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Project Portfolio Management

   Holistic Approach to manage
        Strategic Initiatives


       Anand Subramaniam
“There are four things that hold back human
  progress. Ignorance, stupidity, committees
              and accountants.”

                              - Charles J.C. Lyall




                                                 2
Highlights
   Project Portfolio Management (PPM)
   PPM - Risk vs. Value
   PPM vs. Project Management
   PPM - Importance of Strategy Alignment
   PPM - Strategy Evaluation Process
   PPM Life Cycle
   PPM - Screening Process
   PPM - Selection Process
   Change Management Approach
   Link - PPM, Governance & Project Office
   PPM - Implementation
   PPM - Software Solution Vendors
   PPM - Reference Materials

                                              3
Project Portfolio Management (PPM)
What is PPM?
Corporate          Focus on           Balance Risk      Regulatory          Changing            Project
 Strategy            Value             Vs. Value        Compliance          Priorities         Changes




                                   Ongoing Re-calibration


            Align                     Plan                Execute                 Measure

            Core Operating Processes (Prioritisation, Governance, Monitoring, Resources)



                                               Project
  Optimal                                                         Work Output &            Continuous
                        Net Value             Approvals,
Resource / $$                                                     Performance             Improvement
                       Contribution          Completions &
 Utilisation                                                         Trends              Recommendation
                                             Cancelations

                                                                                                      5
Symptoms calling for PPM…
 Teams overworked /                                                  Seek accurate
                                   Intense competition
  under appreciated                                               estimates based on
                                  internally with regard
                                  to financing / staffing           firm’s history &
                                                                    lessons learned
                                         projects
Rework and “out of
control” costs with
                                                             Many projects are not
 3rd party vendors
                                                            adding “strategic value”
                                      Symptom                 to the organisation
  No prioritisation                      s
    process for                                                 Project benefits not
 business requests                                              captured or tracked

                                            Excessive
Too many                                      project
                       No tracking                               Frequent change of
  small                                     delays due
                            or                                    status of projects
 projects                                    to lack of
                      accountabilit                              (active – on-hold –
underway                                    resources
                      y for project                               priority – on-hold)
                        success

                                                                                        6
PPM – Hub & Spoke
                                             Project
                 Business                   Control &
                Performanc                                     Opportunity
Resource                                   Performanc
                     e                                         Managemen
Allocation                                      e
                                                                   t




                               Project
                                                         Budget &
     Manage                  Selection &                  Cash
      Risk                    Portfolio                    Flow
                             Management



  Scope
                                                               Demand
 Change /
              Resource                      Strategic          (Internal
  Cost
              Availabilit                   & Tactical         Projects)
 Control
                  y                           Plans




                                                                           7
PPM - Assumptions
   Roadmaps in place
   Technology transfer defined
   Strategic business drivers identified
   Key decision-making tools selected
   Cross functional teams work together
   Organisation Vision and Mission known
   Project portfolio is strategically balanced
   Project Management process are mature
   Knowledge Management process in place
   Process in place to handle resource utilisation
   Governance in place to monitor and kill projects
   Resource capabilities data base current and up to-date
   PPM process, driven Top Down by Senior Management
   Project Managers and functional managers have no control
   Detailed project reporting in place to support decision analysis
   Excellent communication, regular training and post investment reviews


                                                                            8
PPM – Best Practice

              Strategy to                Using
               prioritise                cross-
              and screen               functional
               projects                  teams


                                                    Responsiv
                                                       e to
                              PPM                    external
Customer
orientation                   Best                   environ-
                                                      mental
                            Practice                 change



              Tough Go/
                                        Allocate
                 Kill
                                         scarce
               decision
                                       resources
                points



                                                            9
PPM - Benefits
Justifies killing projects that do not       Improves communication and supports
support organisation strategy                agreement on project goals

Balances risk across                                        Builds discipline into
all projects                                                project selection process

 Links project selection                                    GRB & PMO jointly
                                         Benefits
 to strategic metrics                                       execute PPM Processes

Prioritises project                                              Provides executive
                                 Allocates                       oversight of the firm
proposals across a               resources to
common set of                    projects that
criteria, rather than            align with         Provides the structure/process
on politics or emotion           strategic          for project portfolio governance
                                 direction          & avoids duplication / waste

                                                                                  10
PPM - Goals
   Helps the organisation to make the best use of its resources

   Enables the removal of low value projects from the portfolio

   Ensures that all new and existing projects are aligned with the organisation’s
    mission, goals and objectives

   Produces and maintains a comprehensive listing of all projects which the
    organisation is undertaking

   Develops a “bigger picture view” and a deep understanding of the project
    collection as a whole

   Creates an “objective” methodology for identifying, ranking, prioritising and
    selecting new projects

   Ensures that a healthy balance across different types of projects with different
    cost, schedule, complexity and risk profiles is maintained


                                                                                       11
PPM - Essentials

                                   Project
                                Prioritisation

       ROI / Value                                             Capacity
        Forecast                                               Planning


                                  Project
                                 Portfolio
 Opportunity                    Management                           Work
Identification                                                     Scheduling



                      Project                    Program/Project
                  Performance &                  Management &
                 Value Assessment                   Execution



                                                                                12
PPM – Challenges

                           Resource
                          Conflicts and
Implementation                                    Organisation
                          Multitasking
     Gap                                            Politics
                             Multi-project
     The lack of                                Project selection is
understanding and            environment
   consensus on             creates inter-          based on the
strategy among top           dependency         persuasiveness and
 management and            relationships of       power of people
    middle-level          shared resources         advocating the
     (functional)        which results in the         projects
   managers who          starting, stopping,
   independently            and restarting
   implement the               projects.
       strategy.




                                                                   13
PPM - Limitation
   Adds another layer of bureaucracy to organisations

   Difficult to perform in environments marked by frequent change

   Tendency to rely too heavily on PPM tools / software for decisions

   May cause conflict, confusion and stress (eg. due to shifting priorities and
    resources)

   Could require a “cultural change” in the organisation (overcoming resistance
    by some managers and getting sustained commitment by senior
    management)

   Good project selection requires large amounts of quality information which
    is often not always available at the beginning of pre-selection stage

   Cannot be effective without well-documented project plans, accurate
    estimates of resource requirements and resources consumed

                                                                                   14
PPM - Recap

                                   Activities                   Dimensions
      Objectives

                            • Initiative categorisation   •   Financial, Customer,
• Maximising portfolio
                                                              Internal, Innovation
  value
                            • Project / programme             (BSC)
• Linking portfolio to        selection
                                                          •   Renewal,
  strategy
                            • Monitoring and review           transformation,
                                                              process
• Balancing the portfolio
                                                              improvement,
                                                              experiment

                                                          •   Strategy, response,
                                                              opportunity, external



                                                                                 15
PPM – Risk vs. Value
PPM - Value


                  Project
                 Portfolio
                Management




  Project          Value       Change
Management                   Management




                                          17
PPM – Balancing Risk Vs. Value

   Do the projects contribute                               Alignment
    to the strategic goals of
          the company?




Is this project doable                Value                              Is the company
                                                                        receptive to and do
    with the current                                                        they invest in
       resources?                Is the value received                    something New?
                                worth the effort / risk ?

      Fit                                                                     Innovation


                                                                                       18
PPM – Value in terms of Resources
                                                               Alignment
    •   Determine & align with strategy
    •   Decide on evaluation criteria
    •   Select prioritised projects               Executive
    •   Allocate funds                           Management
                                                                           • Re-scope
•       Check resource needs                                               • Re-classify
                                                                           • Re-assign resources
•       Cull projects not aligned
                                                                           • Re-design (merge)
•       Define monitoring process                 Functional               • Re-move (eliminate a
•       Impact on existing projects              Management                  cancelled project)
•       Re-evaluate new projects &                                         • Re-schedule (delay, move to
        cross project dependencies                                           pipeline)


• Project execution
• Performance reporting
• Project information
  archived & used to                      Project Management & Teams
  improve the process

                   Fit                                                                Innovation


                                                                                                   19
PPM vs. Project Management
Project / Portfolio Oriented Business


          Project
                                            Portfolio
• Effectiveness not efficiency
• Projects are used to achieve     • A means of selecting projects
  organisations’ strategic goals   • Approach to project selection
• Projects are the primary           based on investment when
  vehicle for organisation           compared to returns
  change                           • Returns are not necessarily
• Need for multiple projects to      financial
  achieve strategic goals          • Closing projects that are no
                                     longer strategically important




                                                                      21
Project Portfolio Vs. Project Management


          PPM                                    PM
“Doing the Right Projects”             “Doing Projects Right”

     Alignment of projects with         Consistent application of best
     organisational objectives         practices for improved efficiency
                                         and effectiveness in project
    Reduced risk of achieving              oversight and execution
   objectives through consistent
 oversight of multiple opportunities       Improved communication
                                       between stakeholders resulting in
  Financial effectiveness through       higher rate of acceptance and
 the controlled allocation of scarce          client satisfaction
   resources to projects based on
         strategic priorities           Alignment and coordination of
                                            interdependent projects



                                                                           22
Project & PPM – Triple Constraints
            Scope                        Goals




                                        Project
            Project                     Portfolio
          Managemen                    Managemen
               t                            t



                                                    Process
Time                  Cost   Culture
                                                    Maturity

                                                        23
PPM – Importance of Strategy
        Alignment
Importance of Alignment

Align             Execute                Measure


 Doing The            Doing Things           Exploit What
Right Things             Right                 We Did




  Holistic Approach to manage Strategic Initiatives


                                                            25
# 1 Metric to Evaluate Project Success




Source – Gartner Inc. 2008


                                      26
PPM - Strategy Evaluation Process
Strategy Management - Planning Levels

                                                   Mission
                               Identify            Objectives


                                           Mission      Business
            Company Strategy              Objectives     Units


                                  PRODUCT STRATEGY
     Business Strategy        • Alliance            • Technical    Categories
                              • Organisation          Competencies
                              • Strategic Principles

Portfolio Strategy          PRODUCT PORTFOLIO STRATEGY
                         • Project Mix                                           Brands
                                                  • Resource Levels
                         • Milestones

Project                   PRODUCT DEVELOPMENT STRATEGY
Strategy             • Resource Allocation                      • Timing                  Projects
                     • Technical Approaches                     • Deliverables


                                                                                                     28
PPM - Types


            Compliance
             Projects



Strategic                Operational
Projects                  Projects



                                       29
PPM - Process

                                                    Review
                                                   / Revise
                                                   Mission

                                           Inter              Exte
                                            -nal              r-nal

Mission, Goals, Objectives, Culture,
                                               New Goals &
Structure and Infrastructure,
                                                Objectives
Processes, Environment etc.
                                                                      Comprehensive listing of all active,
                                           Portfolio of Strategic     on-hold and proposed projects at all
                                                 Choices              levels of the organisation.

Multiple Assessment Criteria, Quali-             Strategy
tative & Quantitative Tools, Software         Implementation
Applications etc.
                                                                      Maintain “balance” of projects to
                                             Project Selection        create “optimal mix” based on their
                                                                      cost, return, risk, schedule etc..
Periodically review and modify port-
folio by retaining, modifying and
(when necessary) killing projects.                 Projects


                                                                                                      30
Link – PPM Process & Firm’s Strategy

                                Review
                               / Revise
                               Mission

                       Inter              Exte




                                                  Ch
Strategic Management    -nal              r-nal




                                                    an
                                                      eg
                           New Goals &




                                                       M
                                                        an
                            Objectives




                                                           ag
                                                              em
Portfolio Management   Portfolio of Strategic




                                                              en
                             Choices




                                                                 t Ap
                                                                     pr
                                                                     oa
                             Strategy




                                                                       ch
                          Implementation
Program Management`
                         Project Selection


Project Management             Projects


                                                                            31
PPM – Strategy Evaluation Process

                        Strategic
                       Management




                                               Ch
                                                 an
          Strategy /




                                                    g
                                   Strategy




                                                   e
           Portfolio
                                   Translate




                                                    M
          Reevaluate




                                                     an
                                                        ag
                       Portfolio




                                                           em
                        Mngt




                                                           en
                                                              t
           Portfolio               Portfolio




                                                                Ap
            Mngt                   Planning




                                                                  pr
                                                                  oa
                                                                    ch
               Program Management


                Project Management


                                                                         32
Recap - Portfolio Planning
 Creation                      Selection                 Sequencing

  Driven by
  strategy
                               Desirability

                    How much value will the initiative       In the
In response to
                       bring to the organisation?          context of
    an issue
                                                            all other
                                                            projects,
                               Feasibility                when is the
An identified
                                                          best time to
opportunity          Is the organisation capable of
                                                          deliver this
                      successfully delivering this
                                                            project?
                               initiative?
  Driven by
   external
   causes


                                                                         33
Eg. Link Strategies to Potential Projects




                                        34
PPM Life Cycle
PPM - Engagement Model

             Initial                                 Business
Tools      Assessment
                               Prioritisation
                                                     Strategy
                                                                      Innovation          Re Prioritise




Process      Engage            Prioritise             Plan              Build              Sustain



                                                                                           Sustain phase
                               Diagnosis and
                                                                                                often
            Relationship         prioritisation
                                                                        Capability        accompanied by
           building phase     phase to assess
                                                      Strategic        development       periodic diagnosis
          during which the     the company's
                                                   planning based       phase with        audits to assess
           capabilities and     capabilities in
                                                     on in-depth     targeted use of     any changes and
           opportunities of     relation to its
                                                   assessment of    tools for business   adjust the nature
          the company are     priorities and the
                                                    the company       areas requiring    of the intervention
             preliminary        environment
                                                                         attention         as appropriate;
             assessed          within which it
                                                                                            supported by
                                  operates
                                                                                              mentoring



                                                                                                        36
Screen - Ideas, Opportunities, Needs
                                                                                                         Develop /
 Strategise      Capture           Formulate          Evaluate       Define           Promote              Test




                                              Fuzzy Front End




Analyse the    Brainstorm &       Business case      Review and   Build project &    Review projects   Design for X
business       capture            rationale/         score        assign team        Select            Prototypes and
Set business   Research &         justification      Portfolio    Design,            project(s)        market testing
drivers        initial proof of   Cost benefit       analysis     marketing, legal   Assign budget     Manufacturing
Establish a    concept            assessment         Proof of     Customer           & time horizon    MRO
strategy       Publish & share    Reviews & rating   concept      feedback           Approve &         Reuse, recycle
                                                     funding                         promote


                                                                                                                37
PPM – Life Cycle Process


         Gates




                                                                         Test & Validate
                                 Business Case




                                                      Development




                                                                                                         Relaisation
                  Scoping




                                                                                                Launch



                                                                                                          Benefit
Idea /
Need




            G1              G2                   G3                 G4                     G5




         Stages




             Portfolio Management                                   Project Management


                                                                                                         38
PPM - Gates
 Gate 1 - Initial Screening
   Does the idea warrant any further work?
 Gate 2 – Second Screening
   Does the idea justify extensive analysis?
 Gate 3 – Business Case Decision
   Is the business case sound?
 Gate 4 – Post Development Review
   Is the project ready for pilot?
 Gate 5 – Pre-commercialise Business Analysis
   Is the initiative ready to support the market?


                                                     39
PPM - Stages
 Stage 1 – Idea / Need / Opportunity
    It fosters idea generation
    A perpetual process of crafting new products, processes & services
    It integrates partners, geographies, technologies etc

 Stage 2 - Scoping
    Quick investigation and shaping of the concept / definition
    Scope definition brings together cross functional team
    Litmus test - to ensure the new potential value and to deliver on the
     promise

 Stage 3 - Build the Business Case
    Goes into detailed analysis where factual data is collected (costs,
     profitability, service levels)
    Utilises advanced tools to model or simulate scenarios



                                                                             40
PPM – Stages (Contd.)
 Stage 4 - Development
    Detailed process mapping & assigning the correct metrics
    Establish the new or altered relationships

 Stage 5 - Testing and Validation
    Undertakes pilot testing and verifies details with the business case
    Provides the feedback loop and lessons, to minimise risks

 Stage 6 – Launch
    Implements changes and fine tune to support full market demand
    Contingency scenarios activated in the event of a significant disruption

 Stage 7 – Benefit Realisation
    Examine benefits realised or not
    Use lesson leant for the next round of product or services innovation



                                                                                41
PPM - Screening Process
PPM – Functions
   Screen Ideas & Opportunities
   Select Projects for the Portfolio
   Manage the Project Pipeline
   Monitor Approved Projects for possible de-
    selection, termination, or delay.




                                            43
Project Screening Process

                          Project Proposal Idea



                                                      Review Strategic Fit /
                             Data Collection
                                                      ROI / Payback / Risk


                         Self Evaluate Project by
   Cancel Project
                                 Criteria


                         Project Team Evaluate          Request for more
Periodic Assessment
                          Proposal & Review               information
     of Priorities
                            Portfolio & Risk

                        Reject          Accept      Assign Priority, Resources,
                                                        Project Manager &
Hold / Reject Project
                                                        Evaluate Progress


                                                                           44
Eg. Project Screening Matrix




                               45
Project Portfolio - Matrix Dimensions
High

                      Bread & Butter                           Pearl
 Technical Success



                                                       (revolutionary commercial
                     (evolutionary improvements to
                                                         advances using proven
                     current products and services)
                                                          technical advances)



                      White Elephant                          Oyster
                        (Projects that at one time    (technological breakthroughs
                       showed promise but are no      with high commercial payoffs)
                              longer viable)


 Low
                                       Reward (NPV)                                   High

                                                                                             46
PPM - Selection Process
PPM - Selection Model
     Project                                Source, Solicit     Rank Proposal &
                     Model Selection                                                 Manage Portfolio
  Classification                           Project Proposal      Select Projects


 Deciding how        Applying a           Within the          Prioritising        Senior
  well a strategic     weighted scoring      organisation         requires             management
  or operations        model to align                             discipline,          input
  project fits the     projects with the    Request for          accountability,
  organisation’s       organisation’s        proposal (RFP)       responsibility,     The priority team
  strategy             strategic goals.      from external        constraints,         (project office)
                                             sources              reduced              responsibilities
                      Ensure the            (contractors and     flexibility, and
                       model selected        vendors)             loss of power
                       1. reduces the
                       number of
                       wasteful projects
                       2. helps identify
                       proper goals for
                       projects and
                       3. why a project
                       is selected


                                                                                                   48
Selection Process – Detailed Steps
                                    Resource
  Periodic         Risk                                Strategy
                                   Availability &                        Balancing
Measure-ment    Assessment                            Alignment
                                    Allocation

 Schedule      Risk              Availability     Based on         Balancing
                 Identification     (In-house,        Strategy Plan     different
 Cost                              Outsource)        parameters        types of
                Quantitative /                       for project       projects by :-
 Resources      Qualitative       Allocation        selection –
                 Assessment         (Committed,       identifies       purpose and
 Scope                             soft              needs /           benefit
                Risk               allocation)       opportunities
                 Response                                              opportunity,
                 Planning          Optimal or       Set resource,     benefits and
                                    acceptable        budgets need      risk
                Risk               size of the
                 Monitoring &       project          Set Risk         purpose and
                 Control            pipeline          posture           benefit

                                                                                  49
PPM – Selection Criteria

   Financial                        Non –
                                  Financial
       Payback

  Net Present Value             Projects of Strategic
        (NPV)                  importance to the firm.

Internal Rate of Return
         (IRR)



  Several weighted selection criteria could be used to
              evaluate project proposals

                                                         50
PPM Selection Model - Checklist
Approach              Will we build or buy?
Sponsorship           Who is the project sponsor?
Success metrics       How will we measure success?
Finance               What is estimated cost of the project?
Driver                What business problem does the project solve?
Training              Will staff training be required?
Strategy alignment    What specific organisation does this project align with?
Risk                  What is the impact of not doing this project?
                      What is the project risk to the organisation?
Benefits              What is the value of the project to this organisation?
Organisation          Is the organisation culture right for this type of project?
culture
Portfolio             How does the project interact / link with current projects?

                                                                                     51
Pipeline Management
Project Status &   Evaluate against        Variance          Stage Gate –
   Pipeline            Critical           Reporting           Go / No Go
                     Parameters

Schedule           Earned Value       Reporting items      Applying stage
                   Analysis           outside of           gate techniques
Cost                                  targets / limits /   for continuation or
                   Milestone          thresholds           termination
Resources          Analysis                                decisions
                                      Identify
Scope              Dashboard Charts   consequences         Set milestones
                   (Set Criteria &    and action items     (phases) & test
                   Tolerances)        for follow through   against criteria

                                                           Make Go/No Go
                                                           decisions

                                                                              52
Eg. Project Selection - Criteria
                             Human and Physical        Project’s “Strategic Fit”
Project’s “Strategic Fit”
                            Resource Requirements


                            Impact on Organisation’s
                              Employees and their
 Environmental Impact            Motivation &          Estimated Cost and Time
                                 Performance



                            Size and Composition of
 Ethical Considerations       Existing Program &
                                                         Complexity and Risk
                                Project Portfolio




Impact on Organisation’s        Organisation’s
                            Experience With Similar         Organisation’s
        Image                                               Competencies
                                   Projects




 Strategic Partnership         Expected Benefits       Temporal Distribution of
       Building                 (Quantitative &         Quantitative Returns
                                  Qualitative)



                                                                             53
Eg. Prioritisation Criteria
                                                         Sample
                                                         Weight

Financial – Economic Cost and Benefit                    0.25

Business Impact – Contribution to Business Performance   0.35

Risk – Likelihood of Success/Failure                     0.25

Architectural fit – Compatibility with Guidelines        0.15


                                                          1.00
Ranking Process

3. Simple Scoring – everyone votes, one to seven (favorable)
4. Case for score is presented – open to debate
5. Use the information at hand

                                                                  54
Eg. Attractiveness Capability Matrix
                         Maximum Project Project
                            Score     A       B
  Attractiveness
  Strategic importance         40     33     25
  Economic reward              40     35     17
  Time to market               10      5      7
  Robustness                    5      3      5
  Indirect benefits             5      5      5
  Total                       100     81     59

  Capability
  Validity of the idea         30     19     24
  Adequacy of resources        25     20     19
  Production/market skills     25     21     12
  Readiness to scale-up        10     10     10
  Quality of the proposal      10      7      5
  Total                       100     77     70


                                                   55
Eg. Risk Exposure




                    56
Change Management Approach
Change Process
                                     Change Management Process
Change Proposition       Business Definition       Management Infrastructure         Execution and Control

Develop Change        Focus on Priorities          Ensure Benefits are obtained   Programme Management
Proposition                                                                       (Solution Delivery)
                      • Business Level             Embed control mechanisms
• Business Strategy     Objectives                                                Stakeholder understand :
• Market Drivers      • Business Level View of     • Benefits Management
• Regulatory            Portfolios Risk profile    • Portfolio Prioritisation     • Business Priorities
                      • Benefits Management        • Risk Management              • Risk Management
                        Process across portfolio                                  • Project Management Office
                                                   Business owned & managed.      • Benefits Management
                                                   Enable decision making         • Project Portfolio Management
                                                                                  • Solution Delivery

                                                                                  Enable decision making




     Develop                    Focus                          Ensure                         Project
      Change                      on                         Benefits are                   Execution
    Proposition                Priorities                     Driven Out                    and Control




                                                                                                             58
Link – PPM, Governance & Project
             Office
PPM – Conceptual Overview

Strategic                   Governanc
Business                    e Process
Planning

                                                          Project
               Continuous
              Improvement                               Management
                                                           Office
                               Business
                               Process
                             Reengineering




              Project
                                             Maturity
             Portfolio                       Models
                                                          Projects
            Management
                                                                     60
PPM Alignment – Strategy, GRB & PMO




                                                                                      Feedback
Direction




             Governance                                             Governance
                                          Enterprise
               Review                                                 Review
               Board                       Strategy                   Board

                                          Project
                                         Portfolio
                                        Management
            Prioritisation                                          Prioritisation
                                           Project
                                         Management
            Program /                       Office
             Project                                                      QA / QC
            Manager

                             Project Status Reports, Time Sheets,
                                Expenses, Project Schedules
            Feedback                                                     Feedback

                                                                                     61
PPM – GRB & PMO

          GRB                                        PMO
• Policy Centre                            • Information Center
• Make Decisions                           • Recommends
• Reviews and probes data                  • Prioritises projects
  and recommendations                      • Maintains data on resources
• Interprets strategic plans and           • Evaluates project performance
  initiatives                              • Supports development of
• Provides enterprise budget                 project proposals
  and resource parameters                  • Builds database of potential
• Responsible for the final                  and current projects
  selection decisions                      • Recommends projects for
                                             selection, de-selection, or
                                             delay.
 Governance Review Board (GRB) & Project Management Office (PMO) jointly
        execute the Project Portfolio Management (PPM) Processes

                                                                             62
PPM - Implementation
PPM – Implementation Challenges
   Resistance to change
   Isolated groups avoiding processes
   Lack of accountability and follow through
   Resistance to transparency and tracking
   No rigor around structured documentation
   Business’ reluctance to committing to ROI




                                                64
PPM – Critical Success Factors
   Train, Train, Train
   Dedicated PMO Staff
   Commitment – C Level to All Levels
   Focus on business Benefits Realisation
   Consistency of the message at all levels
   Simultaneous communication at all levels
   Prioritising and managing project initiatives
   Communicate, Communicate, Communicate
   Experienced Leader that can prevent pitfalls
   Linking priorities to the current business objectives
   Developing an effective framework for managing a PPM Process




                                                               65
Strategy Alignment - Activities
 Ensure PPM is in-sync with strategy
 Develop long-term technology capability
  roadmaps
 Manage the business requests queue
     Business Case Definition
     Costs
     Resources
     Classification
     Solution Evaluation
     Feasibility Study
 Identify and manage stakeholder expectation

                                                66
Strategy Alignment - Deliverables
   Scope
   PPM Charter
   ROI Analysis
   Business Case
   Roles & Responsibilities
   Opportunity Assessment
   Project Screening, Selection & Scoring


                                             67
PPM – Optimisation Activities
 Rank & prioritise based on value
 Balance portfolio – risk vs. value
 Matching bottom-up and top-down
 Overall resource capacity vs. demand
  analysis
 Available budget vs. funding needs
  analysis


                                         68
Benefit Realisation
   Benefits
  Identified
                                                             Project
                                                             Management
                                                             Office
Responsibility
   Matrix
                     Key                    Benefit Key
                  Measurement                Success
   Business         Criteria                  Criteria     Benefit
                                                                            Benefits
   Case                                                   Delivery
                                                                            Delivered
                                                          Execution


                                 Benefit
 Progress
                                Ownership
 Monitoring
                                                               Risk
                                                               Management
Communication
    Plan



                                                                               69
PPM – Management Activities
 Time & budget tracking
 Project issues mitigation forums
 Resource planning and allocation
 Project governance – stage gated funding
  and approval
 Standardised project delivery methodology
 Ongoing portfolio re-calibration &
  oversight

                                         70
PPM – Management Reporting
   Distribution of effort
   On-time delivery rate
   Resource utilisation rate
   Project benefits realisation
   Project estimated vs. actual hours
   Distribution of effort / dollars by strategy



                                                   71
PPM – Software Solution Vendors
PPM - Software Solution Providers




                                    73
PPM – Reference
PPM - Books




              75
“You will never stub your toe standing still.
 The faster you go, the more chance there
    is of stubbing your toe, but the more
  chance you have of getting somewhere.”

                               - Charles Kettering




                                                 76
Good Luck
http://www.linkedin.com/in/anandsubramaniam




                                              77

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Project Portfolio Management

  • 1. Project Portfolio Management Holistic Approach to manage Strategic Initiatives Anand Subramaniam
  • 2. “There are four things that hold back human progress. Ignorance, stupidity, committees and accountants.” - Charles J.C. Lyall 2
  • 3. Highlights  Project Portfolio Management (PPM)  PPM - Risk vs. Value  PPM vs. Project Management  PPM - Importance of Strategy Alignment  PPM - Strategy Evaluation Process  PPM Life Cycle  PPM - Screening Process  PPM - Selection Process  Change Management Approach  Link - PPM, Governance & Project Office  PPM - Implementation  PPM - Software Solution Vendors  PPM - Reference Materials 3
  • 5. What is PPM? Corporate Focus on Balance Risk Regulatory Changing Project Strategy Value Vs. Value Compliance Priorities Changes Ongoing Re-calibration Align Plan Execute Measure Core Operating Processes (Prioritisation, Governance, Monitoring, Resources) Project Optimal Work Output & Continuous Net Value Approvals, Resource / $$ Performance Improvement Contribution Completions & Utilisation Trends Recommendation Cancelations 5
  • 6. Symptoms calling for PPM… Teams overworked / Seek accurate Intense competition under appreciated estimates based on internally with regard to financing / staffing firm’s history & lessons learned projects Rework and “out of control” costs with Many projects are not 3rd party vendors adding “strategic value” Symptom to the organisation No prioritisation s process for Project benefits not business requests captured or tracked Excessive Too many project No tracking Frequent change of small delays due or status of projects projects to lack of accountabilit (active – on-hold – underway resources y for project priority – on-hold) success 6
  • 7. PPM – Hub & Spoke Project Business Control & Performanc Opportunity Resource Performanc e Managemen Allocation e t Project Budget & Manage Selection & Cash Risk Portfolio Flow Management Scope Demand Change / Resource Strategic (Internal Cost Availabilit & Tactical Projects) Control y Plans 7
  • 8. PPM - Assumptions  Roadmaps in place  Technology transfer defined  Strategic business drivers identified  Key decision-making tools selected  Cross functional teams work together  Organisation Vision and Mission known  Project portfolio is strategically balanced  Project Management process are mature  Knowledge Management process in place  Process in place to handle resource utilisation  Governance in place to monitor and kill projects  Resource capabilities data base current and up to-date  PPM process, driven Top Down by Senior Management  Project Managers and functional managers have no control  Detailed project reporting in place to support decision analysis  Excellent communication, regular training and post investment reviews 8
  • 9. PPM – Best Practice Strategy to Using prioritise cross- and screen functional projects teams Responsiv e to PPM external Customer orientation Best environ- mental Practice change Tough Go/ Allocate Kill scarce decision resources points 9
  • 10. PPM - Benefits Justifies killing projects that do not Improves communication and supports support organisation strategy agreement on project goals Balances risk across Builds discipline into all projects project selection process Links project selection GRB & PMO jointly Benefits to strategic metrics execute PPM Processes Prioritises project Provides executive Allocates oversight of the firm proposals across a resources to common set of projects that criteria, rather than align with Provides the structure/process on politics or emotion strategic for project portfolio governance direction & avoids duplication / waste 10
  • 11. PPM - Goals  Helps the organisation to make the best use of its resources  Enables the removal of low value projects from the portfolio  Ensures that all new and existing projects are aligned with the organisation’s mission, goals and objectives  Produces and maintains a comprehensive listing of all projects which the organisation is undertaking  Develops a “bigger picture view” and a deep understanding of the project collection as a whole  Creates an “objective” methodology for identifying, ranking, prioritising and selecting new projects  Ensures that a healthy balance across different types of projects with different cost, schedule, complexity and risk profiles is maintained 11
  • 12. PPM - Essentials Project Prioritisation ROI / Value Capacity Forecast Planning Project Portfolio Opportunity Management Work Identification Scheduling Project Program/Project Performance & Management & Value Assessment Execution 12
  • 13. PPM – Challenges Resource Conflicts and Implementation Organisation Multitasking Gap Politics Multi-project The lack of Project selection is understanding and environment consensus on creates inter- based on the strategy among top dependency persuasiveness and management and relationships of power of people middle-level shared resources advocating the (functional) which results in the projects managers who starting, stopping, independently and restarting implement the projects. strategy. 13
  • 14. PPM - Limitation  Adds another layer of bureaucracy to organisations  Difficult to perform in environments marked by frequent change  Tendency to rely too heavily on PPM tools / software for decisions  May cause conflict, confusion and stress (eg. due to shifting priorities and resources)  Could require a “cultural change” in the organisation (overcoming resistance by some managers and getting sustained commitment by senior management)  Good project selection requires large amounts of quality information which is often not always available at the beginning of pre-selection stage  Cannot be effective without well-documented project plans, accurate estimates of resource requirements and resources consumed 14
  • 15. PPM - Recap Activities Dimensions Objectives • Initiative categorisation • Financial, Customer, • Maximising portfolio Internal, Innovation value • Project / programme (BSC) • Linking portfolio to selection • Renewal, strategy • Monitoring and review transformation, process • Balancing the portfolio improvement, experiment • Strategy, response, opportunity, external 15
  • 16. PPM – Risk vs. Value
  • 17. PPM - Value Project Portfolio Management Project Value Change Management Management 17
  • 18. PPM – Balancing Risk Vs. Value Do the projects contribute Alignment to the strategic goals of the company? Is this project doable Value Is the company receptive to and do with the current they invest in resources? Is the value received something New? worth the effort / risk ? Fit Innovation 18
  • 19. PPM – Value in terms of Resources Alignment • Determine & align with strategy • Decide on evaluation criteria • Select prioritised projects Executive • Allocate funds Management • Re-scope • Check resource needs • Re-classify • Re-assign resources • Cull projects not aligned • Re-design (merge) • Define monitoring process Functional • Re-move (eliminate a • Impact on existing projects Management cancelled project) • Re-evaluate new projects & • Re-schedule (delay, move to cross project dependencies pipeline) • Project execution • Performance reporting • Project information archived & used to Project Management & Teams improve the process Fit Innovation 19
  • 20. PPM vs. Project Management
  • 21. Project / Portfolio Oriented Business Project Portfolio • Effectiveness not efficiency • Projects are used to achieve • A means of selecting projects organisations’ strategic goals • Approach to project selection • Projects are the primary based on investment when vehicle for organisation compared to returns change • Returns are not necessarily • Need for multiple projects to financial achieve strategic goals • Closing projects that are no longer strategically important 21
  • 22. Project Portfolio Vs. Project Management PPM PM “Doing the Right Projects” “Doing Projects Right” Alignment of projects with Consistent application of best organisational objectives practices for improved efficiency and effectiveness in project Reduced risk of achieving oversight and execution objectives through consistent oversight of multiple opportunities Improved communication between stakeholders resulting in Financial effectiveness through higher rate of acceptance and the controlled allocation of scarce client satisfaction resources to projects based on strategic priorities Alignment and coordination of interdependent projects 22
  • 23. Project & PPM – Triple Constraints Scope Goals Project Project Portfolio Managemen Managemen t t Process Time Cost Culture Maturity 23
  • 24. PPM – Importance of Strategy Alignment
  • 25. Importance of Alignment Align Execute Measure Doing The Doing Things Exploit What Right Things Right We Did Holistic Approach to manage Strategic Initiatives 25
  • 26. # 1 Metric to Evaluate Project Success Source – Gartner Inc. 2008 26
  • 27. PPM - Strategy Evaluation Process
  • 28. Strategy Management - Planning Levels Mission Identify Objectives Mission Business Company Strategy Objectives Units PRODUCT STRATEGY Business Strategy • Alliance • Technical Categories • Organisation Competencies • Strategic Principles Portfolio Strategy PRODUCT PORTFOLIO STRATEGY • Project Mix Brands • Resource Levels • Milestones Project PRODUCT DEVELOPMENT STRATEGY Strategy • Resource Allocation • Timing Projects • Technical Approaches • Deliverables 28
  • 29. PPM - Types Compliance Projects Strategic Operational Projects Projects 29
  • 30. PPM - Process Review / Revise Mission Inter Exte -nal r-nal Mission, Goals, Objectives, Culture, New Goals & Structure and Infrastructure, Objectives Processes, Environment etc. Comprehensive listing of all active, Portfolio of Strategic on-hold and proposed projects at all Choices levels of the organisation. Multiple Assessment Criteria, Quali- Strategy tative & Quantitative Tools, Software Implementation Applications etc. Maintain “balance” of projects to Project Selection create “optimal mix” based on their cost, return, risk, schedule etc.. Periodically review and modify port- folio by retaining, modifying and (when necessary) killing projects. Projects 30
  • 31. Link – PPM Process & Firm’s Strategy Review / Revise Mission Inter Exte Ch Strategic Management -nal r-nal an eg New Goals & M an Objectives ag em Portfolio Management Portfolio of Strategic en Choices t Ap pr oa Strategy ch Implementation Program Management` Project Selection Project Management Projects 31
  • 32. PPM – Strategy Evaluation Process Strategic Management Ch an Strategy / g Strategy e Portfolio Translate M Reevaluate an ag Portfolio em Mngt en t Portfolio Portfolio Ap Mngt Planning pr oa ch Program Management Project Management 32
  • 33. Recap - Portfolio Planning Creation Selection Sequencing Driven by strategy Desirability How much value will the initiative In the In response to bring to the organisation? context of an issue all other projects, Feasibility when is the An identified best time to opportunity Is the organisation capable of deliver this successfully delivering this project? initiative? Driven by external causes 33
  • 34. Eg. Link Strategies to Potential Projects 34
  • 36. PPM - Engagement Model Initial Business Tools Assessment Prioritisation Strategy Innovation Re Prioritise Process Engage Prioritise Plan Build Sustain Sustain phase Diagnosis and often Relationship prioritisation Capability accompanied by building phase phase to assess Strategic development periodic diagnosis during which the the company's planning based phase with audits to assess capabilities and capabilities in on in-depth targeted use of any changes and opportunities of relation to its assessment of tools for business adjust the nature the company are priorities and the the company areas requiring of the intervention preliminary environment attention as appropriate; assessed within which it supported by operates mentoring 36
  • 37. Screen - Ideas, Opportunities, Needs Develop / Strategise Capture Formulate Evaluate Define Promote Test Fuzzy Front End Analyse the Brainstorm & Business case Review and Build project & Review projects Design for X business capture rationale/ score assign team Select Prototypes and Set business Research & justification Portfolio Design, project(s) market testing drivers initial proof of Cost benefit analysis marketing, legal Assign budget Manufacturing Establish a concept assessment Proof of Customer & time horizon MRO strategy Publish & share Reviews & rating concept feedback Approve & Reuse, recycle funding promote 37
  • 38. PPM – Life Cycle Process Gates Test & Validate Business Case Development Relaisation Scoping Launch Benefit Idea / Need G1 G2 G3 G4 G5 Stages Portfolio Management Project Management 38
  • 39. PPM - Gates  Gate 1 - Initial Screening  Does the idea warrant any further work?  Gate 2 – Second Screening  Does the idea justify extensive analysis?  Gate 3 – Business Case Decision  Is the business case sound?  Gate 4 – Post Development Review  Is the project ready for pilot?  Gate 5 – Pre-commercialise Business Analysis  Is the initiative ready to support the market? 39
  • 40. PPM - Stages  Stage 1 – Idea / Need / Opportunity  It fosters idea generation  A perpetual process of crafting new products, processes & services  It integrates partners, geographies, technologies etc  Stage 2 - Scoping  Quick investigation and shaping of the concept / definition  Scope definition brings together cross functional team  Litmus test - to ensure the new potential value and to deliver on the promise  Stage 3 - Build the Business Case  Goes into detailed analysis where factual data is collected (costs, profitability, service levels)  Utilises advanced tools to model or simulate scenarios 40
  • 41. PPM – Stages (Contd.)  Stage 4 - Development  Detailed process mapping & assigning the correct metrics  Establish the new or altered relationships  Stage 5 - Testing and Validation  Undertakes pilot testing and verifies details with the business case  Provides the feedback loop and lessons, to minimise risks  Stage 6 – Launch  Implements changes and fine tune to support full market demand  Contingency scenarios activated in the event of a significant disruption  Stage 7 – Benefit Realisation  Examine benefits realised or not  Use lesson leant for the next round of product or services innovation 41
  • 42. PPM - Screening Process
  • 43. PPM – Functions  Screen Ideas & Opportunities  Select Projects for the Portfolio  Manage the Project Pipeline  Monitor Approved Projects for possible de- selection, termination, or delay. 43
  • 44. Project Screening Process Project Proposal Idea Review Strategic Fit / Data Collection ROI / Payback / Risk Self Evaluate Project by Cancel Project Criteria Project Team Evaluate Request for more Periodic Assessment Proposal & Review information of Priorities Portfolio & Risk Reject Accept Assign Priority, Resources, Project Manager & Hold / Reject Project Evaluate Progress 44
  • 46. Project Portfolio - Matrix Dimensions High Bread & Butter Pearl Technical Success (revolutionary commercial (evolutionary improvements to advances using proven current products and services) technical advances) White Elephant Oyster (Projects that at one time (technological breakthroughs showed promise but are no with high commercial payoffs) longer viable) Low Reward (NPV) High 46
  • 47. PPM - Selection Process
  • 48. PPM - Selection Model Project Source, Solicit Rank Proposal & Model Selection Manage Portfolio Classification Project Proposal Select Projects  Deciding how  Applying a  Within the  Prioritising  Senior well a strategic weighted scoring organisation requires management or operations model to align discipline, input project fits the projects with the  Request for accountability, organisation’s organisation’s proposal (RFP) responsibility,  The priority team strategy strategic goals. from external constraints, (project office) sources reduced responsibilities  Ensure the (contractors and flexibility, and model selected vendors) loss of power 1. reduces the number of wasteful projects 2. helps identify proper goals for projects and 3. why a project is selected 48
  • 49. Selection Process – Detailed Steps Resource Periodic Risk Strategy Availability & Balancing Measure-ment Assessment Alignment Allocation  Schedule  Risk  Availability  Based on  Balancing Identification (In-house, Strategy Plan different  Cost Outsource) parameters types of  Quantitative / for project projects by :-  Resources Qualitative  Allocation selection – Assessment (Committed, identifies  purpose and  Scope soft needs / benefit  Risk allocation) opportunities Response  opportunity, Planning  Optimal or  Set resource, benefits and acceptable budgets need risk  Risk size of the Monitoring & project  Set Risk  purpose and Control pipeline posture benefit 49
  • 50. PPM – Selection Criteria Financial Non – Financial Payback Net Present Value Projects of Strategic (NPV) importance to the firm. Internal Rate of Return (IRR) Several weighted selection criteria could be used to evaluate project proposals 50
  • 51. PPM Selection Model - Checklist Approach  Will we build or buy? Sponsorship  Who is the project sponsor? Success metrics  How will we measure success? Finance  What is estimated cost of the project? Driver  What business problem does the project solve? Training  Will staff training be required? Strategy alignment  What specific organisation does this project align with? Risk  What is the impact of not doing this project?  What is the project risk to the organisation? Benefits  What is the value of the project to this organisation? Organisation  Is the organisation culture right for this type of project? culture Portfolio  How does the project interact / link with current projects? 51
  • 52. Pipeline Management Project Status & Evaluate against Variance Stage Gate – Pipeline Critical Reporting Go / No Go Parameters Schedule Earned Value Reporting items Applying stage Analysis outside of gate techniques Cost targets / limits / for continuation or Milestone thresholds termination Resources Analysis decisions Identify Scope Dashboard Charts consequences Set milestones (Set Criteria & and action items (phases) & test Tolerances) for follow through against criteria Make Go/No Go decisions 52
  • 53. Eg. Project Selection - Criteria Human and Physical Project’s “Strategic Fit” Project’s “Strategic Fit” Resource Requirements Impact on Organisation’s Employees and their Environmental Impact Motivation & Estimated Cost and Time Performance Size and Composition of Ethical Considerations Existing Program & Complexity and Risk Project Portfolio Impact on Organisation’s Organisation’s Experience With Similar Organisation’s Image Competencies Projects Strategic Partnership Expected Benefits Temporal Distribution of Building (Quantitative & Quantitative Returns Qualitative) 53
  • 54. Eg. Prioritisation Criteria Sample Weight Financial – Economic Cost and Benefit 0.25 Business Impact – Contribution to Business Performance 0.35 Risk – Likelihood of Success/Failure 0.25 Architectural fit – Compatibility with Guidelines 0.15 1.00 Ranking Process 3. Simple Scoring – everyone votes, one to seven (favorable) 4. Case for score is presented – open to debate 5. Use the information at hand 54
  • 55. Eg. Attractiveness Capability Matrix Maximum Project Project Score A B Attractiveness Strategic importance 40 33 25 Economic reward 40 35 17 Time to market 10 5 7 Robustness 5 3 5 Indirect benefits 5 5 5 Total 100 81 59 Capability Validity of the idea 30 19 24 Adequacy of resources 25 20 19 Production/market skills 25 21 12 Readiness to scale-up 10 10 10 Quality of the proposal 10 7 5 Total 100 77 70 55
  • 58. Change Process Change Management Process Change Proposition Business Definition Management Infrastructure Execution and Control Develop Change Focus on Priorities Ensure Benefits are obtained Programme Management Proposition (Solution Delivery) • Business Level Embed control mechanisms • Business Strategy Objectives Stakeholder understand : • Market Drivers • Business Level View of • Benefits Management • Regulatory Portfolios Risk profile • Portfolio Prioritisation • Business Priorities • Benefits Management • Risk Management • Risk Management Process across portfolio • Project Management Office Business owned & managed. • Benefits Management Enable decision making • Project Portfolio Management • Solution Delivery Enable decision making Develop Focus Ensure Project Change on Benefits are Execution Proposition Priorities Driven Out and Control 58
  • 59. Link – PPM, Governance & Project Office
  • 60. PPM – Conceptual Overview Strategic Governanc Business e Process Planning Project Continuous Improvement Management Office Business Process Reengineering Project Maturity Portfolio Models Projects Management 60
  • 61. PPM Alignment – Strategy, GRB & PMO Feedback Direction Governance Governance Enterprise Review Review Board Strategy Board Project Portfolio Management Prioritisation Prioritisation Project Management Program / Office Project QA / QC Manager Project Status Reports, Time Sheets, Expenses, Project Schedules Feedback Feedback 61
  • 62. PPM – GRB & PMO GRB PMO • Policy Centre • Information Center • Make Decisions • Recommends • Reviews and probes data • Prioritises projects and recommendations • Maintains data on resources • Interprets strategic plans and • Evaluates project performance initiatives • Supports development of • Provides enterprise budget project proposals and resource parameters • Builds database of potential • Responsible for the final and current projects selection decisions • Recommends projects for selection, de-selection, or delay. Governance Review Board (GRB) & Project Management Office (PMO) jointly execute the Project Portfolio Management (PPM) Processes 62
  • 64. PPM – Implementation Challenges  Resistance to change  Isolated groups avoiding processes  Lack of accountability and follow through  Resistance to transparency and tracking  No rigor around structured documentation  Business’ reluctance to committing to ROI 64
  • 65. PPM – Critical Success Factors  Train, Train, Train  Dedicated PMO Staff  Commitment – C Level to All Levels  Focus on business Benefits Realisation  Consistency of the message at all levels  Simultaneous communication at all levels  Prioritising and managing project initiatives  Communicate, Communicate, Communicate  Experienced Leader that can prevent pitfalls  Linking priorities to the current business objectives  Developing an effective framework for managing a PPM Process 65
  • 66. Strategy Alignment - Activities  Ensure PPM is in-sync with strategy  Develop long-term technology capability roadmaps  Manage the business requests queue  Business Case Definition  Costs  Resources  Classification  Solution Evaluation  Feasibility Study  Identify and manage stakeholder expectation 66
  • 67. Strategy Alignment - Deliverables  Scope  PPM Charter  ROI Analysis  Business Case  Roles & Responsibilities  Opportunity Assessment  Project Screening, Selection & Scoring 67
  • 68. PPM – Optimisation Activities  Rank & prioritise based on value  Balance portfolio – risk vs. value  Matching bottom-up and top-down  Overall resource capacity vs. demand analysis  Available budget vs. funding needs analysis 68
  • 69. Benefit Realisation Benefits Identified Project Management Office Responsibility Matrix Key Benefit Key Measurement Success Business Criteria Criteria Benefit Benefits Case Delivery Delivered Execution Benefit Progress Ownership Monitoring Risk Management Communication Plan 69
  • 70. PPM – Management Activities  Time & budget tracking  Project issues mitigation forums  Resource planning and allocation  Project governance – stage gated funding and approval  Standardised project delivery methodology  Ongoing portfolio re-calibration & oversight 70
  • 71. PPM – Management Reporting  Distribution of effort  On-time delivery rate  Resource utilisation rate  Project benefits realisation  Project estimated vs. actual hours  Distribution of effort / dollars by strategy 71
  • 72. PPM – Software Solution Vendors
  • 73. PPM - Software Solution Providers 73
  • 76. “You will never stub your toe standing still. The faster you go, the more chance there is of stubbing your toe, but the more chance you have of getting somewhere.” - Charles Kettering 76