Project Portfolio Management

Project, Program, and Portfolio Management (PPM) is an essential response to three problems in organizations that execute projects to maintain or improve their competitive positioning. 

The first problem is a steady increase in demand for project support. Not every project request can be both urgent and important, making a method for selection, prioritization, and calibration necessary. The second problem has to do with lacking visibility into delivery constraints (capital, time, people). Unchecked resource shifts are not the same as business agility, therefore requiring transparent decision-making. ​​The third problem is the difficulty with anticipating cross-functional impacts that many projects have. Think, for example, of the pull on shared resources or projects that cancel each other out. 

These issues explain why enterprises require a framework for validating strategic fit and conducting integrated planning and delivery of projects. An effective change governance framework will continuously answer three questions: Why this? Why us? Why now? One indicator of change governance being effective is when decision-makers stop doomed projects when their benefits hypothesis is no longer valid.

A Closer Look

Without a practical approach for aligning on outcomes and priorities, a project portfolio's performance may disappoint when the organization cannot select the right projects or is not capable of delivering projects the right way. 

Consider the impact of not having a robust method for choosing projects and re-balancing the project mix on a periodic basis. Single-voter-issue projects could be given much higher priority than they should. What can be done? Effective selection and calibration of a portfolio uses choice criteria such as strategic fit and value potential. This reduces the probability of arbitrary priority shifts and minimizes conflict about how to allocate capital and people. 

Complexity in project management, on the other hand, comes in two versions and needs careful attention to avoid delivery issues. Teams that make coping with delivery complexity their focal point over-index on the 'how' and 'when' by managing the triple constraint. This can result in missed scope and reduced benefits. These teams need to give as much if not more attention to management complexity (the 'why' and 'what') in projects that enter new territory, require significantly more effort to determine architectures (business and systems), or involve diverse sets of stakeholders. The remedy: committing the organization to a disciplined implementation and governance approach, using a phase-based-delivery, making realistic assumptions, and meticulously managing project stakeholders and third-party dependencies.

A typical challenge with project stakeholders is the lack of cross-functional alignment on project and portfolio priorities and delivery sequence. Byproducts of this problem are unrealistic assumptions about capacity, capability, and efficiency; random (instead of data-driven) decision-making; and difficulties adapting the portfolio to changing circumstances. A top-down mandate directing functional leaders to collaborate can help. Ideally, however, a designated change leader facilitates governance across functions through relentless stakeholder engagement, so that all teams can fly in formation.

Initial Diagnosis

Above problems can be consequential. Projects with an unattractive value proposition may be approved and started, resulting in waste. Projects that are already in-flight may continue although there is evidence that their fit (or need) is no longer given. And some projects may be finished, but it is not known if they can deliver the promised benefits.

How can you tell when the organization's PPM approach lacks precision? A few questions to start:

• • How is the link between execution and strategy ensured?

  • How often does governance say 'not now' to a request?

  • What is the bottom-line impact from poor delivery?

  • How do sponsors perform in their role?

  • How often are projects stopped?

  • Do business cases forecast TCO?

  • How are resources allocated?

  • How big is the pipeline?

The initial assessment of an organization's PPM framework can be conducted through interviews, based on a set of principles and questions. A more comprehensive examination requires analyzing portfolio data and conducting deep-dive reviews of projects. Evaluation criteria can be used to determine portfolio management maturity. 

A Blueprint for PPM Excellence

Implementing a PPM framework establishes an operational runway for growth. Tailoring the approach to your organization's needs avoids unnecessary bureaucracy. By, for example, using known capabilities (existing teams and meeting cadences), only limited investments are required and the organization gains the ability to:

• • Link projects to strategic objectives

  • Ensure cross-functional alignment

  • Optimize portfolios and resources

  • Reconcile resourcing/benefit trade-offs

  • Execute the project portfolio

  • Drive accountability for outcomes

  • Deliver financial/non-financial benefits

  • Increase change agility and ROI

Broadly, PPM is organized in three continuous, overlapping phases:

Two bookend competencies are vital to enable effective PPM: selection and value capture. A robust business case management process connects them. Each project opportunity should be evaluated (for approval) and measured (post-implementation) using consistent criteria documented in a business case. Evaluation and measurement criteria may include ​total investment value, time needed to prove the benefits hypothesis, time-to-market, benefits potential, inherent risk profile, execution risks, required expertise, adoption complexity, alignment with corporate strategy, cross-functional impact, run-cost implications, and technology needs.

On Project Management Office's

A Project Management Office (PMO) can add value when it builds competencies, directs focus, drives alignment, and scales PPM. However, some PMO's earn a difficult reputation when they are too administrative or too rigid.

While some administration is unavoidable in PPM, a PMO should always prioritize its value-add activities:

• • Advancing project management strategies to reduce delivery risk

  • ​Promoting a culture of collaboration and accountability

  • Engaging, training, supporting sponsor organizations

  • Up-skilling subject matter experts and project teams

  • Providing objective advisory and decision-support

  • Using influencing tactics to drive outcomes

  • Aligning stakeholders across functions

  • Driving organizational learning

  • Ensuring high quality delivery

​Clarity about what a PMO will and will not do is vital to establish its authority (advisory vs. compliance), scope (project, program, portfolio), and structure (centralized vs. decentralized). A good starting point to determine which type of PMO makes the most sense is to assess the organization's needs for delivery enablement, execution support, and management controls and compliance.

Reference: Levine, Project Portfolio Management