Frank P.Saladis PMP, PMI Fellow

Frank P.Saladis PMP, PMI Fellow

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

Enterprise Success

Pat Durbin and Terry Doerscher, Taming Change with Portfolio Management

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

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

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

The Purpose of Portfolio Management

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

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

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

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

Organizational Assessment

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

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

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

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

Planning a Project Portfolio Management Strategy

Portfolio Management Organizational Strategy Portfolio Portfolio Project Project Programs 20012 Knowledge Method Pte Ltd PPM Pa ge 21

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

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)

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

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?

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?

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

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

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

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

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

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

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.

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

The Portfolio Management Process

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

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

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

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

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

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 20012 Knowledge Method Pte Ltd PPM Pa ge 41

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 20012 Knowledge Method Pte Ltd PPM Pa ge 42

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. 20012 Knowledge Method Pte Ltd PPM Pa ge 43

Assessing the Portfolio Management Process

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

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

Practical and Tactical Project Portfolio Management

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

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?

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?

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

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

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

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

Critical Questions

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

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

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

Scoring Models

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 20012 Knowledge Method Pte Ltd PPM Pa ge 61

Total Project Score = 70 of 100 Project Deliverable -40 30 of 40 points Total cost -10 Score 5 Duration -8 Score 5 Scope -12 Score 10 Quality -10 Score 10 Value to the Organization 60 40 of 60 points Financial -24 20 of 24 ROI -8 Score 6 Payback-4 Score 4 Cost Benefit - 12 Score 10 Strategic-36 20 of 36 Competitive issues -6 Score 4 New Bus Ops 12 Score10 Capability Improvement -18 Score 6

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

.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

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

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

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

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

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 20012 Knowledge Method Pte Ltd PPM Pa ge 69

Dashboard Views

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

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

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

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

Frank P. Saladis PMP saladispmp@msn.com 718 698 5231 Recent Books: Positive Leadership In Project Management Mastering People Skills A Guide for Project Managers - booktango.com and amazon.com 20012 Knowledge Method Pte Ltd PPM Pa ge 79

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

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