Frank P.Saladis PMP, PMI Fellow

Transcription

1 Frank P.Saladis PMP, PMI Fellow

2 Success factors for Project Portfolio Management The Purpose of Portfolio Management Organizational Assessment Planning a Portfolio Management Strategy The Portfolio Management Process Scoring Models Dashboards Assessing the Portfolio Management Process

3 Enterprise Success

4 Pat Durbin and Terry Doerscher, Taming Change with Portfolio Management

5 Successful enterprises need the ability to respond nimbly to sudden changes in customer demand, supply chains, and competitive shifts This ability is heavily dependent on innovation The Business Case For Project Portfolio Management, Innotas White Paper

6 Top Personnel Basic Education/Training Continuous Improvement Executive Support Standardized Process/Tools Qualification Matrix Continuing Education/Training Career Path PM Mentorship & Coaching Compensation Successful Enterprise Project Management Portfolio Management Successful Experience Compatible Related Business Processes Complimentary Management Philosophy Project Management Certification Project Evaluation Review Process

7 Assessment of overall portfolio health Assess contribution of project and program portfolios toward organizational strategic goals Assess and report the composite risk level of a portfolio Assess and report on resource usage Obtain and evaluate financial data and the value realized from portfolio components

8 The Purpose of Portfolio Management

9 Synchronize the significant effort of selecting, prioritizing and managing projects with the agreed upon and expressed vision and mission of the enterprise Create the appropriate mix of projects and programs Bridge the gap between projects and operational functions

10 To effectively manage Business Change Changing strategic direction Mergers New Products New markets Organizational Structure Establish a unified approach for prioritizing business activities and managing change that effects the sustainability and viability of an enterprise

11 Avoid looking at every change as a single isolated threat Portfolio management allows you to see individual change from a broader perspective Allows for more fluid adjustment to your game plan Change is the nature of the business game Change becomes a strategic tool

12 1. Consumer preferences 2. Energy costs 3. Tax policies 4. Reverse innovation 5. Non-traditional competitors 6. Extended enterprise risks 7. Exponential growth in information flow 8. Long-term growth strategy New markets 9. Global economy 10. Political influences 11. Legal / Regulatory 12. Increasing capability

13 Organizational Assessment

14 My organization has an effective and reliable process for evaluating and selecting projects and programs for execution My organization has a specific, practical, and enforced process for managing project and program change My organization is highly effective and efficient at managing changes in priorities

15 My organization has a specific and reliable process to determine if projects and programs are delivering the desired value My organization has a well defined and reliable process for determining which projects and programs should be discontinued My organization allows the critical asset of people to respond effectively to change

16 My organization consistently maintains the appropriate mix of projects and programs at a level of performance that will enable the organization to achieve its strategic objectives, sustain a high level of operational performance and support the continual enhancement of the brand

17 What are the top 5 assets your executives would consider most important to your organization? If you are not sure, you may be investing disproportionally possibly on declining assets When you have identified the top 5, determine the percentage of the total portfolio budget that is being spent on those assets

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20 Planning a Project Portfolio Management Strategy

21 Portfolio Management Organizational Strategy Portfolio Portfolio Project Project Programs Knowledge Method Pte Ltd PPM Pa ge 21

22 A collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives The projects and programs may not be interdependent or directly related Components of a portfolio are quantifiable: They can be measured, ranked, prioritized

23 The effort of coordinating the tracking and controlling of portfolio components to ensure effective decision making that will support the achievement of specific organizational objectives Provides a platform for a governing body to make decisions that influence the direction of a component or group of components (projects, programs, other work)

24 1. Maintaining portfolio alignment 2. Allocating financial resources 3. Allocating human resources 4. Measuring component contributions 5. Strategic risk management The Standard for Portfolio Management PMI

25 What mix of current and potential projects will provide the best utilization of human and financial resources to maximize long term growth and return on investment? How will new projects or how do existing projects support strategic goals and objectives? How will projects affect the value of corporate shares?

26 How will portfolios be defined and populated? How will day to day operations be affected? What criteria will be used to determine if new or existing projects /programs support strategic goals and objectives? Are all project portfolios connected to the strategic objectives?

27 Strategic projects and programs Projects and programs that support day to day operations (level 2) Portfolio management provides a method for optimization in both environments

28 Optimizing the use of limited funds and resources, and support of missions and strategies is vital for survival PPM assumes that the enterprise positions itself for increased strength and profitability through its selection and execution of projects Harvey A. Levine, Author Project Portfolio Management, A Practical Guide to Selecting Projects, Managing Portfolios, and Maximizing Benefits

29 Projects must align with the organization s strategies and goals Projects must be consistent with the organization s culture and values Projects must contribute directly or indirectly to a positive cash flow Projects must effectively use the organization s resources: people, infrastructure and other resources

30 Project Management Strategies Objectives / Goals Business Performance Stakeholder satisfaction Project selection and mix Resource availability Cash flow, revenue Schedule / time Project cost Project performance Stakeholder satisfaction Scope / change control Resource utilization Funding usage

31 Not the Management of Multiple Projects Part of strategic planning Projects must not only provide for current contributions to the organization s health but must help to position the organization for future success

32 Governance and oversight for portfolios Establish and maintain relevant portfolio management processes e.g., risk management, resource management Guide the selection, prioritization, and balancing of the portfolio components to ensure alignment with strategic goals Establish and maintain a supportive infrastructure Continuously review, reprioritize, and optimize the portfolio to maximize value and benefits realization

33 Governance and oversight for portfolios One portfolio manager typically oversees one portfolio. Reviews the performance and conformance to expectations of components within the portfolio. Ensures that data for each of the components in the portfolio is collected and analyzed. Provides stakeholders with timely assessments of portfolio performance Enables periodic decision making about the future direction of enterprise initiatives.

34 Measuring and monitoring the value to the organization through KPI and CSFs (ROI, NPV, Payback) Supports senior level decision making through timely communication about progress and changes that impact portfolio components Participates in program and project reviews Provides leadership, support, involvement Adheres to ethical standards

35 The Portfolio Management Process

36 Portfolio management is a set of disciplined processes designed to ensure smarter business decisions about change events PPM allows you to view, analyze, and act on meaningful business information People Capability and knowledge Money financial condition Work What the organization does Deliverables Your products and services

37 Project Portfolio Management Strategi c Goals Project Ideas, Recommendations Business Solutions Environmental & Organizational Factors Customer needs Compliance issues Organizational capacity & capability Organizational leadership Economic environment Operating efficiency Financial capacity Competitive position Sustainability Brand recognition Risk sensitivity Human Factors Morale Trust Loyalty Project Selection Process (governance) Innovation Creativity Risk sensitivity Business savvy Cost / Benefit Analysis Tangible benefits NPV, ROI, IRR Payback, Breakeven Intangible Benefits Goodwill, trust Customer Loyalty, Acceptance by Society Risk Assessment - feasibility

38 Accepted Organizational Level Project and Program Portfolio (portfolio of all portfolios) Project Selection Outcome Deferred Rejected Compliance projects Programs Prioritization Interdependent projects and programs Independent Projects R&D Resource Requirements

39 Project and Program Portfolios (approved projects) New Strategic Goals Compliance projects Programs Independent projects Interdependent projects & programs R&D Strategic Goals Achieved Enterprise PM Methodology (Portfolio Governance) Tools Techniques Best Practices Enterprise Software Status / Results: Dashboards Project and program health Go/ No Go decisions Completed projects Updated priorities

40 Set Strategic Goals Select Right Projects and Programs Prioritize Lessons Learned Deliver Successful Projects & Programs Portfolio Management Cycle Assign to Portfolio Manage Projects / Programs Continue Value Adding Projects & Programs Re-Prioritize / Terminate Projects Review Project Performance

41 Performance Measures Examples: Percent of target dates missed Percent variation from budget Percent of changes to project scope Percent of on time completion of tasks Percent of on time completion of milestones Cost of poor quality Percent of errors/defects Number of requests for corrective action Time to correct problems Number of schedule changes Knowledge Method Pte Ltd PPM Pa ge 41

42 Reflect results, not the activities used to produce the results Relate directly to a performance goal Are based on measurable data Contain normalized metrics for benchmarking Are practical and easily understood by all Provide a continual self assessment Provide a benefit that exceeds the cost Are accepted and have owners Knowledge Method Pte Ltd PPM Pa ge 42

43 Actions: Are we doing what we agreed upon? If not, why not? What is needed to set things in motion? Assumptions: Are conditions as we expected? Adjust strategies to actual conditions Achievements: Are we getting the results we anticipated? If results are not what we intended, a cause an effect analysis is required to identify and then determine how to correct the problem(s). Adjustments: Are we applying what we have learned? What are we doing with the measurements? Use measurements as a steering mechanism to make adjustments as the organization moves forward Knowledge Method Pte Ltd PPM Pa ge 43

44 Assessing the Portfolio Management Process

45 Report on the effectiveness of project/program management methods Assess progress and provide information about the total investment in a portfolio or portfolio component Manage project, program, or portfolio dashboards

46 Strengths and Weaknesses in : Project Identification Project Selection Financial analysis Categorization Evaluation of feasibility and capability Prioritization Portfolio Balancing Authorization Periodic review and reporting Managing strategic change

47 Practical and Tactical Project Portfolio Management

48 Consider the definition of practical. It means capable of being put to use, something likely to succeed or be effective in real circumstances.

49 Are business processes well defined, with minimal bureaucracy? (This refers to the general processes across organizational entities that are engaged in running the business) Are all internal business entities utilizing (and enforcing) established procedures? Selecting projects Is the project selection process clearly defined and practiced? Is the project / program pipeline organized for efficiently determining the best mix of projects and essential programs? Is the go and no go decision process aligned with organizational or line of business objectives?

50 Is a "bid/no bid" checklist in place to ensure minimal risk exposure and maximum opportunity? Is there a process or scoring model to ensure appropriate weighting of projects based on alignment to the strategic plan Is there a viable market? Has the competition been assessed? Is an enterprise portfolio management tool in place or available to assist in governing portfolios and programs?

51 Consider the definition of tacticala : of or relating to tactics: as (1) : of or relating to small-scale actions serving a larger purpose (2) : made or carried out with only a limited or immediate end in view b : adroit in planning or maneuvering to accomplish a purpose

52 Periodic reviews of the project selection process Periodic reviews of the gating or decision process in the project and or program pipeline Reviews of projects, programs and other components within defined portfolios Review and reassess organizational key performance indicators and critical success factors Establish a standard training program for project, program, and portfolio managers Use of a standard enterprise level tool for project, program, and portfolio management

53 A stakeholder analysis process to identify the specific needs of project and program key players. This type of analysis will assist in determining the influence levels of stakeholders and can be used to develop strategies for managing them effectively. Establish a PMO A Project, Program, or Portfolio Management Office(or a PM Center of Excellence). A PMO can provide standard tools and techniques that would assist in creating a consistent approach to managing project and programs

54 A defined risk management process Risk management during project and program selection, during actual implementation and during the tendering process can minimize exposure to factors that could result in damage to reputation, penalties, and other costly circumstances

55 Critical Questions

56 How effective and efficient is the project and program selection process? Are critical resources assigned to the highest priority projects? Are all resources fully utilized? Are projects and programs aligned with organizational goals and objectives? Are projects and programs integrated with ongoing operations? This relates to planning, scheduling, resource availability, change management

57 Is the mix of components in a portfolio providing an optimal balance in terms of risk, value to the organization, and meeting client needs? Is a performance measurement system in place to assess projects and programs that will identify significant variance, raise awareness about warning signs, and assist in making decisions about whether projects should continue or be terminated

58 Business Acumen Strategic planning Marketing and sales Knowledge Management Organizational culture Operations, metrics, and KPIs Legal and regulatory Financial & Business Analysis Business case development Economic models Governance Leadership Motivation Direction Communication Project Management Procurement and Vendor Management Planning Controlling

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60 Scoring Models

61 Risk High risk, high reward High risk, low reward Low risk, High reward Low risk, low reward Urgency of Deliverable Operational necessity Long term payoff Competitive positioning Knowledge Method Pte Ltd PPM Pa ge 61

62 Total Project Score = 70 of 100 Project Deliverable of 40 points Total cost -10 Score 5 Duration -8 Score 5 Scope -12 Score 10 Quality -10 Score 10 Value to the Organization of 60 points Financial of 24 ROI -8 Score 6 Payback-4 Score 4 Cost Benefit - 12 Score 10 Strategic of 36 Competitive issues -6 Score 4 New Bus Ops 12 Score10 Capability Improvement -18 Score 6

63 Total Project Score = 2272 Project Deliverable Weight = 3 Subtotal 22 Total cost -10 Score 3 Duration -10 Score 1 Scope -10 Score 10 Quality -10 Score 8 Value to the Organization Weight = 8 Subtotal 277 Financial Weight = 7 Score 19/30 ROI -10 Score 5/10 Payback-10 Score 4/10 Cost Benefit - 10 Score 10/10 Strategic Weight = 9 Score 16/30 Competitive issues -10 Score10/10 New Business Issues -10 Score 4/10 Capability Improvement - 10 Score 2/10

64 .75 x.66 = 49.5% Project Deliverable -40 Percent of total Score = 30 of 40 =75% Value to the Organization 60 Percent of Total 40 of 60 = 66% Total cost -10 Score = 5 Duration -8 Score = 5 Scope -12 Score = 10 Quality -10 Score = 10 Financial -24 Score 20 ROI -8 Score 6 Payback-4 Score 4 Cost Benefit - 12 Score 10 Strategic-36 Score 20 Competitive issues -6 Score 4 New Business Issues -12 Score 10 Capability Improvement - 18 Score 6

65 New Business Is this project outside of our current operational norm? New business 50 % new business Typical project Project Type 100% New Business 10 50% New Business 8 Typical Project, Current technology Score 5

66 Marketability Can this solution be used in other organizational units? Project solution transferrable score = 10 Limited to this client only score = 5

67 Cost Savings This project is expected to have operational savings of: In excess of 20% score = 10 Between 15% and 20% score = 8 Between 10% to 15% score = 7 Breakeven score = 5

68 Profitability This project will impact the organizational profit margin: Exceeds the norm by 20% + score = 10 Exceeds the norm by 10%-20% score = 8 Meets the norm score = 5 Breakeven score = 0

69 Internal Rate of Return Net Present Value Benefit / Cost Ratio Time to breakeven Discounted cash flow Total cost as a percentage of the total available funds Relationship to total expected value of the portfolio Knowledge Method Pte Ltd PPM Pa ge 69

70 Dashboard Views

71 A simple graphical presentation of diverse data that can be used to drill down on underlying information. A dashboard offers a standard format for project status that everyone can understand An at-a-glance project status tool

72 Portfolio Overall Health view of entire portfolio against predefined KPIs Organization Strategic Goal Achievement Projected and Realized value from the portfolio Risk Profile The composite risk level of the portfolio Resource usage - planned and actual (billable time and non billable time) Financial Information Value received, costs incurred, forecasts, earned value analysis, percentage of total organizational financial investment

73 Executive summary Desired business outcomes Financial summary Project Risks Project Complexity Rating Next project gate (phase end review) Project health (red, amber, green) Planned and actual budget Schedule - Milestones / Deliverables Project scope changes Project Issues

74 Consistent communication of portfolio performance, project or program health and timely status to sponsors and executives Increased visibility of risk and issues that may impact the portfolio and / or organizational success Provides early opportunities for action and course correction Provides details and evidence for governance decisions

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79 Frank P. Saladis PMP Recent Books: Positive Leadership In Project Management Mastering People Skills A Guide for Project Managers - booktango.com and amazon.com Knowledge Method Pte Ltd PPM Pa ge 79

80 Advanced Project Portfolio Management and the PMO Multiplying ROI at Warp Speed by Gerald I. Kendall,PMP, Steven C. Collins,PMP Project Portfolio Management, A Practical Guide To Selecting Projects, Managing Portfolios, and Maximizing Benefits by Harvey A. Levine Strategic Project Portfolio Management Enabling a Productive Organization by Simon Moore

81 Taming Change With Portfolio Management by Pat Durbin and Terry Doerscher Project Portfolio Management Tools and Techniques by Parviz F. Rad and Ginger Levin