Project Portfolio Management is the selection, prioritization, and Control of an organization’s projects and programs.
Example: Once a wise said, “Do not put all of your eggs in one basket” – Warren Buffett
To run a successful organization, you need to invest in different projects as nobody can accurately predict the success and failures. Usually, big organizations have a variety of projects to meet the overall strategic goals of the organization. This is where PPM comes into the picture.
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What is Project Portfolio Management?
Project Portfolio Management – PPM is responsible for all projects in any organization. It always sees the projects, portfolios in a bigger picture – a high-level perspective.
Project Portfolio Management is used to optimize the portfolio’s output to get maximum benefits the organizations want.
Most of the firms use Project or Program or Portfolio Management Office – PMO to achieve the Project Portfolio Management goals.
PMO drives PPM at the strategic level on all projects. It’s a permanent entity in the organization using it.
PMO will analyze and prioritize the projects and even advise the organization not to take any project after careful analysis of its position & nature if not matching its strategic goals.
What is PMO?
Project Portfolio Management in an organization is best served by a central Project, program, or Portfolio Management Office – PMO.
Many organizations are referring to the P3MO model that is Portfolio, program, and Project Management office. This is a combined facility that brings project, program, and portfolio skills under one leadership. In this, these team supports all the related manager at every level.
Project Portfolio management needs high-level project and program management maturity to work. It requires the best decision-making governance, strategy generation process.
The goal of PPM is to balance risks and rewards.
Major Tasks of Project Portfolio Management
As said earlier, PMO manages these tasks if available otherwise, PPM does it by itself. The primary tasks are;
Prioritizing: It will advise prioritizing a project or program according to strategic objectives.
Resources Management: Responsible to manage & provide all the required resources to drive projects according to skill, time & budget.
High-Level Planning & Controlling: To track major milestone of projects
Development: It will advise & arrange required training, coaching & mentoring to the team, including managers, as per requirements.
Support Program: One of the major tasks is once assigned to the team, it should help the team drive a successful project & if they need any help, it should provide without any hassle.
Without proper PPM application, all blur and organization may run out soon as it is not looking at future perspectives efficiently. In this case, an organization is following a bottom-up approach that will overload the employees.
PPM uses a top-down technique to put the load on a capable person only, and the project is less risky. This is done through proper resource planning.
Role of a Portfolio Manager
A portfolio manager’s role is to select the projects and programs that deliver the organization’s strategy and deliver the capability that will enable those projects and programs to be delivered in the specified parameters.
Project Portfolio manager job to have a “Birds Eye View” on all the projects and programs related to an organization.
A portfolio manager looks after strategic development, project and program management, and change management simultaneously.
The portfolio manager continuously evaluates the organization’s project and programs to prioritize and even dump or remove if no longer serving the organization.
PPM & Project Management
To understand, let’s start from the basics – Hope you may know already theses terms & skip if you wanted to head next.
A primary endeavor was undertaken that gives us Unique products, services, or results as per PMI – PMBOK.
For example, you are to build a Mall, road, bridge, Plant erection, etc. are one-time unique tasks & we call it a Project. Making tea or cleaning a house is not a Project as it is not Unique – It’s called operation.
It’s a group of “related” projects that we can manage in a coordinated way. This is done to get collective benefits as we cannot control these by one.
It is related to the sense of strategic business objectives, transformational across departments or business units.
For example, we have a project for Parking, and the other is for a Road. We will manage them through a Program as activities are closely related and hence beneficial. A dissimilar project can’t form a Program.
It includes Projects and Programs as you can see in the above exhibition. You have multiple non-related projects and programs even you can make sub-portfolios for your convince, which ultimately have Projected in it.
The basic difference between portfolio & program is: in a program, only related projects are included, but the portfolio won’t mind any to have any.
A discipline uses principles and procedures to help manage a project to deliver a unique outcome, such as a product, result, or service. The person responsible for running a project is called a Project Manager as per the PMI standard. He has the Charter to efficiently utilize the project resources by applying the project management process.
Program Management is the process of achieving the optimum result for a group of projects.
The Program Manager is a person responsible for managing the program.
Implementation of PPM
The implementation of Project Portfolio Management (PPM) brings more openness to the authorization process and less ambiguity into the what, where, when, and how of the project delivery process. If a PPM process is put in place, typical political manipulation around pet projects becomes much more difficult. PPM also makes it difficult to hide mistakes and brings a level of detail that may create a fear factor among senior and operational managers. However, PPM is a change project, and resistance to change will essentially become the norm.
What are the typical barriers to adoption?
- Internal politics and culture are by far the biggest barriers to adoption. Implementation is always very nature will demand change within the business, and with change comes resistance – from both above and below.
- You will need to become an ‘evangelist’ for Project Portfolio Management, with an ‘executive sponsored guardian angel.’ Resistance is inevitable; critics will most likely outnumber advocates, and you will need to preach the benefits and prove the value of PPM continually.
- Often management is aware of dissenters or non-conformists in the organization but mistakenly relies upon introducing the new system to improve these individuals’ productivity and performance rather than tackling them head-on through direct communication before introducing the new system.
- Organizational capability and maturity in program and project management governance and standards will impact PPM adoption. The more mature the organization project management capability, the more ready the business will adopt PPM.
- Top management commitment to and understanding of the purpose and value of Project Portfolio Management is critical. Typically senior management either delegates it to lower ranks or believes that it is the vendor’s responsibility to design and implement a complete process in isolation and fails to appreciate that the organization and its key personnel are a vital part of the adoption process.
- The management’s inability to agree on identifying projects within the organization is an important barrier. For example, there will be resistance from program and project teams to adopting a common approach to managing projects, reporting progress, and constructing business cases.
- Business managers’ unwillingness to see their ‘pet projects’ shifted in priority is also a barrier.
- Disagreement on the pace of adoption is a challenge. Whether rollout is incremental or rapid, the business will inevitably demand that disruption and productivity loss be minimized.
- The organization’s willingness to support the financial investment potentially needed for implementing a PPM software tool-set will be a major issue, and tool selection is often fraught with technical difficulties. ‘Rip-and-replace’ solutions come at a high price – cultural, technical, and financial. The adoption of PPM will need to take into account the impact on existing processes and systems. Will they be replaced? If so, why, and at what cost to the business? Integration, flexibility, and reconfigurability will determine the successful choice of any PPM solution.
- It is simply human nature that people will blame the tools and processes for hiding their own lack of knowledge and understanding. All tools and processes are created with their own set of idiosyncrasies; therefore, it will be important to provide continual support and training. However, you must be prepared to accept that no matter how much you train, hand-hold, and evangelize, some people will not understand PPM.
- For the executive levels to get a bird’ s-eye view of information on multiple projects, the business must collect that information and determine who is working on what. One of the most crucial but often overlooked barriers to PPM is the adoption of timesheet technology to collect baseline information. It is essential to manage the ‘Big Brother Syndrome’ – the suspicion that the business uses timesheet technology to keep tabs on the staff. Instead, it is necessary to sell the benefits of increased employee visibility, utilization, and productivity.
PPM – Best Practice Considerations
Who: engaging the right people
To organize the business for PPM, senior management and executive buy-in are absolutely critical – without this, PPM will fail. Executive sponsorship is essential to create awareness, provide support, build consensus, and motivate stakeholders at all
levels to participate effectively. Executive sponsorship gives PPM the all-important ‘nod’ from above.
Why: identifying the pain and calculating the ROI
Justifying PPM within any organization depends on the business’s ability to sell PPM’s benefits. This can be achieved by conducting a health check to establish key areas of pain and dovetail this with an ROI model. Ownership of the health check and ROI model should be with the key project stakeholders and executive sponsors. The ROI analysis will help the organization define and quantify potential top-line benefits and identify the quantitative and qualitative benefits of deploying PPM, such as in revenue, market capitalization, increased customer base, and decreased attrition.
What: selecting the right tools
The successful deployment of PPM will critically depend on selecting the right software tools. A key determinant is how the tools integrate with the rest of the business from both the cultural and the technical viewpoints. As discussed earlier, when selecting PPM tools, the organization should look to avoid a ‘rip-and-replace’ tool-set. It is essential to choose scalable and flexible tools, avoid excessive and restrictive customization, and integrate with peripheral applications, and evolve as the business evolves. Successful tool selection needs to be embraced by everyone in the organization, and if an application is too difficult to use, or requires people to make drastic changes to the way they do their job, then PPM will fail.
How: testing the tools and processes
Deploying a proof of benefit (PoB) is an essential prerequisite that enables the organization to minimize all the risks associated
with implementing a change project like PPM. The PoB provides an actual ‘real-world’ view of the value of a PPM solution within a ‘low risk’ environment and is an excellent way to facilitate the communication of potential Return on Investment (ROI) and Return on Opportunity (ROO). In actuality, the PoB is the first deliberate step in a phased approach to implementation by starting small and then rolling out more functionality and coverage over time.
When: avoiding ‘big bang’ deployment
It is essential to understand that PPM, by its very nature, is a change project and that each business is different in terms of its level of maturity and ability to handle change. Building on a PoB as part of a larger, phased approach should be undertaken, and this should be based on the company’s internal project management readiness and maturity. Use the results of your business case and PoB to scale the PPM solution throughout those areas of the neediest. An incremental implementation allows cultural issues to be solved on a domain-by-domain level and then its success to be sold upwards throughout the organization. PoB allows the business to cultivate best practice examples that can be converted into
quantifiable results for management.
PMO in PPM Implementation
• Tactical: The PMO provides direct support to projects in several areas such as scope management, baseline change management, project scheduling, resource management, cost management, and project reviews. The PMO provides the information required for decision making and ensures that the decisions are being carried out.
• Strategic: The PMO supports the PPM framework, which supports project prioritization, performance management, and benefits realization (see Figure 13). The PPMT intersects with the executive stream, allowing the organization to make strategic ‘go/kill/hold/fix’ decisions on key projects in the context of managing a balanced portfolio
In summary, the PMO is responsible for coordinating, planning, overseeing, and monitoring an organization’s multi-project environment. Through the PPM process, the PMO enforces executive accountability and transparency by connecting its projects to its portfolio strategic decision-making stream. The information supplied by the PMO flows directly into the PPMT’s funding, selection, prioritization, and resourcing processes.PMOs are becoming a standard feature within many organizations and are viewed as the operational center supporting any business project. They act as the clearinghouse for project information and the driving force for project delivery.
The main specific responsibilities of the PMO include:
Project management, Control, delivery, and alignment:
– monitoring project outcomes and communicating this upstream to the PPMT and downstream to project managers
– increasing communication and coordination across projects
– advising the PPMT on the benefits and status of projects
– advising and reporting on the placement of new and elimination of old projects
– endorsing, advising, and supporting project managers
– confirming successful delivery and sign-off at the closure of the projects
– managing resource utilization across the organization, a matching project needs with specialized skills and availability
– ensuring critical projects are on time and within budget by providing objective accountability and review at every stage, from initiation to closure
– using dashboards to enhance the roles of project and program managers within the enterprise
– assisting project managers with budget control
– maintaining financial status reports on all projects
– analyzing interfaces and critical cost dependencies between projects and recommending appropriate action
– maintaining a list of stakeholders and their financial interests
Project management support:
– providing a single point of contact for all project information
– training, coaching, guidance, and mentoring
– developing and holding project templates and master copies of all project and program information
– generating all necessary quality management documentation
– maintaining, controlling and updating documentation
– establishing and maintaining an electronic registry of project information for use by both the PPMT and project managers
Methodologies, standards, and metrics:
– guardianship of project methodologies (for example, Prince2), standards and metrics
– compiling reports and collecting information from project reviews
– providing a central, customer-focused office to care for the concerns of the client, sponsor, and project stakeholders
– providing assistance to the PPMT in selecting and analyzing projects
– establishing consistent practices and standards for program governance arrangements, including project planning, reporting,
– change Control, analyzing risks, and maintaining and updating the risk register
Building Executive Sponsorship
Executives are more accountable today for answering these questions than ever before. They are under the shareholders’ critical eye and the board to deliver value, maximizing ROI while minimizing the risks. It is at this level that of the ‘executive community’ that buy-in and sponsorship are paramount. The executive decision-making stream is critical to any project’s success or failure. Establishing a PPM process and solution within the business is only workable if it has executive support and visibility. And this support is only tenable in the long term if members of the executive body have a reliable and workable
framework for extracting the information they need.
PPM is a lame-duck if executives and senior management do not take ownership and cannot sell its benefits to the board level. Executive sponsorship provides the infrastructure whereby the right authority is empowered to drive the organization’s right behavior. In other words, a truly strategy-driven approach to deploying PPM must start at the top for accountability, transparency, and, above all, credibility to extend throughout the organization.
The establishment of PPM within the business must be based on a simple yet effective premise of managing it as a change project from the top down. Executives can eliminate many problems simply by involving themselves at the appropriate points in the project delivery process, and this is never truer than with the implementation of PPM.
Moreover, the tools and processes must be bolstered by continual executive support and not delegated downwards once the process has been implemented. Therefore, as discussed in the next section, a permanent executive place on the PPMT is not only required but is essential to its long-term longevity. Managing the PPM process from the top-down increases the primary project planning functions’ visibility, enabling executives to make top-level decisions based on coherent, factual information, presented and accessed, and delivered in real-time. This visibility gives the executive decision-making stream a bird’ s-eye view of each department, their project progress, their cost, and who is responsible for each. As a result, executives can quickly make strategic and operational decisions, which can be adjusted as changes to projects in the pipeline arise.
The portfolio’s strategic contents, reasons for selection, and execution fall to executive champions and project sponsors. However, as stated earlier, the successful deployment of the PPM process affects a multilayered relationship. It is also dependent on how executive and strategic decisions about the business portfolio of projects are translated in real-time to the business’s operational side. In other words, how does the business communicate downstream with its program, project, and
resources managers? It is simply not enough for both sides to communicate within the strategic planning process, then afterward, for the focus to split back to each side’s respective interests with no iterative communication
between the two elements.
A key component of sponsorship by executives is managing PPM deployment as a change management project. In other words, change management needs to be represented at the board level, and executive buy-in will be needed to help set up a change program that will address the cultural issues stirred up by PPM. The change program will need to agree on a corporate vision and justify the necessary resource management decisions needed to select, buy, and implement the PPM tools. Executive
sponsorship will provide the PPM process with the necessary leadership to drive its implementation, weed out resistance, sell its benefits to the board, and provide long-term sustainability and credibility. As PPM is pushed down to the lower levels of an organization, this will begin to change the culture and impact.
For a PPM process to be successful, the organization needs this visibility of and control over resources to ensure that it has the right people in the right jobs at the right time. Effective PPM is about the ability to view resource allocation across all projects, programs, and portfolios and also have the ability to reallocate these resources to more critical activities and to factor this into any planning.
To better understand your business’s capability, three key components need to be factored into organizing for PPM:
• A single integrated resource and skills database: The PPM implementation must be designed to handle automatic resource allocation, facilitated by an underlying skills database drawn from a
single data source.
• ‘What if’ scenario capability analysis: Advanced scenario modeling provides the ‘what-if’ capabilities to examine multiple scenarios to help fine-tune assumptions about projected resource usage, performance, and milestones, and is essential to planning and forecasting the future direction of the project portfolio. This allows resource plans to be tested for feasibility, matching skills, competencies, experience, and availability. ‘What if’ scenarios give the portfolio process the ability to match supply and demand and clearly demonstrate to the rest of the business where potential shortfalls exist.
• Dashboard visibility of resources: PPM needs to deliver dynamic visibility by aligning resources with organizational capacities. As outlined earlier, dashboard visibility enables the business to drill down and drill up through capability management data by allowing all relevant roles and layers of management to efficiently measure and monitor the business’s internal and external resources demands in real-time. Dashboard visibility allows you to receive automatic notifications on
work slippage, capacity issues, and other concerns while extending
PPM is the Control, selection, and prioritization of the allocation of resources within the organization that helps project and program managers get optimum results. The main difference is in Project Portfolio Management, a bigger picture, and always thinks outside the box. In contrast, Project Management only handles an individual one, hence not looking at its strategic set goals. However, it may be the best approach for a single project to complete successfully.