An Overview of Project Portfolio Management

Project Portfolio Management
An Overview of Project Portfolio

Management
By
Dr. Ricky Mohanty
ASBM University
• Project Portfolio Management (PPM) is NOT

Project Management.
• Project Portfolio Management is a significant
advance over traditional PM methods, (which
focuses primarily on project execution).
• What are we trying to fix?

• PPM addresses a common problem where
scarce resources (money, people, facilities) are
allocated to the wrong projects.
• What’s different?
• PPM, therefore, goes beyond the art of
"managing projects right" and focuses on
"doing the right projects".
• The objective of PPM is to create the mix of

projects most likely to support the
achievement of the organization's goals,
aligned with the preferred strategies, and
within the organization's resource (people and
funding) constraints.
This presentation:
• Shows how PPM bridges the gap between the projects and
operations sides of the enterprise.
• Discusses organizational issues to place PPM at the hub of an
integrated process.
• Reviews the components of the project selection and
prioritization process.
• Discusses issues for managing the project portfolio and
maintaining a portfolio aimed at realizing the maximum
benefits.
Project Portfolio Life Span (PPLS) consists of the
following phased components:
1. Identification of needs and opportunities.
2. Selection of best combinations of projects (the
portfolios).
3. Planning and execution of the projects (project
management).
4. Product launch (acceptance and use of
deliverables).
5. Realization of benefits.
Project Portfolio Management Practices
and Organizational Roles
• Project Portfolio Management is a set of

business practices that brings the world of
projects into tight integration with other
business operations. PPM brings projects into
harmony with the strategies, resources, and
executive oversight of the enterprise. PPM
provides the structure and processes for
project portfolio governance.
• Organizing for PPM Bridges the Gap between

Projects Management and Operations
Management
• Organizing for PPM Bridges the Gap

between Projects Management and
Operations Management
– Project Management:
Schedule/Time, Project Cost, Performance,
Stakeholder Satisfaction, Scope/Change
Control
• Organizing for PPM
 Bridges the Gap between Projects
Management and Operations Management
 Operations Management:
Objectives, Goals, Strategies, Project Selection & Mix,
Cash Flow, ROI
• Organizing for PPM Bridges the Gap between
Projects Management and Operations
Management
– PM: Schedule/Time, Project Cost, Performance,
Stakeholder Satisfaction, Scope/Change Control
– OP: Objectives, Goals, Strategies, Project
Selection & Mix, Cash Flow, ROI
– Different people, different goals, different
rewards, different languages
Organizing for PPM

• Key involved parties (in addition to the PMO)
are senior managers or their designees
• May include CEO, COO, CFO, CIO, Strategic
Planners, VP-Operations, etc.
• The Challenge: How do we get these different
disciplines involved and on the same track?
• And … How do we communicate with them?

• Calls for establishment of a PPM Governance
Council, with representatives of aforementioned
management areas.
• Governance Council works in conjunction with
(and is supported by) the Project Management
Office (PMO).
• Decisions (project selection & de-selection) are
made by the Governance Council

• Clarifying the role of the PMO vis-à-vis the
role of the Governance Council
• In general:
• PMO is Information Center
• GC is Policy Center
• Recommendations are made by the PMO
• Decisions are made by the GC
• The Major Functions of Project Portfolio

Management
• Major functions of PPM are:

• Select Projects for the Portfolio
• Manage the Project Pipeline: Monitor
Approved Projects for possible deselection,
termination, or delay.
The Selection Process involves:
• Determination of an optimal or acceptable size of the
project pipeline
• Most organizations try to do more than they should
• Projects drag out
• Cost more
• Miss window of opportunity
• Resources float between projects
• Surveys: Make more money doing less projects
• Get more done with less people by doing fewer projects.
• The Selection Process involves:

• Ranking potential projects by value & benefits
• Financial Models
• Alignment with strategies
• Risk/Reward
• Various scoring models
• Check Lists

• Appraisal of risk
• Risk Assessment is a major component of the
selection process
• Risk Identification

• Potential for Risk

• Impact of Risk

• Impact of Risk
• Risk Mitigation Options

Appraisal of risk
Risk Assessment is a major component of the selection
process
Risk Identification
Potential for Risk
Impact of Risk
Risk Mitigation Options
This is NOT Monte Carlo type process

Identification of risk
Using a Work Breakdown Structure for Risk
A checklist
An organizer

Inventory of resource availability and allocation
This is a carryover from traditional PM
capabilities
With a couple of complications:

• Inventory of resource availability and allocation
• Availability:
• In-house
• Supplemental

• Availability:
• In-house
• Supplemental
• Allocation
• Committed Resources
• Softbooking
• Inventory of resource availability and
allocation
• Availability:
– In-house
– Supplemental
• Allocation
– Committed Resources
– Softbooking
• Your software must support this expanded
resource planning
• Alignment of projects with strategic plans
– The Strategic Plan sets the parameters for project
selection
– Identifies areas of Needs and Opportunities
– Sets ranges for resources, budgets, etc.
– Identifies Objectives and Initiatives
– Sets a Risk posture
– All of these impact on project prioritization and
selection.
– Build a WBS for strategies
– Create program buckets
– Size the buckets
– Link Projects to Program/Strategic Buckets
• Balancing:
• Balancing different types of projects by purpose
and benefit
• Balancing opportunity, benefits and risk
• Allocation Model:
• 60% - Growth & Enhancement
• 30% - Maintenance & Utility
• 10% - Experimental
Balancing different types of projects by purpose
and benefit
Maintenance & Utility Projects
Growth & Enhancement Projects
Transformation Projects
Allocation Model:
60% - Growth & Enhancement
30% - Maintenance & Utility
10% - Experimental
Example of three portfolios
Maintenance & Utility Projects (30%)
Incl. mandated projects – needed to stay in business
May not exhibit best benefit/risk numbers, but must
do anyway
Usually lowest risk
Allocation Model:
60% - Growth & Enhancement
30% - Maintenance & Utility
10% - Experimental
• Example of three portfolios
• Growth & Enhancement Projects (60%)
• New products & capabilities, consistent with current
business focus
• Main portion of portfolio, requiring greatest attention
• Medium risk
• Example of three portfolios
• Transformation Projects (10%)
• New product or service line (expanded or new market)
• Breaking new ground
• High risk
• Monumental reward if successful
• Generally not more than 10% of the resources
• Ranking potential projects by value & benefits
• Determination of an optimal or acceptable size of the
project pipeline
• Balancing different types of projects by purpose and benefit
• Balancing opportunity, benefits and risk
The process of Managing the Pipeline involves:
• Periodic measurement of project status and
performance [how are we doin’?]
• Schedule
• Cost
• Resources
• Scope
• Evaluation of project status and performance against
critical parameters [is this OK?]
• Earned Value Analysis
• Milestone Analysis
• Dashboard Charts
• Set Criteria
• Set Tolerances
• Display Green/Yellow/Red
Reporting items outside of
targets/limits/thresholds [what’s not OK?]
What’s not OK?
What are the consequences?
What can we do about it?
Who’s going to do it?
• Applying stage gate techniques for continuation
or termination decisions [phased approvals]
• Set milestones (phases)
• Set criteria for milestones
• Test against criteria
• Make Go/No Go decisions
Applying stage gate techniques for continuation
or termination decisions [phased approvals]
Set milestones (phases)
Set criteria for milestones
Test against criteria
Make Go/No Go decisions
It’s OK to terminate a project
Applying stage gate techniques for continuation or
termination decisions [phased approvals]
It’s OK to terminate (or delay) a project
Money down the drain
Missed window of opportunity
Better use of resources
No longer aligned with strategies
• PPM Requires integration of:
• Project Management, Operations
Management, Financial Management, and
Marketing
• Project Management and Strategic Planning
• Benefits Analysis, Risk Analysis and all above
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Project Portfolio Management

An Overview of Project Portfolio

• Project Portfolio Management (PPM) is NOT

• What are we trying to fix?

• The objective of PPM is to create the mix of

• Project Portfolio Management is a set of

• Organizing for PPM Bridges the Gap between

• Organizing for PPM Bridges the Gap

Organizing for PPM

• Organizing for PPM

• Organizing for PPM

• The Major Functions of Project Portfolio

• Major functions of PPM are:

• The Selection Process involves:

• The Selection Process involves:

• The Selection Process involves:

The Selection Process involves:

The Selection Process involves:

The Selection Process involves:

The Selection Process involves:

The Selection Process involves:

The Selection Process involves:

The Selection Process involves:

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