Project Portfolio

Management
Concepts
Theory
Practice

common/typical practices
'best' practices
ideal practices that is, what the
concepts and theory suggest could
or should be done.

Analysis and Synthesis

We

will review many of the analysis

topics you studied in your other courses
(cost analysis, risk analysis, earned value
analysis, work breakdown structure,
resource scheduling, etc), but in the
context of synthesizing them into a PPM
process

We

will study decision making and

prioritization (topics from DNSC 224)
which will be helpful in performing
synthesis required for many facets of PPM

Overview of Course
(Blackboard)
Announcements
Syllabus

Grading percentages are

approximate and may be modified to
some extent.
Discussion Forums
Expect some changes

Overview of Course
(Blackboard)
Outline

Dates
Topics
Grading/Deliverables

(Tentative %s)

Mid Term 20%

Final 20%
Project Choice Decision 20%
Project Portfolio Project 25%
Class Presentation of Specific Topic 10%
Class Participation 5%

Overview of Course
(Blackboard)
Discussion

Board

Personal Information
One Minute Summaries
General Discussion and Team
Forming

PPM Doing the Right

Things
Project

Management

Doing things right

Enterprise

Management

Doing things right throughout the

enterprise
Project

Portfolio Management

Doing the right things!

Stakeholders
Stakeholders

for individual projects (project

management) include
business owners, business sponsors, and often
the end user of a projects output.
they are specifically concerned with satisfying
their own business requirements and needs and
controlling cost and schedule.

Stakeholders

for the PPM processes include

financial management, senior business

executives, and ultimately the stockholders of
the organization.
they are concerned with optimal investment of
scarce company resources and typically are
interested in return on investment, strategic
alignment, and the risk profile of the portfolio.

Integration / Synthesis
To

satisfy both sets of

stakeholders, organizations must
define an integrated process that
links project management and
portfolio management practices.
by tying the executive decision
process to resource allocation
and day-to-day project execution.

Art and Science

Project

portfolio management is
the art and science of applying a
set of (concepts, theories),
knowledge, skills, tools, and
techniques but to a collection (or
portfolio) of projects in order to:
meet or exceed the needs and
expectations of an organizations
investment strategy.

PPM enables businesses

to..
Provide a structure for selecting the right projects and

eliminating the wrong ones

(But which ones are right and which ones are wrong?)
Allocate resources to the right projects, thus reducing
wasteful spending
(this is part of determining which are right and which
are wrong, but not individually, as a combination or
portfolio)
Align portfolio decisions to strategic business goals
Base portfolio decisions on logic, reasoning, and
objectivity
(As well as well informed subjective judgment)
Create ownership among staff by involvement at the
right levels
Help project teams understand the value of their
contributions

PPM is NOT just Enterprise Project

Management
Levine

pg 23: A critical mistake is

to think that PPM is fundamentally
the management of multiple
projects. This is not so. PPM is the
management of the project
portfolio so as to maximize the
contribution of projects to the
overall welfare and success of the
enterprise. This means that

PPM is NOT just Enterprise Project

Management

Projects must be aligned with the firms strategy and goals.

(AHP will be useful in accomplishing this)

Projects must be consistent with the firms values and

culture
(Subjectivity will be an important part and should not be
overlooked)

Projects must contribute (directly or indirectly) to a positive

cash flow for the enterprise

(The portfolio of projects must contribute directly or indirectly to all

of the enterprises objectives, not just cash flow. But a particular
project need only contribute to one or a few of the objectives)

Projects must effectively use the firms resources both

people and other resources
(Resources will be considered at a macro level when making
portfolio decisions and then at a micro level when performing
projects.)

Projects must not only provide for current contributions to

the firms health but must help position the firm for future
success

(Objectives such as corporate image, impact on the environment,

ethics should be included in the Enterprises strategy.)

Making the Case for Project Portfolio

Management
Chapter 5.1

To

make the case for PPM, it is

necessary to demonstrate how PPM
can address real and immediate
problems.
This is best accomplished by soliciting
the input of co-workers to isolate
known problems, making
interpretations, developing potential
solutions and outlining benefits
accruing from these solutions, and
communicating these findings.
Examples:

Statement 1. Im overloaded with

too much work going on.
Who

Says: Any staff member.

Interpretation: The staff member has too
many projects.
Solution: (AHP and Optimization) Improve
prioritization and selection process.
Reduce the number of projects happening at
one time by one part of the organization.
Benefit: When the number of projects is
reduced, project quality and performance
increase as attention focuses on doing the
right things. In addition, extra capacity is
created for attending to emergencies or
engaging in creative thought.

Statement 2. Im not sure how

projects are approved or prioritized, or if
the decisions are sound and the projects
doable.

Who Says: Any staff member.

Interpretation:

many projects.

The staff member has too

Solution:

Improve prioritization and

selection process.

Reduce

the number of projects happening at

one time by one part of the organization.

Benefit:

When the number of projects is

reduced, project quality and performance
increase as attention focuses on doing the
right things. In addition, extra capacity is
created for attending to emergencies or
engaging in creative thought.

Statement 4. We made this

commitment to the client and must fulfill
it.
Who Says: The project manager

Interpretations
Someone has challenged the projects validity (rightly or
wrongly) or attempted to add scope to the project based
on new information.
In the absence of formal oversight of such requests, the
project manager has decided to defend the project.
He/she probably feels judged based on whether he/she
delivers on time, on spec, and within quality constraints.
This dynamic occurs in organizations that havent learned
that project execution is subordinate to project
relevance.
Meeting ones commitments is laudable only when the
commitments make sense.
Demands and resulting commitments were made in a
vacuum.
The clients needs have not been previously challenged.

Statement 4. We made this

commitment to the client and must fulfill
it. (continued)
Solution:
Remove

the stigma associated with project

redefinition by emphasizing and communicating
the importance of considering the business
benefit of proposed changes over traditional and
rigid measures of project success.
Raise the visibility of the decision making process
by holding regular portfolio management meetings.
Enable broad-based input and buy-in by ensuring
that all projects are vetted by a centralized and
empowered governance body with the capability to
see the larger picture
Emphasize and communicate the importance of
considering the business benefit of proposed
changes over traditional and rigid measures of
project success.

Statement 5. The project is a

must-do
Who

Says: The client.

Interpretation: There is the
sincere belief of a client who has
decided (often unilaterally) that his
project must take precedence over
other projects. The client has
gotten away with this before and
often is willing to threaten taking his
project elsewhere
.

Statement 5. The project is a mustdo

(continued)
Solution. All projects are assessed
for their ability to meet strategic
goals, which can then be articulated
versus arguing, Because I say so
The

governance body must apply

scientific methods when evaluating
projects while also allowing intuitive
expressions , so the results are
defensible and intuitive to system
owners.

Statement 11. How can we make

decisions with incomplete information?
Who

Says. A PPM governing body member.

Interpretation. PPM governing body members
typically need three things in order to commit to a
result:
They need to agree on the criteria (objectives)
that will be used to prioritize and select projects.
They need to have clear descriptive
information about the projects (for example,
the business case.
They need to have a mechanism for applying
criteria to create project rankings. (measure
the contribution of projects to the organizations
objectives to derive ratio scale priorities).
Continued

Statement 11. How can we make decisions

with incomplete information? Continued
The

criteria (objectives) should be top down in

nature, deriving from high-level performance
goals in the organization. The ranking
mechanism (prioritization mechanism) should be
statistically (theoretically) sound and
defensible and include an opportunity for open
conversation that provides a forum for
expression of the collective experience of the
group.

Solution.

The governing body (Governance) and

its sponsors are charted to make top-down
decisions about what the organization should
do to meet strategic objectives. If the
information is incomplete, make and
document assumptions In order to move
ahead. Then reconcile this plan with bottom-up
data.

Statement 14. Portfolio

management should be simpler.
Who

Says. Any staff member.

Interpretation:
People often avoid change, and
implementing responsible portfolio
management is a big change for many
staff.
A staff member may complain that PPM is
too difficult in order to avoid
accountability or out of fear that critical
work will not get done in a timely fashion.
(continued)

Statement 14. Portfolio management

should be simpler (continued)
Solution.

Simplify as much as possible,

recognizing that a number of assumptions can
be made about the complex interrelationships
that exist in order to make progress.
With PPM however, multi-variate criteria
(multi-objective) analysis (and synthesis) yield
superior results to single-variable decision
making. It is possible (and we will learn how) to
combine simplicity with multivariate techniques
to achieve a more balanced portfolio.
Organizations that implement this approach rank
among the highest performing. Integrating
qualitative and quantitative data improves
the probability of success, since it entails the
consolidation of both subtle and supporting
factors that are important to project work.

Designing/Choosing Strategies
Enterprise

and Business Unit Strategic Plans

Annual offsite to revise
Brown/Green/Red Book gathers dust on
shelves
Bring to life by using it to make decisions!
Contrasting alternative strategies
Strategy Case analogous to business case
Specific objectives (high level)
Evaluating Strategies
Boston Consulting Group Model
Market Attractiveness (Market Growth)
Industry Competitiveness (Market Share)
NetMBA
..ValueBasedManagement
BCG type AHP model for Enterprise
BCG type model for Business Unit

Chapter 4.1 Linking Strategy and Project Portfolio

Management (Y.C. Yelin)

Organizations

are accustomed to investing

in developing strategies to drive them
forward
Multiple days of leaders and cross-functional teams time
are spent each year in offsite meetings
Participants leave the meeting feeling they have raised
options, hammered through them and achieved
alignment among participants and the key methods that
the organization will pursue to achieve its goals
The goals these strategies are intended to make happen
are frequently NOT achieved
Cross-functional resource allocation and competing
priorities cause drag on the organization
Over time, belief in the organizations ability to develop
effective strategies and achieve goals lessens
Funding sources retreat and talented associates who want
to contribute to a successful organization leave

What is Strategy?

(Tregoe Zimmerman in Top Management strategy)

Framework that guides those choices

that determine the nature and direction
of an organization

(George Steiner in Strategic Planning)

Strategy answers the questions:

What should the organization be doing?
What are the ends we seek and how should
we achieve them?

(Michael Porter, Competitive Strategy)

Competitive strategy is a combination

of the ends (goals) for which the firm is
striving and the means (policies) by
which it is seeking to get there.

Figure 4.1-1 link between strategy and project portfolio

Assuming that leadership has identified the mission, goals,

and strategies, the next level of detail is identification of
specific projects that will carry out the strategies.

These projects become candidates for inclusion in the

organizations project portfolio.

Figure 4.1.2 sample goals with links to strategies

and potential projects

Exhibit 4.1-1 Evaluating the degree of Linkage

and Criticality to the Strategies

The sum of the individual strategy impact ratings provides an

overall project strategy value score.

This score is integrated with a projects ratings on other evaluation

criteria, such as net present value or risk.

Such a total project score is often used to do the initial prioritization

of project candidates.

 What

No Explicit Strategy?

if strategies do not exist for the

organization?
German proverb: Whats the use of running if
you are on the wrong road?
Stop and find the right road.

Might

be able to reverse engineer the

organizations strategy by looking at:
Where is the organization spending its money?
What programs are funded?
What skills are being bought?

Gain

concurrence from leadership to use

the implied strategic criteria in the
project evaluation process.

PPM as a Surrogate for Strategic

Planning

If

your organization does not do

strategic planning today, instituting
PPM will enable the discipline and
process that defines the strategic
process.
If your organization does do strategy
work today, integrating PPM with it is
a natural extension to strengthen it
and increase rate of strategy
realization (take the dust off the
strategic plans sitting on shelves).