The document discusses the importance of portfolio management in achieving organizational success. It notes that effective portfolio management provides strategic alignment, balance across projects, risk management, aligned capabilities, and capacity for change. This allows organizations to complete more projects on time and on budget, realize benefits from initiatives, and make better business decisions. Research cited shows that organizations with higher portfolio management capability outperform peers in share price growth and meeting goals. Industries differ in their maturity of portfolio processes, with some demonstrating good practices around sponsorship, strategy linkage, and integrated people, process and technology.

1. Robert Buttrick
17 June 2015

2. Projects fail,
are late,
overspent or
never started
No clear strategyNo defined
approach
Wrong projects
started
Projects not aligned to strategy
or to each other
Short term focus
Business plans do
not reflect strategy
Decisions not
aligned
Inadequate
prioritisation
Functions
reverse previous
decision
Too many projects started
No support systems
Lack of open resource
management
Resources are
overstretched
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

3. It’s not enough to be good at project management

4. Excellence is not enough . . .
 Successful project management
 Successful project
 Successful business
 So what makes the difference?

5. Successful project management
Cost
Time Scope
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

6. Successful project
Cost
Time Scope
Area of benefit viability
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

7. Successful project
Cost
Time Scope
Area of benefit viability
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

8. Successful project
Cost
Time Scope
Area of benefit viability
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

9. Successful project
Cost
Time Scope
Area of benefit viability
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

10. A successful business
Example of a “herd of projects”
0.0
1.0
2.0
3.0
4.0
Time
Benefits(Eurom)
Project 5
Project 4
Project 3
Project 2
Project 1
Current
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

11. How well we perform

12. Maturity and its implications
Stage 0 Stage 1 Stage 2 Stage 3 Stage 4
Informal
management
Portfolio
excellence
Project
excellence
Collaboration
excellence
Functional
excellence
© Copyright Pittiglio Rabin Todd & McGrath
See also The Project Workout, Robert Buttrick, FT Prentice Hall, 2009

13. . . . Significant advantages
Portfolio
excellence
Project
excellence
Functional
excellence
Average
growth
Profit
advantage
TTM Index
Productivity
increase
8% 12% 19%
2.0 1.0 0.8
35% 54% 67%
0% 10% 25%
© Copyright Pittiglio Rabin Todd & McGrath

14. Maturity and its implications
Stage 0 Stage 1 Stage 2 Stage 3 Stage 4
Informal
management
Portfolio
excellence
Project
excellence
Collaboration
excellence
Functional
excellence
Can be led from the “middle” Must be led from the “top”

15. Working across the organisation

16. Unit A Unit B Unit C Unit D Unit X
Projects cross departmental (unit) boundaries
time
Effort
A
B
C

17. The two dimensions of the matrix
Project dimension
Business focussed
Benefit focussed
Flat
Flexible
Line dimension
Cost control focussed
Line manager focussed
Hierarchy
Stability
“We value cost centre
budgets over business
performance.”
“We value business
performance over
cost centre budgets.”
Benefits
Project
Sponsor

18. The Matrix
Low
High
Authority of
the project
sponsor and
manager
Co-ordination Full projectMatrix
High
Low
Authority of
the line
manager
Functional
Matrix
Project
Matrix
Balanced
Matrix
Strong
Weak

19. A definition . . .
Weak/Functional Matrix: A project manager with only limited
authority is assigned to oversee the cross- functional aspects
of the project. The functional managers maintain control over
their resources and project areas.
Balanced/Functional Matrix: A project manager is assigned to
oversee the project. Power is shared equally between the
project manager and the functional managers. It brings the
best aspects of functional and projectized organizations.
However, this is the most difficult system to maintain as the
sharing of power is a delicate proposition.
Strong/Project Matrix: A project manager is primarily
responsible for the project. Functional managers provide
technical expertise and assign resources as needed.
Source: http://en.wikipedia.org/wiki/Organizational_structure#Matrix_structure

20. A definition . . .
Weak/Functional Matrix: A project manager with only limited
authority is assigned to oversee the cross- functional aspects
of the project. The functional managers maintain control over
their resources and project areas.
Balanced/Functional Matrix: A project manager is assigned to
oversee the project. Power is shared equally between the
project manager and the functional managers. It brings the
best aspects of functional and projectized organizations.
However, this is the most difficult system to maintain as the
sharing of power is a delicate proposition.
Strong/Project Matrix: A project manager is primarily
responsible for the project. Functional managers provide
technical expertise and assign resources as needed.
X

21. Tipping the balance
Chief Executive
Benefits
Benefits
Project
Sponsor
Project
Sponsor
Portfolio
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

22. Focussing your entire effort on what matters

23. Portfolios ?
Portfolio (MSP and MoP)
The totality of an organisation’s
investment (or segment thereof) in
the changes required to achieve its
strategic objectives.
Portfolio management (MoP)
is a coordinated collection of
strategic processes and decisions
that together enable the most
effective balance of organisational
change and business as usual.
Portfolio (APM)
A grouping of an organisation’s
projects and programmes.
Portfolios can be managed at an
organisational or functional
level.
Portfolio management (APM)
The selection, prioritisation and
control of an organisation’s
projects and programmes in line
with its strategic objectives and
capacity to deliver.

24. Portfolios ?
Portfolio (ISO)
collection of portfolio components grouped together to
facilitate their management to meet strategic objectives.
Portfolio component (ISO)
project, programme, portfolio, or other related work
.

25. Portfolio – ISO view
A “portfolio”
Portfolio
Sub-
Portfolio
Programmes Projects “other work”
Projects “other work”
Done in full, it’s a completely different way of looking at
your business – benefits and value focussed.
Sub-
programmes

26. Portfolio management provides . . .
Strategic
alignment
Making sure we
are all facing the
same way towards
the same
objectives.
From this:
To this:
Balance
Reduce our
exposure to
extremes, near
term versus long
term, new
products versus
old cash cows; etc
Risk assessed
We can afford to
take risks, if we
aren’t taking risks
on everything.
Aligned
capabilities
Knowing we will
have the skills and
resources to
complete our
business plans
From this:
To this:
Capacity for
change
Knowing our
people, customers
and suppliers can
absorb the
changes we need
to do.
BT
Values
10
tonne

27. Unit Unit Unit Unit Unit
Suppliers
Business Portfolio: Sub-portfolios, programmes, projects, processes
Inputs
Services
Products
Customers
Benefits
Projects
End to end processes (Bau)
Business portfolios are the 2nd dimension
of the matrix
Customer and value
driven and cost
constrained.

28. Unit Unit Unit Unit Unit
Business Portfolio: Sub-portfolios, programmes, projects, processes
Customer and value
driven and cost
constrained.
Business Portfolio: Sub-portfolios, programmes, projects, processes
Business Portfolio: Sub-portfolios, programmes, projects, processes
Services
Products
Customers
Inputs
Business portfolios are the 2nd dimension
of the matrix

29. How well we perform - maturity

30. Customer service
delivery
Common way
for business
portfolio
management
Cost
transformation
Investing for the
future
Aligned
capabilities
Balanced
portfolio
Strategic
alignment
Reduced time to
market
Healthy
organisation
Less stressed staff
More projects
completed, RFT
Joined up risk
management
More benefit for
same cost base
Fewer, better
initiatives
• Approve only
what we need
• Approve only
what can be
done
• Kill bad projects
early
• Make better
business
decisions
Processes which
work, end to end
Change which
can be absorbed
Consistent service
and operations
There are clear benefits, which contribute to
strategic objectives

31. What sets high performing organisations
apart?
Booz & Co’s annual Global
Innovation 1000 research confirms
PMI’s findings: it isn’t how much
money you spend on innovation
that counts, but the quality of the
talent, processes and decision
making. These are the pillars of
effective portfolio, programme and
project management.
Those with higher
portfolio management
capability perform
better.
Source: The high cost of low
performance; PMI; March 2013

32. Some more research
PMI survey
Gartner sets the challenge . . . .
 By 2015: 60% of the Fortune 1000 will establish an EPMO
to improve the value created by investments in projects
and programs. Organisations should establish an
enterprise-level function to ensure strategy execution and
program success, and manage across silos commensurate
with maturity, immediate need and culture desired by the
organisation.
 By 2016: Organisations must institute enterprise wide
mechanisms to ensure similar fundamental approaches
and use of practices and tools of project management
delivery, whether it's communities of practice, enterprise.
Their survey in 2012 shows portfolio management makes a
difference:
Research – Technology management
Portfolio adopters have a clear lead in share price performance
Average % of
projects
Effective
portfolio
managemen
t
Minimal
portfolio
management
%
increase
Met original
goals
77% 65% 18%
Met ROI 62% 48% 29%
On time 68% 50% 36%
To budget 64% 54% 19%
International Data Corporation findings
Performance indicator Value
Redundant projects dropped 78%
Cost per project reduced 37%
Project failure rate dropped 59%
Payback time of initiative 8 months
Their findings show clear benefits which excellence in
processes, programmes and projects alone cannot achieve.
2012

33. Different industries are in different places
© PPPM – Moorhouse Consulting / Deloitte
Original Research 2012.
Typical portfolio management process maturity and process
effectiveness of organisations in selected industries
Process maturity
Portfolioprocesseffectiveness
Good practices
• Strong effective sponsorship
• Clear linkage between strategy,
project delivery and benefits
realisation
• People, process and technology
work in concert
• Frequent reviews of ideas and
projects against priorities
• Holistic view of ideas, projects and
assets/applications
• Continuous improvement cycle

34. Make sure you really understand projects
Don’t deal with it a s a “process” issue

35. Different methods can harness the extended
project lifecycle . . .
Output Outcome Benefit
£
Recognition eventTM Value flashpointTM
£
Condition of satisfactionProject Workout
Isochron’s
Source: Isochron

36. Benefits mapping and project scope
Output
Output
Output
Output
Outcome
Outcome Benefit
“Delivery” management
Change management methods
Benefits management methods

37. Benefits and outcomes always matter
Output
Output
Output
Output
Outcome
Outcome Benefit
“Delivery” management
Change management methods
Benefits management methods

38. What levers can you use to make this work?
Culture
Process
Systems Structure
The accountabilities
and relationships
Brings consistency,
when consistency
adds value
Makes processes
more effective and
efficient
How we behave (or
misbehave!)
Source: The Project Workout, Robert
Buttrick, FT Prentice Hall, 2009

39. What levers can you use?
Make them “end to end”.
Make them role driven.
Mirror the accountabilities.
Reinforce the culture
Design them on the assumption the
organisation WILL change.
Who is accountable to whom
. . . . and for what?
Be clear on decision rights.
Have compatible goals.
Vertical and horizontal
Shared values (e.g. trust)
Team based methods
Pull rather than push
Team, not “individual”
Benefit and value, no just cost
Culture

40. Portfolio management in context

41. Don’t meet every problem by reorganising
A flat structure ? A few minor changes A Pyramid
“I was to learn later in life that
we tend to meet any new
situation by reorganising, and a
wonderful method it can be for
creating the illusion of progress
while producing confusion,
inefficiency and demoralization.”
Quotation from Gaius Petronius Arbiter, AD66

42. Summing up
 Successful project management is not enough for a successful
business – be change and benefits focussed
 How you implement project management at an organisational
level matters
 Unless you totally separate your resources and funding, you will
have a matrix – admit it.
 The leadership team to decide on the strength of the matrix
 It is fundamental to accountability and corporate governance
 Rethink your paradigm on what a project is all about – consider
change (outcomes) and benefits as being within the scope.
 . . . and perhaps you’ll solve some of the problems we started
with . . . and start to make portfolio management work

43. Robert Buttrick
projectworkout.com
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