Project Portfolio Management Brandon Olson
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Project Portfolio
Management Brandon Olson
Workshop Objective
Develop a plan to increase the
impact of your projects Formalize project section process
Apply a strategic project evaluation metric
Agenda
Project Management
Project Selection
Portfolio Approach
Portfolio Management
Migrating to Portfolio
Agenda
Project Management
Project Selection
Portfolio Approach
Portfolio Management
Migrating to Portfolio
What is a Project?
“…a temporary endeavor
undertaken to create a unique
product, service, or result.”
PMI, 2008
Project Sources
Projects
Revenue Generation
Expense Reduction Directive
Project Teams
Executive
Functional Manager
Staff Staff
Functional Manager
Staff Staff
Functional Manager
Staff Project
Manager
Project Management
Initiating Planning Executing Monitoring Controlling
Closing
Project Management Process Groups
PMI, 2008
Knowledge Areas
Project Integration
Management
Project Scope
Management
Project Time
Management
Project Cost
Management
Project Quality
Management
Project Human Resource
Management
Project Communications
Management
Project Risk Management
Project Procurement Management
Project Variables
Functionality
Q
Project Success Rates
0%
10%
20%
30%
40%
50%
60%
Successful Challenged Failed
1994
1996
1998
2004
2009
2011
Gale, S. (2011). Failure rates finally drop. PM Network, 25(8), 10-11.
Project Success?
How do you define project success?
Agenda
Project Management
Project Selection
Portfolio Approach
Portfolio Management
Migrating to Portfolio
Project
V
Project Selection and
Resource Limitations
Processing
Power
Time Personnel
Funds
Project
W Project
N
Project
R Project
S
Project
Y
Project Selection:
Common Practices
Political Influence
Squeaky Wheel
FIFO
Age of Request
Financial Attributes
(ROI/NPV/Payback)
Project Monitoring
Functionality
Performance
to Budget? Performance
to Timeline?
Performance
to Deliverables?
Agenda
Project Management
Project Selection
Portfolio Approach
Portfolio Management
Migrating to Portfolio
Portfolio Appraoch
Project Portfolio Operational Scope Strategic Scope
Governance Governance
Schedule Business Value
Budget Portfolio / Project Risk
Functionality Schedule & Budget
Project Risk Functionality
Distributed Management Centralized Management
Project B
Project Governance
Project I
Project M
Project R
Project X
Project T
Project L
Project Q
Project P
Project Y
Project D
Project A
Project N
Project J
PMO
Project Portfolio Governance
Portfolio
Project Y Program
Project R
Project X
Project C
Project G
Portfolio
Program
Project A
Project Q
Project H
Project J Program
Project K
Project B
Project S
Executive Management
Project Portfolio Management
Goal:
Determine and deliver the mix of potential
projects that will result in the best utilization
of human and cash resources and
maximize long-range growth and return on
investment for the firm.
Levine, 2005
2 Phases of PPM
Portfolio Selection
• Propose Projects
• Align Projects
• Evaluate Projects
• Identify Risks/Value
• Rank Projects
• Select Projects
Project
Pipeline Portfolio Maintenance
• Project Objectives
• Portfolio Objectives
• Forecast Impacts
• Reevaluate Projects
• Value
• Performance
• Determine Funding
• Cancel
• Continue
Agenda
Project Management
Project Selection
Portfolio Approach
Portfolio Management
Migrating to Portfolio
PPM Process
Align Value Distribute Risk Select Monitor
Strategic Alignment
Organization Strategy and Objectives
Operations Planning Strategic Planning
Initiatives
Project Portfolio
Operational Resources
PMI, 2008b
Align Value Distribute Risk Select Monitor
What is Value?
Return on Investment (ROI)
Estimated Lifetime Benefits – Estimated Lifetime Costs
Estimated Lifetime Costs
Example: $310,000 - $160,000
$160,000
= 0.94 = 94%
Align Value Distribute Risk Select Monitor
Project Selection
Informational
Infrastructure
Transactional
Strategic
Common IT Portfolio
Cost Agility
MIT Sloan Center, 2007
Innovation Integration
Align Value Distribute Risk Select Monitor
Risk Evaluation Scale Value Probability Value Schedule Cost
Very High 1.0 90% - 100% > 10% > 10% > 10%
High 0.7 70% - 90% 5% - 10% 5% - 10% 5% - 10%
Medium 0.5 50% - 70% 2% - 5% 2% - 5% 2% - 5%
Low 0.3 30% - 50% 1% - 2% 1% - 2% 1% - 2%
Very Low 0.1 10% - 30% 0% - 1% 0% - 1% 0% - 1%
Very Low Low Medium High Very High
Very Low .01 .03 .05 .07 .10
Low .03 .09 .15 .21 .30
Medium .05 .15 .25 .35 .50
High .07 .21 .35 .49 .70
Very High .10 .30 .50 .70 1.00
Probability
Risk
Risk = Average (Value, Schedule, Cost)
Adapted from Brewer & Dittman, 2010 and Lovelady &Anderson, 2006
Align Value Distribute Risk Select Monitor
Project Selection
Primary Funding
Selective
Funding
Selective
Funding
Not Funded
RISK
VA
LUE
Risk Score
ROI
Align Value Distribute Risk Select Monitor
Project Evaluation
Alignment
Value
Distribution
Risk Assessment
Balance Resources ($ and people)
Intangible Benefits
Align Value Distribute Risk Select Monitor
Monitor Portfolio
Project
Project
Project
Project
Program
Program
EVA Risk
Alignment Value
Align Value Distribute Risk Select Monitor
Agenda
Project Management
Project Selection
Portfolio Approach
Portfolio Management
Migrating to Portfolio
Steps to PPM
Define Portfolio
Gather Projects
Begin Weeding
Begin Evaluating
The PPM Starter Kit, ganntthead.com
Tips for PPM 1. Start at the Top
2. Avoid the Big Bang
3. Develop a Governance Process
4. Use a Proven PPM Tool
5. Forgive Human Errors but not Process Errors
6. Use the Tool in your Operations Reviews
7. Use Executive Dashboards
8. Be Open to Project Failures
9. Anticipate Business Opportunities & Constraints
10. Remember Who the Boss is
ganntthead.com
Key Drivers of PPM
78% - Senior Management Receptivity
66% - Competent Portfolio Governance
62% - Standardized Metrics and Criteria
59% - Consistency & Logic of Objectives
58% - Mature Project Management Office
PM Network Survey, 2012
• Formalization at both the project and portfolio levels
results in higher performance than formalization at
just one level
• Formalization provides transparency that leads to
improved allocation of resources and an overall
cooperation between projects Teller, Unger, Kock & Gemunden, 2012
Formalized PM & PPM
Practices
Organizations with stable PPM practices see
64% of projects meet targeted ROI (17% more
than highly variable PPM practices)
Formalization at both the project and
portfolio levels results in higher performance
than formalization at just one level
Formalization provides transparency that
leads to improved allocation of resources and
an overall cooperation between projects
PM Network Survey, 2012 & Teller, Unger, Kock & Gemunden, 2012
64%
Why PPM?
0% 20% 40% 60% 80%
Improved Prod. Dev. Costs
Improved ROI
Revenue Growth
Cost Reduction
Customer Satisfaction
40%
45%
58%
59%
73%
PM Network Survey, 2012
Suggested Readings
July, 2012 Volume 30
Issue 5
References Brewer, J. L., & Dittman, K. C. (2010). Methods of IT
project management. Boston, MA: Prentice Hall.
Lovelady, R., & Anderson, A. (2006). Psst: Want to take a risk? In G. Richardson & C. Butler (Eds.), Readings in information technology project management (pp. 166-171). Boston, MA: Thomson/Course Technology.
Pearlson, K.E. & Saunders, C.S. (2010). Managing and using information systems: A strategic approach (4th ed.). Hoboken, NJ: Wiley.
Project Management Institute (2008). A guide to the project management body of knowledge (4th ed.). Newtown Square, PA: Author.
Project Management Institute (2012). The power of portfolio management. PM Network, 26(6), 14-15.
Teller, J., Unger, B.N., Kock, A., & Gemunden, H.G. (2012). Formalization of project portfolio management: The moderating role of project portfolio complexity. The International Journal of Project Management, 30(5), 596-607. doi:10.1016/j.ijproman.2012.01.020
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