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How To Implement Project Portfolio Management ?

Agenda
What are the market leaders doing? Where do we start? What is the most popular ranking criteria? What are the key steps in implementing project portfolio management?
Challenges and Issues

2012 Thinktank Consulting. All rights reserved

What Are The Leaders Doing?


Percentages in the graphs below mean Percentage of businesses who perform this tasks well
Best, Average, Worst Performer determined by stock performance 205 businesses Mean size - $6.4 billion in sales High technology 17.6% Processed materials 8.3% Industrial products 8.3% Chemicals and advanced materials 26.3% Healthcare products 6.3% Others 19.0%

Breakdown of respondents:

Impact Of Portfolio Management


Formal & Systematic Portfolio Management In Place 3.8% 21.2% 57.1% 8.0% 30.7% 65.5% 0.0% Portfolio Contains High-Value Projects 21.2% 37.9% 12.0% 25.0% 39.2% Worst Performers Average Performers Best Performers

Resource Breakdown Reflects Business Strategy

Good Job Of Ranking/Prioritizing Projects

2012 Thinktank Consulting. All rights reserved

Where Do We Start?
Make a commitment to installing a systematic, formal and rigorous PPM process There is no one right PPM method try a hybrid approach
2.5 methods/business for successful businesses Formulas are OK, data isnt 39% of best businesses use strategic methods Only 10% of worst businesses use strategic methods

Beware of overreliance on financial methods


Pay more attention to strategic approaches

Scoring Models Ranking Criteria


Strategic fit Pay off Probability of Success Timing Technological Capacity Commercialization Capacity Protectability Synergy Between Projects Other 12.6% 41.6% 35.5% 50.1% 65.5% 62.9% 76.1% 90.4% 86.8%

2012 Thinktank Consulting. All rights reserved

Implementing PPM
Chicken-or-egg question
Do we start with a brand new batch of project proposals? OR Do we start by evaluating our existing portfolio?

Several studies have shown that a structured review and evaluation of the existing portfolio can turn up numerous instances of deficiencies

Implementing PPM
Evaluating the current portfolio
Performance of the project
Scope, Quality, Time, Resources and Budget Has anything changed? Are the project deliverables still needed? Can it still be delivered in an acceptable time frame? Is the project still aligned with strategies?

Criteria used to select the project in the first place:

Governance council in place Standardized practice for submitting proposed projects Try with pilot program first

2008 Thinktank Consulting. All rights reserved

2012 Thinktank Consulting. All rights reserved

Implementing PPM
Prequalification
Prequalification template/document, business case, proposal, etc.

First Step - Self-regulation Second Step - Governance Council Reasons why can be rejected:
Not in line with available resources, mission or other criteria Not sound politically, socially or for business relationships Feasible technologically but not economically Feasible economically but not technologically Involves excessive risk for our risk culture

Role of The PMO


Business Unit PMO Governance Council
Concept or Need identified Sponsor prepares Business Case Review against prequalification Submit to PMO

PMO Review

Governance Council Analysis

Yes Cancelled? Project Dropped

No Project Ranking Yes Track Project Performance

Project Initiated

Assess Project

Cancelled?

2008 Thinktank Consulting. All rights reserved

No

2012 Thinktank Consulting. All rights reserved

Challenges & Issues


Too Many Projects, Not Enough Resources
Having the right number of projects for the limited resources available was the weakest performance metric, with 43.5% of firms rating themselves as weak or poor
e.g. Steve Jobs: 350 10 products

Time to market starts to suffer as projects end up in queue Xerox Study:


More than of our projects had no work done on them today! We were simply waiting for people to get around to doing something

Challenges & Issues


Once Made, How Firm Are Resource Commitments?
Should viable and active projects be killed or put on hold just because a better one comes along? Very Flexible:
Pros: it is very flexible! Cons: better have good PPM in place Pros: Team morale and continuity Cons: Good project may be missed Firm commitments until the next gate

Three philosophies:

Fairly Firm Commitments:


Middle Ground

2012 Thinktank Consulting. All rights reserved

Challenges & Issues


Imaginary Precision: Bad Quality Data
No time, people or money to do the homework Predicting future is tough, so why bother? We wanted to do the work but lacked the skill, knowledge and people needed Preoccupation with financial measures favours smaller, shorter-term projects Nike Theory Of Management aka Just Do It approach (management impatience) Shorter-term project is easier to predict than longer-term

Too Many Small Projects, Too Few Major Hits


Thinktank Consulting Example


Project selection yes Projects on time? the important ones Value ingredients
Financial - revenue Competitive advantage is it currently being offered on the market? Market attractiveness is it in demand? Strategic alignment - is it in PM, PPM domain?

Strategy = Remain profitable and continue growing the business by becoming an internationally recognized project/portfolio management authority
Hands-on consulting work (aka billable hours) 50% (75%) Book and articles 20% (5-10%) Speaking at the conferences, events 20% (5-10%) Development of new courses/workshops 10% (15%)

Strategic resource planning yes Portfolio funnel (start with a lot of ideas, then prioritize)

2012 Thinktank Consulting. All rights reserved

Seminar Takeaways

What can be done:


Educate your executives
Have someone come in and do a 1-hour presentation at your company

1-day PPM seminar/working session


Define variables, balance and strategic alignment

Conduct a detailed analysis of current project portfolio Finalize the variables, balance and strategic alignment Apply to all or just flagship projects Do not confuse the implementation of PPM/PM methodology with the implementation of PPM/PM software!

Contact me if you have any further questions: info@thinktankconsulting.ca

Questions

?
2012 Thinktank Consulting. All rights reserved