Agile Project Portfolio Management

C an Do GmbH Implerstr. 36 81371 Munich, Germany

AGILE PROJECT PORTFOLIO MANAGEMENT Virtual business worlds with modern simulation software In view of the ever increasing, rapid changes of conditions, project work is playing an increasingly important role in companies today. It is getting harder all the time, for managers to keep an overview of the entire project. Project ideas and current projects are summarised and assessed in project portfolios. In the end, it s all about deciding which project should be implemented and which should rather be put on ice. Software that supports the portfolio manager s decision-making processes must be able to capture and cope with the increasing and fluctuating amounts of data behind the projects and project ideas. Simulation software must prepare the data intelligently so as to provide the manager with a well-grounded and realistic basis for his decisions. Portfolio management within companies From the project idea, through the project, to the archives Projects decide the daily work within many companies. In an economical context, a project is considered to have been implemented successfully when a pre-defined goal is achieved within the agreed budget and the agreed time frame. A successful project runs according to the plan that was drawn up. Whether the project made sense and was useful to the company is not stated in the project plan and is also not assessed within the framework of the project plan. But, that is exactly what really matters: It is not about bringing any old project to a successful close, but rather about carrying the right projects through and implementing them. This is how a really simple and chronologically oriented process emerges: First of all, projects come from ideas, e.g. customer queries. These ideas are gathered together in a portfolio, where their feasibility and entrepreneurial usefulness is assessed. The projects that make sense are started and those that make less sense are put on hold. The selection of the right projects is an ongoing process. Every new project starts off in a portfolio from where it is assessed for feasibility and value or usefulness to the company. If the portfolio manager comes to the decision that the project should be implemented, he gives the go-ahead. The realisation then follows according to the proven project management methods with the support of the appropriate portfolio management tools. It is common practice to make cyclic decisions with regard to the projects that are to be realised. This causes the company to lose a lot of time and money, because the projects that are to be implemented each have certain potential and value that is only recognisable when the project is realised. Every day that goes by until the project is implemented, means losing a bit more of the expected positive effect of the project. If a project is brought to a successful close, it should be archived, and not deleted. Besides the mandatory obligation to preserve records, this also offers the possibility of using the project data as a basis for similar ideas and for reflection on lessons learned. Multi-project structures Usually, there is more than one project running within a company at any given time. At the same time, new projects are being planned and the implementation of other ideas is being decided upon. Running projects tie up resources and furthermore, they are often the predecessors of new projects. Therefore, a portfolio is only functional and complete when both the future and the current projects are taken into consideration. Can Do GmbH Page 2

Multi-resource structures In addition to the financial means available, the human resources available also affect the likelihood of the realisation of a company s projects. For modern portfolio management software, the fact that most project workers are typically involved in more than one project at any given time is a big challenge. This makes both the planning of a project and keeping track of it into a complex matter. In this context, a relatively accurate forecast regarding the availability of staff for the required period is a decisive factor for the analysis of the portfolio. Employees seldom work exclusively on one project. Usually, they have a certain number of basic tasks and a relatively routine working day. This makes it very difficult to simulate a project portfolio. Some employees are tied up for several days at a time with the work that needs to be done in their own departments, or with ad-hoc tasks, and this makes it very difficult to pin down how much time they have. Modern project management systems are able to capture such basic behaviour patterns. In fact, many programmes even have a suitable capacity calculation model that can represent and simulate reality very well indeed. Projects in portfolios Projects in a portfolio are usually simply outlined. The entry contains little more than the most relevant header information of the projects such as name, project start and end and the costs. Over and above this, the basic general capacitative requirements and the usefulness (e.g. turnover and profit) are also included. The risk is sometimes added manually, sometimes calculated by a computer programme. In the area of capacity risks, high-performance software that is able to process the large amounts of data required to calculate the likelihood of a capacity overload, is required. The visual depiction of the analysis of the projects within a portfolio is usually in the form of quadrants or bubble charts. It is important that the current projects in the portfolio are taken into consideration and represented in the graphs. The simulated portfolio world Structural data sources In the simulation of project portfolios, the following also applies: The more data that is available, the more accurate will be the simulation. However, the quality of the data is the deciding factor. Past data, such as the actual chronology of current projects, is easiest to obtain. It is useful for the portfolio, when the discrepancies between the actual data and the desired data can be determined. If a project is moving along more slowly than planned, one can presume that the future cost planning has been set too low. The more accurately project ideas or project offers are analysed, the more precisely will the computer be able to calculate their realiability. The biggest problem here is the handling of innovative project ideas for which only limited amounts of experience exist. In this case, rather than planning the worst case with the highest values the project and portfolio managers should strive to gain as much knowledge as possible, in order to be in a position to come up with a realistic assessment. Another possibility is the use of systems that are able to represent inexact planning scenarios adequately. For instance, you could plan here for a project to begin in the third quarter. The duration of the project would be 12 to 15 months. The software would then produce various complex probability models and compare them constantly with the actual processes. In such cases, the results would represent the probability of occurrence for the portfolio. This approach represents reality more closely and provides the best results. A further challenge is the estimation of the usefulness of the project or portfolio. For this purpose, there are programmes that gather ideas, and from these, they are able to assess what processes Can Do GmbH Page 3

the project will entail for the employees, or what use the project would be to the company. Weighting models and other processes will then be used to determine a value (score) for the project. If decisions regarding projects are affected by external factors or made by external people, it is very difficult to create the most likely portfolio. This situation raises its head very often in business, when an offer is accepted or declined. Software solutions that create a probability value for a project portfolio, that indicates the likelihood of a project being realised, are helpful in this respect. With this software, every potential project (offer) is given a probability of occurrence value. In this simulation, the effect that the project will have on usefulness, costs and utilisation of resources is then calculated on the basis of probability of occurrence. Dealing with ideas Innovation management is all about dealing with and managing ideas. Before an idea reaches a level of maturity anywhere near that required for implementation, it must go through many processes during which it is broken down and looked at from ever changing angles. A modern portfolio management system can provide this. It becomes really interesting when an idea is developed into a concrete project application and is assessed for realisability and usefulness. At this stage, even good ideas can be rejected or put on ice. Risk management The topic of risk management is very present in all the project considerations surrounding a portfolio. Besides contemplating the usefulness and the planning-related information of a project idea, a risk analysis should also be performed. This involves estimating the potential damage that could be caused by the project and the likelihood of this damage occurring. This damage would have a negative effect on the financial usefulness of a project. A project that seems at first glance to be absolutely promising can entail substantial financial risks should it fail. One of the greatest risk factors relating to projects is lack of knowledge. Even if some project planning systems give the impression that every step of a project can be precisely planned, hardly any projects run exactly according to plan. Nevertheless, projects are usually run more or less to an exact project plan because there is hardly any planning software that can represent inaccurate, inexact information in an adequate manner. For example, if the costs of the project are estimated based on between 500 and 800 person days, it can be presumed that there is still a high degree of ignorance involved. To incorporate the highest costs into the planning at this stage is just as likely to fail the target as incorporating the lowest costs would be. Inaccurate consideration In view of the fact that future developments cannot be predicted with any degree of certainty, the advantage of inaccurate planning methods,i.e. realistic planning methods, lies within reach. However, in some industrial concerns, considerable efforts are made to plan a project, right from the idea stage, to such a degree that nothing can go wrong later. The creed is: The more detailed and accurate the planning, the better and more securely the project will run. Actually, the opposite is the case: The more detailed and accurate the planning, the more likely it is that discrepancies will arise. There must be a healthy relationship between the costs and the possible usefulness. This can also be expressed in terms of consideration of risks: Within the framework of project portfolio planning, project ideas should display a good balance between opportunities (the usefulness of the project) and risks. Agile resource planning In the past, planning in of capacities depended mainly upon the availability of machines. The planning of routine tasks recurred regularly, so it made sense to optimise these more and more. These models were frequently adopted in project management systems with a resource planning Can Do GmbH Page 4

function. However, they have not proven successful in practice, because the results of work done by people cannot be predicted accurately. People are more flexible, are able to complete many different tasks and are able to organise their work by themselves. Resource planning for projects The various tasks within a project do not have a high rate of repetition but rather, are unique in their professional form. The concept of agile planning processes presents a solution here. This means that the work patterns of the employees are no longer precisely determined, but are rather outlined in extended, flexible task blocks. The employee takes over the micro-organisation himself. He remains flexible in his work and can plan it himself. In the case of computersupported prognoses of possible capacity overloading, the planning software must be able to predict the behaviour of the employee. It becomes particularly difficult when the employee is working on various tasks in several projects simultaneously, and decides for himself when to do which task. Agile methods such as Scrum avoid this problem by prescribing the exclusivity of the employee in a particular project. Assessment of portfolios Depending on the type of business, many companies offer more projects than they are in a position to realise. They presume that not all of their offers will be accepted. This superimposes the risk analysis and basically makes no sense. If each offer is given a likelihood of occurrence value, the portfolio manager can put together a more likely scenario in the case of extreme overbooking. Without taking this into consideration, projects could be delayed at short notice or the likelihood of an offer (project) being accepted is estimated inaccurately. In this case, you need an experienced portfolio manager who is able to optimise the estimation if necessary. Control panel for portfolios Basically, a project portfolio is a clearly represented summary of the current projects and the project ideas that are being considered, making allowances for capacitative over-burdening, whilst simultaneously taking the planned time structures into account. Because the current projects are considered in their entirety, the portfolio management software can determine the appropriate prognoses for the projects with regard to realisability. The new project can then be scheduled and arranged in such a way that it can be realised in spite of current projects. The fact that all current and future projects develop dynamically and can change at any time remains a problem. Current projects, for example, are in a state of constant change due to plan changes and reporting on the actual working time spent on the project by each employee. In order to provide an accurate basis for decisions, the project ideas in this dynamic environment need to be analysed and adapted as necessary. The software must capture all available data, condense it and keep it on hand as a general framework for the new projects. This must happen as quickly as possible, ideally in real time. This type of software provides the portfolio manager with a real control panel: He can see all the current projects in his portfolio and can also see, at the same time, what the projects look like in this environment. Because all projects are shown immediately in this way, he can react to the new situation immediately. For example, the availability of resources in a current project could change because an employee leaves the company and a must project that was not predicted in the portfolio suddenly, on the instruction of management, needs to be implemented. If all the projects that were still considered realisable before the changes were still to be implemented, this would result in substantial conflict. Therefore, portfolio management is a permanent process that takes the latest situation within the company into consideration. Project decisions must be made individually, which means more Can Do GmbH Page 5

work for the decision-makers, but it also gives them more time and therefore a better basis for their decisions. From portfolios to projects Approval of projects Before a new project is given the go-ahead, the portfolio manager is already aware of the risk situation thanks to his software. The likelihood of realisability and the simulated results that the project could have on the intentions in respect of other projects etc. can be recognised directly, whilst keeping the current situations surrounding all the other projects in mind. Once the project has received the go-ahead, the simulation becomes reality. The new proposition undergoes a metamorphosis from a project idea to a project, and all simulated changes to concurrently running projects and future planning come into effect accordingly. The project leader now begins with the detailed planning within his framework of specifications. Control panel for portfolios Future projects are constantly influenced by current projects, for example in relation to the resources required and the finances available. In order to be able to make a sensible decision regarding the realisability of planned projects, it is necessary to have reliable data on all current projects. The more current the data, the better the basis for decision making. As a result, the analytical reporting system takes a central role, keeping current projects and their results in mind at all times. The older the reports or the data, e.g. quarterly reports, the more risky and uncertain the portfolio manager s decisions will be. A modern portfolio control panel delivers all information relating to current projects in real time. This doesn t mean, however, that all the events that occur during a project are immediately on hand on the computer. The appropriate portfolio management tool should nevertheless immediately transfer the relevant data that has been entered to the affected projects. This timespan is updated daily or weekly, depending on the work methods of those involved in the project. High-performance simulation systems also calculate the effect on project ideas. The expected risks are calculated and are incorporated into the decision making. This applies to plan changes, reported working hours spent on the project, changes to predicted usefulness and the general staffing structure including illness in the case of people with key qualifications. In the ideal case scenario, the portfolio manager keeps both the current projects and the intentions surrounding new projects in view, under consideration of the calculated results. Real-time information for all employees Information is the most important possession of a company. This applies not only to management, but to the staff in general. There are often complaints that employees either capture data incorrectly or not at all. This is one of the biggest problems affecting the implementation of modern project management methods and project management systems. The primary cause lies in the fact that the employee is unable to obtain any immediate use by capturing this data in other words, he doesn t know what effect the information he is working with could have. He sees data entry exclusively as additional, unnecessary effort. If employees become aware of the importance of the data they provide, and if they have access to the overall project data whenever they desire, their commitment could increase. Managers and those people responsible for projects must communicate the information that leads to decisions that are made openly and honestly. This is partly so that the employee understands and recognises results immediately, with regard to further goals, milestones or profit for the company. Can Do GmbH Page 6

Finally, two factors are decisive: With regard to laying the basis for transparent decision making, managers are somewhat resistant, due to the danger of bad decisions being too visible. The other deciding factor is the performance of the computer systems in use. If modern portfolio management software is used, monitors can be set up in the department, upon which the states of the current projects are represented in the form of bubble charts or key figures. This serves as motivation to the employees and also provides the project with transparency. As soon as employees enter data into the system, the results become visible on the monitors. This makes it easier for the employee to visualise the importance of his work. Management and portfolios In the area of project management particularly, there are huge gaps in knowledge regarding technical possibilities on all hierarchical levels. Instead of reaching for modern tools, lists and tables are hastily put together to work from. As a result, the basis available for decision-making is rather unstable. This situation, which in itself doesn t exactly promote much confidence, is often superseded by the fact that senior project managers have never received any education or training on the topic of project management. Managers must build up their knowledge in specific areas, and must make sure that they have access to the latest software technology at all times. IT has made central tools available to all companies, which often makes it responsible for the innovation drive. However, it is just as important that the employees see themselves as a team and that the best experts for the job are recruited. Hire the best should be supplemented by the words: computing the best. About Can Do: For 15 years now, Munich-based Can Do stands for professional project management software, for competent consulting services and interim management for process optimization, implementation and project management. Our project management software supports companies in the efficient realisation of projects. The software ensures a higher degree of transparency in both projects and portfolios, enables optimal allocation of staff and makes it possible to work according to realistic planning methods. Over and above this, the project management software also excels with its comprehensive range of functions in the area of budget management, among other characteristics. All information that is relevant to a given project is available in real-time at all times. Reputable enterprises and institutes all over the world rely on Can Do. Our project management tool is a certified Software made in Germany product and has already received many awards: In 2013, our software was rated among the best three solutions at the annual Innovationspreis-IT ( ERP ) award and was placed among the leaders at the Industriepreis ( IT & software solutions for the industry) award. Can Do GmbH also received awards at the Deloitte Technology Fast 50 Awards in 2011 and 2012 and took first place in the Austrian Project Management Institute s Battle of the Tools competition in 2010. Contact: Can Do GmbH Implerstr. 26 81371 Munich, Germany Phone: +49 89 / 512 65-100 E-Mail: CanDo@candoprojects.de www.candoprojects.de Can Do GmbH Page 7