Mastering Project Portfolio Management

Transcription

1 Mastering Project Portfolio Management A Systems Approach to Achieving Strategic Objectives Michael J. Bible, PMP Susan S. Bivins, PMP J.ROSS PUBLISHING

2 Contents Preface Acknowledgments About the Authors xi xv xvi Introduction to Project Portfolio Management Acceptance of Project Management Overview of PPM PPM Model Overview Strategic Phase Overview Screening Phase Overview Selection Phase Overview Implementation Phase Overview Evaluation Phase Overview Iterative Nature of the PPM Process Governance of the PPM Process Organizational PPM Roles and Responsibilities Executive (Strategic) Review Board Portfolio Management Board Portfolio Process Group ' Portfolio Managers and Portfolio Management Team ' Considerations for Implementing PPM...' Summary.'....-.' References 17 Establishing the Foundation Through Strategic Planning Overview of Strategic Planning 19 Role of Strategic Planning in the PPM Process 20 Organizational Mission and Values Mission Statement Denning Organizational Purpose Establishing Values and Ethics Defining Organizational Behavior Vision Statement Setting Long-term Direction Setting Goals Benchmarks for Achieving Success 24 Organizational Assessment Establishing Objectives Defining Performance Outcomes Strategic Plan Charting the Course 27 Environmental Protection Agency Strategic Plan Approach 27 Siemens AG Strategic Plan Approach Strategic Planning and Project Portfolio Management Completing the Strategic Phase American Business University Background & Strategic Plan ABU Mission 32

3 Mastering Project Portfolio Management ABU Vision ABU Goal ABU Objectives 33 ABU Objectives and Sub-objectives Summary References : 35 Introduction to Ratio-scale Measurements and the Analytic Hierarchy Process Decision Making with B.O.G.S.A.T The Importance of Hierarchies in Complex Problems Comparison of Ways to Use Numbers Nominal Scale Ordinal Scale Interval Scale Ratio Scale Compensatory and Non-compensatory Decision Making Analytic Hierarchy Process Pairwise Comparison Overview of AHP in Project Portfolio Management Introduction to Expert Choice Software Tools Comparion Suite : Expert Choice Desktop 48 Numerical Mode 49 Verbal Mode 49 Graphical Mode Periscope Summary ; References.; Prioritizing the Objectives Hierarchy Using Analytic Hierarchy Processes PPM Role in Prioritizing Objectives Prioritizing Objectives Structuring the Objectives Hierarchy Measuring by Conducting the Evaluation Select Measurement Methods Additional Pairwise Comparison Concepts Preparing the Participants Synthesizing to Derive Priorities for the Objectives Local and Global Priorities in an Objectives Hierarchy Ideal versus Distributive Mode Consistency Iterating as Necessary Present Results and Maintain Governance of the Process ABU Campus Revitalization Program Example ABU Campus Revitalization Program Goals and Objectives 62 Identify Objectives and Sub-objectives 62 Determine the Level of Objectives To Be Evaluated Prepare to Evaluate the Objectives Using AHP and Comparion 63 Login to Comparion and Create a New Project 63

4 Contents Basic Navigation in Comparion 66 Preliminary Project Management Information Structure the Model 69 Structure the Model Entering the Goal and Objectives 69 Including Sub-objectives in the Objectives Hierarchy 71 Structure the Model Participants and Their Roles Measure Establish the Evaluation Approach 76 Select Measurement Methods 76 1 Choosing the Participation Method 81 Check the Progress of the ABU Evaluation 83 Status When Objectives Evaluation Is Complete Perform the Evaluation Collect Data and Prioritize Objectives 85' Collect Data Synthesize the Results to Produce Relative Priorities 88 Ideal versus Distributive Mode 89 Consistency 90 Other Functions Available for the Synthesize Tab Iterate Reports Review and Present for Approval Prioritized Objectives A Major Step : Summary Appendix 4A Using Expert Choice Desktop to Create the Model Building the Expert Choice Desktop Model 93 Open Expert Choice Desktop 93 Create the Expert Choice AHP Model 94 Entering the Facilitators Address 95 Saving the Model...: 96 Opening an Existing Expert Choice Model...-.? 97 Establish the Goal.'. 98 Establish the Objectives Hierarchy, 99 Including Sub-objectives in the Objectives Hierarchy Complete the Model and Upload to Comparion 102 Local and Global Priorities 102 Selecting the Participants 104 Upload the Model to Comparion Appendix 4B Synthesizing in Expert Choice Desktop Combining and Synthesizing the Results Ideal versus Distributive Mode Consistency References 114 Building the Pool of Potential Projects Pre-screening Process Pre-screening Roles and Responsibilities Soliciting Project Proposals Project Proposal Submission Methods Receiving, Reviewing, and Evaluating Project Proposals Identifying the Pool of Potential Projects 120

5 Mastering Project Portfolio Management Obtaining Buy-in and Approval of Pre-screened Projects Determining Feasibility Other Considerations for Pre-screening Organizational Risk Tolerance and Attitude Senior Leadership Influence Anticipated Portfolio Budget Understanding the Organization's Capabilities and Resource Pool Project Management Capabilities Portfolio Management Capabilities ABU Campus Revitalization Program Pre-screening Pre-screening Process Establishing Roles and Responsibilities (Governance) 128 Board of Trustees (Executive Review Board) 128 Steering Committee (Project Management Board) 128 University Facilities Office Establishing the Program Management Office Implementing a PPM System Preparing to Pre-screen Project Proposals Soliciting Project Proposals for the ABU Revitalization Program Evaluating ABU Revitalization Program Project Proposals Obtaining Pre-screening Alignment Matrix Approval Summary References 133 Determining Candidate Projects and Making the Case Screening Process Screening Activities Screening Roles and Responsibilities ; Screening Prerequisites v :.' Business Cases Developing Business Cases Special Considerations for Cost Estimation Business Case Elements for Existing Projects Existing Projects Inventory of Existing Projects Organizational Change Management Establishing Project Categories or Classifications Common Categories of Projects Strategic Buckets Defining Screening Models for Project Categories Potential Screening Model Criteria Nonnumeric Criteria 144 Sacred Cow 145 Operating Necessity 145 Competitive Necessity 145 Product Line Extension 145 True Innovations Numeric Criteria 146 Payback Period 147 Average Rate of Return 148

6 Contents Discounted Cash Flow 149 Benefit-Cost Ratio 150 Internal Rate of Return 150 Modified IRR 150 Profitability Index 151 NPV Advantages Screening Model Considerations Developing the List of Candidate Projects for ABU ABU Campus Revitalization Program Project Categories ABU Campus Revitalization Program Screening Model ABU Candidate Projects Evaluating ABU Campus Revitalization Project Business Cases ABU Campus Revitalization Program Portfolio Candidates Alternative Approaches to a Specific Project Aligning Projects to Objectives the Alignment Matrix Summary Appendix 6A Sample High-level Business Cases Renovate and Expand C. W. Benson Campus Library 159 Project Name 159 Screening Criteria Overview 159 Background 159 Project Rationale 160 Project Objectives and Goals 161 Anticipated Benefits 161 Project Alternatives 161 Project Work Breakdown Structure 161 Cost Estimates ; 161 Resource Estimates 162 Risks and Mitigation Strategies../ Constraints ': :.'. 163 Assumptions Sample Business Case for ABU Indoor Athletic Complex Project 163 Project Name 163 Screening Criteria Overview 163 Background 164 Project Rationale '. 165 Project Objectives and Goals 165 Anticipated Benefits 165 Project Alternatives 165 Deliverable Work Breakdown Structure 165 Cost Estimates 167 Resource Estimates 167 Risks and Mitigation Strategies 167 Constraints 168 Assumptions Appendix 6B Choice Model Alternatives for Student Services Center Appendix 6C AACE Estimate Classifications References 173

7 Mastering Project Portfolio Management Prioritizing Candidate Projects PPM Role in Prioritizing Alternatives Prioritizing Candidate Projects Overview Structure the Model Adding Alternatives to the Model Map Alternatives to Objectives to Establish Contribution Specify Evaluators and Their Roles : Measure by Conducting the Evaluation Select Measurement Methods 179 Rating Scales 180 Step Functions and Utility Curves Establish Measurement Options Prepare the Participants Synthesize to Derive Priorities for the Alternatives Local and Global Priorities for Alternatives Ideal versus Distributive Mode Consistency Sensitivity Analysis Iterate as Necessary Present Results and Maintain Governance of the Process ABU Campus Revitalization Program Example ABU Campus Revitalization Program Alignment Matrix Prepare to Evaluate the Alternatives Using AHP and Comparion Structure the Model 187 Add Alternatives 187 Add Descriptions for Alternatives 188 Map Alternatives to Objectives to Establish Contribution 191 Specify Evaluators and Their Roles Measure Establish the Evaluation Approach.-.' 197 Select Measurement Methods!' 197 Establish Measurement Options 203 Asynchronous Anytime Evaluation 209 Synchronous TeamTime Evaluation Perform the Evaluation Collect Data and Prioritize Candidate Projects 213 Collect and Synthesize Data 214 Collect Data.' Synthesize the Results 216 Review the ABU Alternatives Evaluation Results 216 Ideal versus Distributive Mode Perform Sensitivity Analysis of Synthesized Results 218 ABU Dynamic Sensitivity Analysis Example 219 ABU Performance Sensitivity Analysis Example 220 ABU Gradient Sensitivity Analysis Example 222 ABU 2D Analysis Example The Need to Iterate Review and Present Results and Next Steps Prioritized Projects A Major Step Summary References 225

8 Contents 8 Considerations for Selecting the Initial Portfolio Funding Levels Selecting the Initial Project Portfolio Efficient Frontier., Constraint for the Initial Portfolio Groups ABU Initial Portfolio Selection Example ABU Initial Project Portfolios Preparing the Model Introduction to the Resource Aligner Preparing for ABU Initial Portfolio Selection 240 ABU Groups for Projects with Multiple Alternatives ABU Initial Portfolio Selection Scenarios 245 ABU $200M Portfolio Scenario 246 ABU $50M Portfolio Scenario 247 ABU Alternate Initial Portfolio Using Analysis of the Efficient Frontier 250 Comparing Selection by Optimization to Rank Order by Benefit Approach ABU Initial Portfolio Conclusions and Recommendations Summary References Additional Considerations for Selecting the Project Portfolio Organizational Power and Political Environment Balance and Coverage of Projects Across Objectives Resource Limitations Other Types of Constraints Mandatory and Prohibited Projects Project Dependencies and Enablers Establishing Funding Pods Accounting for Project Risk in Portfolio Selection../ Portfolio Risk :."..' Project Risk...: Optimal Portfolio with Dependencies, Balance, Coverage, and Risk Alternate Scenarios ABU Optimal Project Portfolio Example Project Dependencies and Mandatory Constraints 266 Must and Must Not Constraints 267 Project Dependencies Critical Resource Constraints Consideration of Balance and Coverage Creating Charts Showing Costs versus Benefits Consideration of Risk and Risk-Discounted or Expected Benefits Approval to Proceed and Next Steps Summary References Implementing and Governing the Project Portfolio Portfolio Performance Reporting Structure PPM Governance during Implementation Evolving PPM Roles and Responsibilities 304

9 Mastering Project Portfolio Management 10.4 Types of Portfolio Performance Monitoring and Control Foundation for Monitoring and Controlling the Portfolio Project Portfolio Management Plan Project Portfolio Management Information System Iterative Nature of PPM Responding to Strategic Change Summary References Implementing and Evaluating Project and Portfolio Performance Project Performance Indicators Earned Value Management Measuring Cost and Schedule Performance Schedule and Cost Performance Indices Combining Cost and Schedule Performance Estimated Costs to Complete Quality Performance Index Measuring Conformance to Specifications Measuring Project Performance Measuring Portfolio Performance Project Portfolio Performance Dashboard Evaluating Performance and Determining Portfolio Corrective Action Summary References 330 Index 331