2 Toyota Corolla 19,700 29 132 3 13 3.86 3 Honda Civic 19,190 30 143 3 12.5 1.90 4 Hyundai Elantra 18,200 28 145 5 14.8 3.90
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Editor's Notes
- #2 I am Reza Masoumi, PhD candidate of construction management. I am the TA of this course and Prof. Eckelman ask me to give you a presentation on my research because he was planning to go to a trip this week. I can not jump into this topic without defining project, program, and then portfolio. So first of all, it is required to get familiar with the meaning of project, program, and portfolio, and how management can influence a project portfolio. Through this presentation, I will talk about the two years research that I was engaged with on managing a portfolio of projects-metrics to measure. This research was supported by the CII (construction industry institute). The organization that connects industries to universities to come up with break through solutions for industry issues. At the end, the project portfolio formation that I am working on for my dissertation will be talked about. And I will show a demo on multicriteria decision making methods to learn how useful these method could be even for day-to-day hard decision making. The method that I will talk about is PROMETHEE, a European based multicriteria decision making method. And You may know that Analytical Hieararchy process (AHP) is the Amercian based method.
- #3 Project based on project management body of knowledge or (PMBOK) is a temporary endeavor undertaken to create a unique product or service. PMBOK is the standard of project management which has been completed over time. It has nine knowledge or management areas which defines generally the processes of different management areas with their inputs and outputs. The processes are general because it is not applicable to define one process for all the organizations due to different organizational structure.
- #4 Project based on project management body of knowledge or (PMBOK) is a temporary endeavor undertaken to create a unique product or service. PMBOK is the standard of project management which has been completed over time. It has nine knowledge or management areas which defines generally the processes of different management areas with their inputs and outputs. The processes are general because it is not applicable to define one process for all the organizations due to different organizational structure.
- #5 When you hear the word project, what types of projects come up into your mind. Totally based on the Construction Industry Institute or in summary CII definition, there are four various types of business sectors: building, infrastructure, light industry, and heavy industry. Here you see a couple of pictures on different types of projects.
- #6 All project have these characteristics: they are temporary-have start and finish time, unique and unrepeatable-even two similar projects consume different resources, restricted with some criteria such as time, cost, quality, and environment; with definitive objectives or goals. The goal can be the capacity, improving the quality, customer satisfaction. There is always a trade-off among the important factors in a project. If there are three factors, it is shown with a triangle and four factors make a rectangular. Five makes a heptagonal. Six makes a hexagonal.
- #7 What is a program? Based on PMI definition in PMBOK glossary, Program is a group of related projects that are managed together to obtain benefits. If these projects are managed individually the benefits can not be obtained. This is the standard for program management by PMI. And the figure shows that program includes projects and other programs.
- #8 Project portfolio is a collection of projects and programs which are related or unrelated to each other and are managed together to facilitate effective management of the work to achieve the goals of the organization. It has a standard the same as project and program. The figure shows that a portfolio can include several project, programs, or portfolios. What is management? Management always wants to consume efficient resources to achieve the goals. The resources is not just money, but human resources, equipment, software, computers, and whatever used in doing the work.
- #9 This is the career path for a portfolio manager. Every one should starts from the project engineer position then promote to project manager position according to his/her capabilities in management and communication and finally to portfolio management. A portfolio manager should have all these expertise. Technical, leadership, management, and communication.
- #10 My research title was … which was supported by CII.
- #11 We were a team of 17 organizations, 9 owners, 8 contractors, in different industry sectors and three universities which our university was the principal on this research and Prof. Touran was the principal investigator of this research.
- #12 The research on managing a portfolio of projects followed three goals. Understanding current problems in portfolio management, identifying tools, techniques, and practices which are being used by organizations in portfolio management and introduce these useful practices to other organizations to improve their portfolio management.
- #13 To achieve the three goals, team decided about the research methodology which includes three stages, Collect Data, Analyze Data, and Develop Tool. The research methodology was covered in three stage. The first stage is collect data includes an online survey, interviews, and case studies. From the organizations responses to the survey questions, we identified 15 organizations who have advance practices within their organizations. And then, based on the interviews, six organizations were selected for further study and the case studies are developed based on interviews with these organizations. Based on the gathered information, we analyze the data to identify any trends in owner and contract organizations and finally prepared the outcome of the research called portfolio management playbook.
- #14 We proposed this four steps process for portfolio performance management. It starts from identifying the KRA, that I will explain in next slide, then selecting appropriate KPIs, collecting data to calculate the KPIs, and eventually evaluate the portfolio performance process. The portfolio performance can be shown graphically in format of a dashboard.
- #15 These are the nine important KRAs that stakeholders are usually interested on.
- #16 And this slide shown the KPIs or metrics to measure the performance of each of the KRAs.
- #17 The metrics or KPIs can be included in a dashboard for visualization. Because managers at the top organizational level usually interested to visually hhavve some interoperations of the their projects portfolios. When we talk about dashboard the first thing that come to mind is the car dashboard. Actually the dashboard for visualizing portfolio performance originated from the car dashboard which includes several indicator in different style to show the performance of the car. Here is an actual example of a portfolio dashboard which includes bar chart, color coded tables, and bubble graphs. Usually dashboards include three color-coded traffic light or dial. Red shows the bad situation, green good, and yellow is somewhere between.
- #18 These are the output document of our research. CII researches usually have three various documents including IR or …, RS or …, and RR or … . The cover page of IR and RS are shown here. The RR has not finalized yet and we are working on it.
- #19 What I am working on for my dissertation is about project portfolio formation. Portfolio formation follows three goals, …
- #20 This the hierarchy of decision making methods. Some of the methods are easy and some complicated. You know about the decision tree under single criterion decision making and maybe linear programming under multiple objective decision making. What I am using in my dissertation is PROMETHEE and AHP. One of the methods is European and the other one is American invested method. I am going to use the PROMETHEE method in an example because it has a software that is available for academic purposes free of charge.
- #21 PROMETHEE stands for ….This is the interface of the software.
- #22 All the multi-criteria decision making problems include several criteria and alternatives. Having more than two criteria with various ideal values, I mean some the criteria are interested to be maximized and other minimized make the decision making problem hard task. Using the multiple criteria decision making methods helps to optimize the decision making problem. In this example, we have four types of cars and six criteria that two of them have minimum ideal value and four maximum.
- #23 If you enter all the criteria for different alternatives, and give a weight to each criterion that here I considered one for all the criteria which is not close to reality, because in reality different criteria have different weight. Any way, based on these information the rank of the four cars can be identified.
- #24 Here is the rank of alternatives. Phi is called net flow value that is the different between phi+ and phi-. phi+ is positive net flow, and phi- is negative net flow. Phi+ shows how well the alternative outrank other alternatives, and phi- shows how the alternatives is outranked by other alternatives. So, the higher the phi+ and the lower the phi- is better.
- #25 The output spreadsheet shows the answers that are similar to the software results. Using @Risk with the Ex-PROMETHEE worksheet helps to probabilistically evaluate the rank of alternatives. These are different types of distribution that you have through this course. These can be used for the input variables to calculate the PDF or CDF of the output variables.
- #26 I used normal distribution for fuel consumption criterion with mean values given in the table and standard deviation 10% of the values of mean values. The outputs are shown on box-whisker plot. It is obvious that within 25-75 percentile, two of the alternatives can different ranks.