Project Portfolio Management: Get a Grip (Again)
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- Bryce Fleming
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1 Strategic Planning, M. Light Research Note 5 February 2003 Project Portfolio Management: Get a Grip (Again) A lack of practices, tools and information to facilitate nearreal-time control can frustrate project portfolio management. "Dashboard" processes enable IS organizations to deliver information tools for business processes in near real time. Core Topics Application Development: Managing Application Development Business Management of IT: Real-Time Enterprise Key Issues What project management tools, processes and techniques are required for delivering high-quality, on-time and on-budget applications? How should enterprises select the first processes to subject to time-based transformation? Strategic Planning Assumptions Through 2006, IS organizations that lack stringent risk assessment procedures will cancel more than 20 percent of projects in the execution phase (0.7 probability). Through 2006, IS organizations that lack a project management competency center to reliably deliver projects and master sourcing governance will cause major annual disruptions to business operations (0.6 probability). By 2005, 70 percent of IS organizations will have adopted a mix of project portfolio management application services for team collaboration, resource allocation, and utilization and cost tracking (0.6 probability). Enterprises struggling with frequent postponements of high-value application work, failed projects or inefficient resource utilization have been seeking new ways to "get a grip" on their project portfolios. Here, we outline a project portfolio management process. To function well, this process must be enabled by the appropriate organizational mechanisms (such as a project office) and applications (for example, Business Engine, Niku and Pacific Edge). When the process is working well, near-real-time decisions on project priorities, cancellations, risks and remediation become possible. However, with limited visibility into project status, resource utilization and other metrics, only "reactive" decision making is possible. Through 2006, IS organizations that lack stringent risk assessment procedures will cancel more than 20 percent of projects in the execution phase (0.7 probability). The creation of a dashboard validated against business requirements is an imperative for enterprises looking to remain competitive and proactively manage application delivery. In 1998, we offered a framework for validating the portfolio of IS and application projects (see "The AD Project Portfolio: Get a Grip") and stressed the importance of a dashboard process and the tools to proactively manage the delivery of technology services (see "The AD Management Dashboard: Get a Grip"). Some IS organizations have progressed toward such a project portfolio management approach, supporting organizational and procedural change and metrics collection with the use of project/resource management applications, so that most IS organizations now have a form of project office with responsibilities that include training in the tools and generation of the dashboard reports for a project review board. Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.
2 Regular project review meetings are essential to optimizing project portfolios. The usual tracking of individual projects against plan with a mix of time and status reporting does not help with cross-project prioritization or with balancing "continue/kill" decisions against new project opportunities nor does it help with scheduling scarce, specially skilled resources. To help IS and application delivery (AD) organizations prioritize and schedule, account for costs and efficiently apply resources across their project portfolios, we recommended in 1998 that IS and AD management not only analyze the project portfolio s mix, but continuously validate it. Figure 1 provides a high-level view of such a process, in four "macro" phases. The bar across the top shows a panel of sample indicators for continuously evaluating projects against one another and against business goals. Figure 1 Project Portfolio Process and Key Indicators Budget Pipeline Resource Utilization Bottlenecks Progress Variance Profitability Defects Charter Prioritize Execute Closure 1 Feasibility Preliminary Planning Estimating Risk Assess Cost/Benefit 3 Project Ranking Value Analysis Return on Investment Queue Management Time-to-Market Analysis 5 Planning Scheduling Resource Management Tracking Reporting Replanning/ Rescheduling Risk Tracking 7 Best Practice Harvesting Metrics Gathering Submitted 2. Identified 3. Funded 4. Approved 5. Scheduled 6. Balanced 7. Delivered 8.Vaulted 9. Registered Source: Gartner Research For example, in the chartering phase, a growing imbalance between innovative or "frontier" projects and maintenance or "utility" work could provide a warning signal. (For a discussion of the "utility-enhancement-frontier" framework, see "The Gartner Portfolio Management Tool for IT Investment.") To avoid excess overhead, management will need to set a threshold (for example, one person-month) below which work is not subject to a full "chartering" review; however, such work would still be entered into the system's chart of accounts to enable time capture. 5 February
3 The cycle of iteration depicted between Phase 2 (prioritization) and Phase 3 (execution or "micro" project life cycle) signifies the reprioritization and rescheduling of projects based on portfolio validation. These phases interact fluidly, so a project's place in the queue is changeable. The high-level prioritization criteria must be established by senior management (see "Note to AD Managers: Stop Prioritizing Your Projects"), but the availability of key resources can demote those projects in the queue that will require those resources, and the enterprise project management tools can be used to plan and control this (see Note 1). Thus, the "gate" involves a reverification of a project's critical success factors, including resource availability and the continued validity of the business case, with the business sponsors. In addition, shifting business, technology and market conditions can rearrange priorities, as with many Web projects in the last few years. Note 1 Representative Vendors of Enterprise- Class Project Portfolio Management Tools Artemis (ViewPoint and Portfolio Director) Business Engine (BEN) Lawson (SA) Microsoft (MSP 2002) Niku (Niku 6 and Niku Portfolio Manager) PlanView (PlanView 7.2) Primavera (TeamPlay 3.5) The closure phase begins with the post-project review. How long did the project really take, what was its actual size and what functionality was delivered vs. requirements? Quality and defect metrics are collected during this closure phase via a shakeout period of about three months, and, as defects are corrected, any reusable components can be "hardened" for possible reuse. Increasing defect rates or late delivery can provide warning signals. A project office is appropriate to provide the project portfolio reports and forecasts required by IS/AD management (see "The Project Office: Teams, Processes and Tools"). Organizations similar to project offices are increasingly used to provide project managers or project management training, as well as to log new skills and knowledge gained, capture best practices, track defect rates, and provide reuse services and related work. Most IS organizations can gain speed and quality from the establishment of a project management competency center. Through 2006, IS organizations that lack a project management competency center to reliably deliver projects and master sourcing governance will cause major annual disruptions to business operations (0.6 probability). The Dashboard IS/AD managers work within the context of a multiconstraint model. Constraints include (but are not limited to) budgets, resource capacity, skillsets, customer expectations and technology infrastructure. Against the background noise of such common plaints as "I had to have it yesterday," "do more with less" and "just one more change, please," managers can gain efficiency, productivity and some peace of mind by setting up and monitoring a management dashboard. 5 February
4 A dashboard comprises a set of organization-specific metrics pertinent to project delivery and enables managers to "manage by exception" (that is, take action when a tolerance range has been exceeded). Data-gathering processes must be set up with senior management support, and they should focus initially on the IS and AD groups' key areas of concern. A comparative benchmark can help identify areas of relative weakness; however, management can typically identify key goals, such as improving application quality, reducing cancellations, estimating more accurately and cutting maintenance costs. Procedures for collecting specific data are then built into the current process, with the conviction that they are key to problem prevention and process improvement and will yield substantial payback. These procedures should normally be executed by an authorized project manager, perhaps working out of a project office. Tools (such as estimating, testing or time collecting) will support these procedures. Savings gained by assessing and applying the knowledge derived from the new procedures should be quantified and publicized. In recent research, we've indicated a variety of project metrics (see "What Are Project Office Best Practices and Metrics?"). However, other categories of metrics may be more-immediately useful, depending on organizational context. An enterprise may need more, or it may require a different set. Note 2 Examples of Specific Metrics Project Management: Milestone achievement Earned value Critical-path slippage Scope creep (changes) Resource Management: Resource loading Billability Overtime Web Services Usage: Time finding/analyzing Web services Number of services incorporated New services harvested Quality: Defect arrival and removal rates Requirements accuracy and customer satisfaction Maintenance expense Many tools are available to help plan and schedule projects, as well as allocate resources based on skills and constraints and track progress, costs and other metrics (see Note 2). In fact, these tools, many of which emerged from the project/resource management market of the 1990s (see "Hitting the Wall with Microsoft Project?, Part 1" and "Hitting the Wall with Microsoft Project?, Part 2") now generally leverage Web-based technology for real-time alerts, as well as for project discussions and the handling of project documents. In addition, such enterprise resource planning (ERP) II vendors as Lawson Software, Oracle and PeopleSoft have recently added significant project portfolio management modules. By 2005, 70 percent of IS organizations will have adopted a mix of project portfolio management application services for team collaboration, resource allocation, and utilization and cost tracking (0.6 probability). Although promising, the actual implementation of such tools should be secondary to the creation of the dashboard process and the identification of key organizational metrics. With limited visibility into project status, resource utilization and other metrics, only "reactive" decision making is possible. Enterprises struggling with canceled projects, inefficient resource utilization or frequent postponement of high-value application 5 February
5 work should attempt to get a grip on their project portfolios using a process framework like that outlined here, enabled by the use of project management tools and appropriate organizational mechanisms. The creation of a dashboard validated against business requirements for AD is an absolute imperative for AD organizations that wish to remain competitive and to proactively manage application delivery. Acronym Key AD Application development ERP Enterprise resource planning ROI Return on investment Bottom Line: Project-intensive organizations with ad hoc processes for managing their project portfolios can realize significant productivity and satisfaction improvements by better defining these processes and supporting them with suitable applications. Improved planning, resource utilization, project change management and project communications will provide most enterprises with significant return on investment (ROI). 5 February
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