Your executive Partner in achieving
Project Management Excellence
Palisade conference
Project, Program & Portfolio Management
Jan Van Broeck
Anton Boone
Amsterstam - 30/03/2011
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A look in the agenda of the CEO …
Wednesday – Morning
09:00 – 10:00 – Meeting with Jim
– New product IRIS
10:00 - 11:00 – Meeting Suzanne
– backup data center Europe
11:00 – 13:00 - Meeting & lunch
– budget FY 2012 - Alain
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The “ideal” world at CxO level
Prioritize Business Drivers
Prioritize Projects
Impact Assessment
Investment Maps
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Introduction
Today decision making is considered as a key competence of project,
program and portfolio managers, line managers and executives. They face
a business world of large complexity, with increased number of
decentralized decision centers…
Decision making must be faster, more accurate (predictable ?), and
preferably based upon more reliable assumptions, input and output
parameters…
Organizations, striving for higher transparency and open communication to
their stakeholders and shareholders, seek ways to reduce the subjective
way of decision making, and therefore show an increasing interest in
decision tools.
What longer term improvements do we have to make in project, program
and portfolio management in response to these challenges ? What are the
prerequisites, the benefits and the critical success factors ? “….
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Some observations
Today, there is a very strong interest in portfolio management.
Organizations want to improve the decision process for selection of projects, and want
to get better control in the prioritization (strategic portfolio management).
However, allocation of resources to the selected project portfolio is a major issue in all
larger organizations (operational portfolio managment).
This adds on the (more) professional approach towards justification of an
individual project using a business case.
In too many cases the decision process on the project is happening in
isolation, should we now move towards decision taking at a
consolidated group (portfolio) level ?
We can examine all elements that might play a key role : strategy, yearly
budgets, operations do interact with project, programs & portfolios !!!
….but they all have different stakeholders ??....
Let’s have a detailed look ….
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Portfolio management – avoid confusion
Strategic Portfolio
Management
Optimise Investment Decisions
Operational
Portfolio
Management
Manage Resources Across
Project
Management
Obtain Repeatable & Consistent Project
Delivery
Programs & Projects
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Strategic Portfolio management
Portfolio Management is a dynamic (group) decision process...
Portfolio Management is a tool-supported process...
Portfolio Management is a set of (centralized) managerial activities....
Portfolio Management allocates resources to active projects...
Portfolio Management is a continuous process...
Selection
Screening
Prioritizing
Managing
Authorizing
Identifying
Evaluating
Balancing
A portfolio is a collection of projects and/or programs that are grouped together
to facilitate effective management of that work to meet strategic objectives (PMI).
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Overview (PMI)
Executive
Management
Vision
Strategic
Plan
Mission
Strategic
Objectives
Identify
Components
Categorize
Components
Evaluate
Components
Select
Components
Identify
Portfolio
Risks
Develop
Portfolio
Risk
Responses
Balance
Portfolio
Communicate
Portfolio
Adjustments
Authorize
Components
Monitor &
Control
Portfolio
Risks
Analyze
Portfolio
Risks
Prioritize
Components
Portfolio
Management
Project and
Program
Management
Operations
Management
Project
Program
management
Performance
Measurement
Review &
Report
Portfolio
Performance
Monitor
Business
Strategy
Changes
Project
Program
Close-out
Operations
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Our best practices model
Threon
Best
practices
Vision
Strategic
Risk &
Opportunity
Strategic
Issue & Action
Mission
Values
Benefit
Value
Proposition
Goals
Program
Management
Control
Point
(MCP)
Business
Change
Project
Project
Objectives
Yearly
Objectives
KPI
Operational
work
Component
Portfolio
Reserve
Budget
Portfolio
Category
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Without programs (benefit management)…
Vision
Strategic
Risk &
Opportunity
Mission
Values
Value
Proposition
Goals
Management
Control
Point
(MCP)
Opportunity
Project
Strategic
Issue & Action
Project
Objectives
Yearly
Objectives
KPI
Operational
work
Component
Portfolio
Reserve
Budget
Portfolio
Category
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From project to portfolio management
Let’s have a look at some tools that are receiving increased
interest in the (Project) Portfolio management community :
NPV (pro memory)
Analytical Hierarchy process
Weighted scoring
Argus
There is clearly a tendency to use similar techniques from the
“business case” area in project management, where
different alternatives are evaluated against each other.
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Analytical Hierarchy Process
Pairwise comparison
Criterion L1,a
Criterion L1,b
Goal
Criterion L1,c
Criterion L1,d
Thomas L. Saaty
Criterion L2,a
Criterion L2,b
Alternative 1
Alternative 2
Alternative 3
Alternative 4
Alternative 5
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Weighted scoring
Mathematical formula or algebraic expression
The formula incorporates factors believed to be
important
Each factor is weighted to reflect its importance
relative to the other factors
Each project is scored on each factor
But how do we score ? Contribution or preference ?
Produces a total weighted score for each project
under consideration
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Argus : how to go from values to pure ranking
Criterion
Not
Important
Low
Importance
Moderate
Important
Important
Strong
Importance
Extreme
Importance
No
R10
R9
R8
R7
R6
R5
Low
R9
R8
R7
R6
R5
R4
Moderate
R8
R7
R6
R5
R4
R3
Strong
R7
R6
R5
R4
R3
R2
Very Strong
R6
R5
R4
R3
R2
R1
Preference
“Achieving Respect for Grades by Using
ordinal Scales”
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Program
Program Execution
Planning
Execution
Portfolio
Management
Project
Business Case / tender
Idea
Opportunities for usage
Project Execution
Planning
Execution
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Where are the opportunities ?
At the Strategic level
Analysis of product portfolio
Analysis of markets
Strategic Risk Analysis
Sensitivity Analysis
At the project (business case) level
Analysis of alternatives
• Analytical Hierarchy Process, Scoring models
What-if analysis
• NPV calculations
Project schedule risk
At the program level
At the portfolio level ?
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The challenge
How can we combine the prioritization of projects with a
view on the maximum profitability or maximized strategic fit,
taking into account our resource constraints, and what
about our ongoing project portfolio, and our individual and
collective fiscal year targets ???….
… and as a leader ensure that all stakeholders are aligned ?
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Our best practices model
Threon
Best
practices
Vision
Strategic
Risk &
Opportunity
Strategic
Issue & Action
Mission
Values
Benefit
Value
Proposition
Goals
Program
Management
Control
Point
(MCP)
Business
Change
Project
Project
Objectives
Yearly
Objectives
KPI
Operational
work
Component
Portfolio
Reserve
Budget
Portfolio
Category
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Project prioritization in portfolio(s)
The Regulatory domain
includes all legally required
projects, but can also be
referencing to internal best
practice (internal standards)
projects. The major driving
force for prioritization is time. In
case there is no real support for
an internal standards project,
these projects never end nor
deliver the anticipated results,
as there seems to be no time
priority.
This category is to Ensure
Continuity, where prioritization
is based upon risk. A difficult
category as risk is very
subjective in lots of
organizations, and it combines
2 parameters that are purely
estimations: impact and
probability. The usage of
Expected Monetary Value (risk
impact times probability) could
be used as prioritization
parameter.
Regulatory
Standards
Ensure
Continuity
Business
Growth
Absorb
Growth
The business growth domain
is prioritized using (in most
cases) revenues instead of
cost/benefit or margin.
The absorb growth domain is
preferably prioritized using
cost/benefit analysis (IRR,
NPV,...). It contains all projects
where efficiency gains
(continuous improvement) are
expected.
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Critical success factors
Integrated approach between
Strategy
Operations & yearly budget
Portfolio, program & project management
Senior management support - acceptance
Supporting tools with fast feedback mechanisms
Training & coaching
Gradual introduction at different locations in the
organization
Common culture – terminology - language
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