Download What is Project Portfolio Management?

Project Portfolio Management
Tom Westcott, CEO
Project Solutions Group
Agenda
What is Portfolio Management?
Aligning projects to business strategy
The project selection process
When do you terminate an existing project?
Demonstration of Microsoft UMT product
Becoming a PPM Organization
What is Project Portfolio Management?
Project Portfolio Management (PPM) is a discipline
used to manage a grouping of projects, resources
and assets, to effectively achieve organizational
goals.
PPM is a Solution to a Problem
The biggest problems organizations face in
achieving their objectives:
Not realizing the benefits promised from
projects
Competing and changing priorities on
projects
Not enough resources to complete all
projects
Project delays and budget overruns
PPM is a Solution to a Problem
PPM should help organizations:
Maximize organizational benefits from
projects
Choose the right projects
Ensure adequate resources to complete
projects
Increase project success rate
Defining Strategic Goals/Objectives
Defining strategic goals and objectives is critical
to being able to effectively manage a project
portfolio.
Strategic goals and objectives help to:
• determine which project work should and
should not be done
• Prioritize project work
• Establish metrics for measuring portfolio
success
Linking Strategy to Portfolio Management
Goals
Strategies
Projects
Buy and integrate Company X
Buy and integrate Company Y
Acquisitions
Grow to $2B
Develop Sales Channels in Europe
Implement 3 additional sales
channels
Establish survey programs
Improve Customer
Satisfaction
Build Customer Survey Program
Increase Market Share
Build industry leading competency in
X
Increase direct marketing efforts
Build online survey tools
Fund university collaborative
Build recruitment program
Develop catalog
Execute direct marketing campaign
Symptoms of Defective Strategic Planning
Project and resource managers often fight over resources
Project priorities and resource assignments change frequently
Managers have authority to unilaterally start projects
Projects are started without regard to resource availability
Completed projects do not produce expected results
By the time change is implemented, it is obsolete
There is no single view of all projects how they relate to strategic
goals
Significant turnover at the senior management level
The strategic objectives are a list of initiatives without priorities,
benefit analysis, dates or sequencing
Symptoms of Defective Strategic Planning
If an organization is constantly changing
project priorities, this is a red flag that the
entire strategic planning process is out of
control!
Defining the Portfolio
The portfolio of projects exists only to deliver
results for the strategic goals of the organization.
This involves a top-down planning approach.
When project are identified outside of the
strategic planning process, they must be
evaluated against the strategic objectives and
then against the current portfolio.
Project Portfolio Prioritization (forced)
Purpose of prioritizing your project portfolio is
to determine which projects:
should be done
can be done
get funded
start when
get terminated
get strategic (scarce) resources
Align Investment to Strategy
Optimization of project selection promotes strategic
priorities
Optimized
Unaligned
Resource Constrained Project Scheduling
Consider these 2
scenarios:
Scenario 1 – Resource A is
working on 2 projects
simultaneously (50% on
each).
Scenario 2 – Resource A
works on one project (at
100%) and then begins the
second project when the first
is complete.
Resource A (50%)
Resource A (50%)
Resource A Resource A
(100%)
(100%)
Ongoing Measurement & Analysis
‘Just by observing a system, you change its behavior’
–
the Observer Effect, Heisenberg's Uncertainty Principle
“The purpose of a measurement system is to drive the
parts to do what is good for the system as a whole.”
– Dr. Eli Goldratt, Theory of Constraints
“To be able to manage, you must be able to control, and
to be able to control, you must be able to measure.
Thus, if you cannot measure, you cannot control and
if you cannot control you cannot manage!”
Ongoing Measurement & Analysis
Since measurement changes and affects behavior, it is
critical to choose the right measures and apply them in the
right way to achieve the desired results.
One of the biggest failures of organizations is measuring
the wrong factors.
“Tell me how you measure me, and I will tell you
how I will behave. If my measurements are unclear,
then no one can predict how I will behave, not even
me!” – Dr. Eli Goldratt
What is Project Portfolio Management?
“Alignment is the essence of management” Fred Smith, Chairman Federal Express

Management Discipline – improves alignment between strategy
planning and business/IT; strengthens governance; improves project
definition, portfolio selection, resource planning and executive reporting

Comprehensive Project Inventory – develops and captures new,
ongoing and carryover work centrally to provide transparency around how
key Business Drivers are supported and how resources ($/FTE) are
dispersed

Transparent & Actionable Decisioning Framework –
provides ongoing and actionable portfolio analysis and reports to the
PPM is a management
discipline that helps
organizations achieve
maximum project
portfolio value through
the continuous process
of evaluating and
managing projects
against key performance
metrics and strategic
business objectives.
decision-makers to enable improved investment viability and accountability

Workflow With Roles & Responsibilities – provides clearly defined

Analytical software toolset – leverages toolsets to capture project inventory and to ensure optimal,
roles and responsibilities throughout the process and Governance framework
consistent and fact-based portfolio selection and planning decisions by simultaneously evaluating and comparing
competing project ideas and resource needs (e.g., what-if, sensitivity analysis, optimization, etc.)
Request Management
Business Case Development
Portfolio Prioritization / Valuation
Portfolio Optimization / Selection
Project Planning
Cost Management
Resource Management
Time Reporting
Change Management
Issue Management
Risk Management
Status Reporting
Earned Value Analysis
Program & Portfolio Reporting
Benefits Realization
Portfolio & Program Management
Governance Process Definition
Project Management
Business & Technology Stakeholders
Organizations Utilize Both Disciplines
Portfolio Management answers the
following questions:
 Have I selected the right investments?
 Do the investments align with the strategic
objectives?
 Do I have sufficient resources to deliver
the selected investments?
 Will the investments be delivered on time
and within budget?
 Are my investments delivering the
forecasted benefits?
Investment Effectiveness
Even with the advent of portfolio management, in use by over 50% of organizations
today and better project management techniques, 40% of the value of projects is
lost.
However companies that have put their focus on “selecting the right projects, the
right way, at the right time” are attaining a yield of 90% or more from their projects1.
Best Practice Company Today
Average Company Today
100%
100%
Effective Use of Resources
<10 % Value Lost
40 %
Value Lost
60%
Value Realized
>90%
Value Realized
Project
Mgt.
100%
0%
Ability to Realize Business Value Potential
Efficient Project Delivery
Portfolio
Management
100%
0%
Ability to Realize Business Value Potential
1Source:
Dr. Howard Rubin Meta Group
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Determine Selection Criteria
Gather C-level personnel and identify
goals and strategies
– Goals should be quantifiable
– Strategies should be ‘objective’
– Projects should be specific plans to achieve objectives
1)
2)
3)
4)
Improve Financial Performance
a) Expand into new markets and segments
b) Increase market share in existing markets
c) Reduce expense base
Maximize Organizational Efficiency
a) Expand into new markets and segments
Improve Customer Satisfaction
a) Improve customer satisfaction score
b) Improve product quality
Reduce Turnover
a) Improve employee satisfaction
Prioritize Selection Criteria
Conduct ‘Pairwise Comparison’ session
with C-Level personnel
Consistency Rate
is important!
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Evaluate Project Portfolio
Coordinate with SME’s and middle
managers to align projects to strategies
Result: Project Priorities
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
We’re not done yet . . .
Model portfolio based on constraints
(i.e. cost, resource, etc)
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Project Portfolio Lifecycle
Identify
New ideas
Initiatives
Enhancements
Regulation
Mandates
PPS
Define
Benefits
Strategic
Alignment
Resources
Budget
Ownership
Dependencies
PPS
Prioritize
Select
Strategic Value
Financial Value
Risk Value
Criteria
Weighting
Mapping
Optimization
Constraint
Force I/O
Risk
PPS
PPS
Stage
Sequence
Capacity
Max ROI
Baseline
PPS/EPM
Plan
Tasks
Milestones
Schedule
Leveling
Resources
Budget
Risks
EPM
Execute/
Track
Baseline
Actuals
Variances
EVM
Reporting
Utilization
Work Auth
Issues
Risks
EPM
Close
% Comp
Approval
Final Docs
Historicals
EPM
Measure
Cost
Time
ROI
Quality
Success
PPS
1
Terminating Projects
Just because a project has been
initiated, doesn’t mean it should never
die!
At each stage-gate, evalute project against
strategies and criteria.
Ask questions:
Does the project still represent effective use of the
firm’s resources?
PPM Stakeholders
Project Portfolio Server’s PPM features address
executive concerns, opening doors
CEO
CEO/Strategy Mgt. Officer
• Operationalize
Chief Information
Officerstrategy
CFO
PPMO
Strategy Mgt level
Officer strategic
•
Executive
• Business value-based
• Optimize investment
consensus LOB Executives • Real-time visibility
prioritization
allocation
•LOBProject
Life
Cycle framework
Business
benefit
linkage
CFO
CIO
LOB•Executive
A
Executive
B
PMO
• Resource commitment
• Standardized financial
• Reportable
repository
• Higher strategic
ROI
control
/
budgeting
tool
forecast and tracking
• Inter-project
• Clear resource
demands coordination
•
Often
the
starting
point
for
• Project Sponsor visibility
• Skill leverage & escalation
PPM maturity growth
MS PPM Solution Architecture
Integration with
Tools People Know
Team Participation
Executive Reporting
Project Web Access
Easily Create Enterprise Project Plans
Project Professional
XML-based
API
Project Documents, Issues/Risks &
Tasks
UMT Demonstration
PPM Maturity?
How are projects currently
selected in your organization?
1.
Ad Hoc or Random
2.
Selected individually on a case
by case basis
3.
Evaluated against other projects
based on financial ROI OR
against other projects based on
strategic goals
4.
Evaluated against other projects
based on financial ROI and
strategic goals
5.
Financial ROI, strategic goals
AND optimized, given budget
and resource constraints
What is your biggest PPM-related
concern?
1. Governance (inconsistent PPM
governance processes across
organization)
2. Monitoring (Lack of
reporting/monitoring capabilities)
3. Consistent Valuation (Difficult to
compare projects because of
inconsistent valuation framework)
4. Alignment (Ineffective processes
to align investment ideas to
business strategies)
5. Transparency (Poor visibility and
missed opportunities)
Roadmap to PPM Maturity in the Organization
Enterprise
Value to Organization
Our Opportunity
Cross
Portfolio
Project
Portfolio
Project
Inventory
Ad hoc
No Portfolio
Inventory or Process
-“Just Do It/FIFO”
-Success is random
-Poor transparency
Basic
Crawl
Processes are defined
& documented, and
most projects are aligned
to Business Driver
Portfolio analysis is
repeatable, predictable,
and consistently used to
evaluate and optimize
project portfolio selection
Portfolio Management
teams are able to
understand, analyze, &
recommend optimal
portfolio bundles and
schedules to technology
and business partners
PPM is adopted and used
consistently across
multiple organizations
and portfolios
Portfolio Analysts can
compare and leverage
portfolio analysis
information across multiple
departments
Consistent measures
enable cross portfolio
analysis, selection,
planning and
management that
supports predictive
modeling and internal /
external benchmarking
PPM is optimized
across the enterprise
with a focus on
continuous risk mitigation
and value creation
Project portfolio
performance and risk
data is understood and
can be compared at the
individual, cross-LOB,
and enterprise levels
Senior leadership is
able to leverage PPM
analysis when allocating
funds to various
portfolios
Ability to measure and
benchmark entire
portfolio lifecycle
All projects are
consistently captured in a
project inventory
Stages of Excellence
Walk
World-Class
Run
Implementing a PPM Process
Gain Senior Management buy-in
Take a phased approach
Develop governance process
Use proven PPM tools
Develop consistent set of strategies and drivers
and weight their importance
Optimize the portfolio against constraints
Continue to monitor portfolio execution and
benefits realization
Gaining Control: Success Stories
“UMT’s solution led our Senior Executive Team
to increase the 2004 IT Budget to allow
additional projects to be funded based on their
proven Strategic Value.”
“Wachovia is using UMT Portfolio Manager™
… by using the specialized tools, it allows a
much higher degree of interactivity and
participation.”
“…there was much less skepticism about the
value of the projects and a richer dialogue
about IT and business strategy. …it's reestablished our credibility and trust and has
allowed senior officers to get engaged with IT
at a much more strategic level."
“It’s been extremely well received by our
business partners. Some business units are
even using the tools on non-technology
projects. It isn’t fundamentally about cost
savings. It’s about resource allocation.”
Frank La Rocca – CIO
KeySpan Energy
Allan Shub – VP Retail
Wachovia
"…we saved $5 to $10mm [out of a $50mm
budget] in the first year alone on projects that
would have automatically gone through before.”
UMT Portfolio Manager™ “helps agency heads
and IT managers to have a greater
awareness of all IT projects that are being
worked on.“
Tom Runkle –
Dir. Enterprise Projects
State of North Carolina
Paul Bateman –
Dir. Enterprise Governance
AXA Financial
What’s Next?
On-Site Executive Briefing on Project
Portfolio Management
In this two-hour briefing we will discuss how your organization can
take advantage of one or more of the following benefits:
Determining appropriate project selection criteria
Connecting your business strategy to the project selection criteria
Preventing “problem projects” from making it into the pipeline
Identifying & terminating non-strategic projects
Using technology to optimize your portfolio and gain real-time visibility
Determine ROI on current and future projects
Properly staging projects for the highest ROI
Includes an interactive
demonstration of
Microsoft’s PPS solution
What’s Next?
Strategic Project Portfolio Management Training
This 3-day intensive training class will cover:
• Fundamentals of Project Portfolio Management
–
–
–
–
–
–
Understanding why managers need to care about strategy
Understanding the process of value realization from projects
Knowing your organization’s strategy through three market disciplines
Linking an organization’s strategy with enterprise project management strategy
Knowing, leading and working within your organization’s strategy
Developing and managing the project business case
• Implementing Project Portfolio Management
–
–
Using a process to implement project strategic alignment
Assessing project alignment with the organization’s strategy
–
–
–
–
–
–
–
Using financial success criteria measures for projects
Leading and communicating project strategy with project sponsors
Linking business and project management strategy with a PMO
Examining best practices of a project executive governance board
Developing and effectively using a skill-based resource pool
Using an effective project management information system
Leading and working with business unit directors and managers
»
Leading and managing when the organizational strategy is fuzzy or does not exist
• Managing Control of Strategic & Tactical Projects
–
–
–
–
–
Using MS Project 2003 Server and MS Project Portfolio Server to convert data to information
Managing project risks across a program/portfolio of projects
Monitoring and tracking a program/portfolio performance
Analyzing data and making decisions about project delays and terminations
Assessing the value realized proposed in the project business case
What’s Next?
Project Portfolio Management Webcast
For everyone who would like to share this information with
others at your organization, Project Solutions Group will be
holding two webcasts of our Executive Seminar on Project
Portfolio Management.
• November 21, 2006 10:00 AM - 11:30 AM (ET)
to register:
https://lra100.livemeeting.com/LRSRegistration/EC/microsoft/185379199.aspx
• December 19, 2006 10:00 AM - 11:30 AM (ET)
to register:
https://lra100.livemeeting.com/LRSRegistration/EC/microsoft/185379199.aspx
Contact Information
Project Solutions Group
– Tom Westcott, CEO
–
–
–
[email protected]
508-579-1112
Tod Monchecourt, VP Sales
[email protected]
(617) 448-5674
Andy LaGarde, Senior Account Manager, New England
[email protected]
(617) 448-5119
Kristin Hanley, Practice Manager, New England
[email protected]
(781) 883-4415
Microsoft
– Alban deBergevin
[email protected]