Portfolio Lifecycle PPT

8/10/2019 Portfolio Lifecycle PPT

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What Are We Presenting?

Project Portfolio Management…. PPM2

LEARNING OBJECTIVES

Provide a structure for applying the PMIstandards for Portfolio Management.

Enable understanding and application throughlife cycle management .

Comments about Symptoms & benefits ofadopting Portfolio Management .

A person who undertakes to

carry a cat home by the taillearns ten times as much as a

person who simply watches.

Mark Twain

Portfolio:

The totality of an organization’s investment (or

segment thereof) in the changes required to

achieve its strategic objectives.

Portfolio Management:

Portfolio Management is a coordinated

collection of strategic processes and

decisions that together enable the mosteffective balance of organizational change

and Business As Usual (BAU).6

PROJECT PORTFOLIO MANAGEMENT

The objective of PPM is to create themix of projects most likely to supportthe achievement of the

organization's goals, aligned withthe preferred strategies, and withinthe organization's resource (4M)constraints.

Programme Managing Successful

Programmes (MSP) defines aprogramme as a temporary,flexible organization createdto coordinate, direct andoversee the implementation ofa set of related projects andactivities in order to deliveroutcomes and benefitsrelated to the organization'sstrategic objectives.

A programme is likely to havea life that spans several years.

Programme

management MSP defines programme

management as theaction of carrying out thecoordinated organization,direction andimplementation of adossier of projects andtransformation activities

(i.e. the programme) toachieve outcomes andrealize benefits of strategicimportance to the business.

Project A project is also a temporary

organization, usually existingfor a much shorter time than aprogramme, which will deliveron~ or more outputs inaccordance with a specificbusiness case.

A particular project may or

may not be part of aprogramme. Whereasprogrammes deal withoutcomes, projects deal withoutputs.

Project

management Project management is

the planning, monitoringand control of all aspectsof the project and themotivation of all thoseinvolved in it to achieve

the project objectives ontime and to the specifiedcost, quality andperformance.

From the above it can beseen that the keydifferences betweenportfolios and portfoliomanagement on the onehand, and programmes,

projects and PPM on theother are:

Programmes and projects are

temporary organizational

structures, whereas the portfolio

is permanent.

Programmes and projects are

primarily focused on delivery of

outcomes and outputs

respectively. The portfolio, in

contrast, is focused on the

overall contribution of these

outcomes, benefits and outputsto strategic objectives.

Portfolio management is

concerned with ensuring that

the programmes and projects

undertaken are the right ones in

the context of the organization'sstrategic objectives; maximizing

benefits realization; and

ensuring that lessons learned

are identified, disseminated and

applied in the future

PROGRAMMES AND PROJECTS

SPECIFICALLY FOCUS ON 'DOING THINGSRIGHT', WHERE AS PORTFOLIOMANAGEMENT IS ABOUT A COMBINATIONOF 'DOING THE RIGHT THINGS' AND'DOING THINGS RIGHT' AT A COLLECTIVELEVEL.

PORTFOLIO MANAGEMENTPRINCIPLES

The portfolio management principles represent thefoundations upon which effective portfoliomanagement is built; they provide theorganizational environment in which the portfoliodefinition and delivery practices can operate

effectively. These are generic principles - the way inwhich they are applied must be tailored to suit theorganizational circumstances whilst ensuring thatthe underlying rationale is maintained.

the portfoliomanagementprinciples providethe context withinwhich the portfoliodefinition and

portfolio deliverycycles, and theirconstituentpractices, operate.

5 - PORTFOLIO PRINCIPLES

Five flexible principles upon which successfulapproaches to portfolio management depend.These are :

1. Senior management commitment.

2. Alignment with the organization's governanceframework

5 - PORTFOLIO PRINCIPLES

3. Alignment with the organization's strategicobjectives

4. The use of a portfolio office (virtual orotherwise) to support senior-managementdecision-making

5. Working within an energized change culture.

PRINCIPLE 1: SENIOR MANAGEMENT COMMITMENT

The National Audit Office (NAO) reports that seniorlevel engagement is crucial in three ways by:

1. Providing a mechanism to prioritize theprogramme and project portfolio in line with businessobjectives.

2. Creating a clear decision-making structure withagreed lines of accountability so that decisions aremade swiftly and in line with business strategy.

3. Demonstrating that senior management iscommitted to the change.

PRINCIPLE 2: GOVERNANCE ALIGNMENT

Research and practical experience indicate thata key factor behind successful implementation ofportfolio management is effective governance,i.e. clarity about what decisions are made, where

and by whom, and what criteria are used inreaching these decisions

PRINCIPLE 3: STRATEGY ALIGNMENT

Strategic alignment means that the allocation of

funds to different types of initiative (for example,infrastructure, research, strategic, operationalsupport etc.)

PRINCIPLE 4: PORTFOLIO OFFICE

Portfolio management enables therelevant portfolio governance bodiesto make better and more informed

investment decisions. A function istherefore required to provide timelyand accurate information to facilitatethat decision-making process

PRINCIPLE 4: PORTFOLIO OFFICE

The key services provided by this function include:

1. Defining portfolio-wide PPM standards, processes and templates toensure consistent approaches are applied and to provide a clearline of sight across the portfolio.

2. Providing an assurance to senior management on effective andefficient management and delivery of change initiatives.

3. Providing a challenge or critical-friend role for individual initiatives.(A critical friend is a trusted person who offers critiques of a work asa friend.)

4. Preparing t he portfolio strategy and delivery plan

5. Preparing the portfolio dashboard.6. Improving the links and feedback loop between policy and

strategy formulation and PPM delivery.

PRINCIPLE 5: ENERGIZED CHANGE CULTURE

The portfolio management cycles of definition anddelivery are driven by organizational energy, and inthe context of portfolio management an energized

change culture includes elements such as:• Senior management commitment, communicationand motivation

• A mutual and shared desire to succeed based oneffective employee engagement.

• Effective governance with an appropriate level ofbureaucracy.

• Culture and behaviors reflective of a focus on t heoverall good and success of the organization ratherthan individual interests.

PORTFOLIO MANAGEMENT CYCLES

PORTFOLIO DEFINITION CYCLEPORTFOLIO DELIVERY CYCLE

THE PORTFOLIO MANAGEMENT CYCLES

PORTFOLIO MANAGEMENTPRACTICES

1.The portfolio definition cycle - understand,categorize, prioritize, balance and plan.

2. The portfolio delivery cycle – managementcontrol, benefits management, financialmanagement, risk management, stakeholder

engagement, organizational governanceand resource management.

PORTFOLIO DEFINITION CYCLE

The purpose of the portfolio definition cycle is tocollate key information that will provide clarity to

senior management on the collection of changeinitiatives which will deliver the greatestcontribution to the strategic objectives, subject toconsideration of risk/achievability, resourceconstraints and cost/affordability.

The key output of the portfolio definition cycle isan understanding of what the portfolio is going todeliver

PORTFOLIO DELIVERY CYCLE

The purpose of the portfolio delivery cycle is

to ensure the successful implementation of the

planned change initiatives as agreed in the

portfolio strategy and delivery plan, whilst also

ensuring t hat the portfolio adapts to changes in

the strategic objectives, project and programme

delivery and lessons learned.

PORTFOLIO DEFINITIONCYCLE

five practices found within the portfolio definition

cycle: Understand

Categorize

Prioritize

Balance

PRACTICE 1 : UNDERSTAND

the purpose of the 'understand' practice is toobtain a clear view of what is in the currentportfolio and the project development pipeline,performance to date and the forecast costs,benefits, and risks to delivery and benefits

realization.

PRACTICE 2: CATEGORIZE

Categorization organizes change initiatives intogroups, segments or sub-portfolios based on thestrategic objectives or other groupings asrequired.

PRACTICE 3: PRIORITIZE

Prioritizing ranks the change initiatives within the portfoliobased on one or more agreed measures. The most

common measures are financial metrics and/or someform of multi-criteria analysis (NPV,IRR and Payback)

Prioritize help senior management and the portfoliogovernance body answer the following questions.

1. Which initiatives should the organization invest in?

2. What are the most important initiatives?

3. What initiatives must be resourced above all others?

PRACTICE 4: BALANCE

Periodization results in ranked list of strategicchanges .the purpose of that (balance)practice is to ensure that the resulting portfolio isbalanced in term of factors such as timing,coverage of all strategic objective, impactacross the business, stages of overall risk , returnprofile.

PRACTICE 5 : PLAN

The purpose of the plan practice is to collectinformation from the portfolio definition cycleand create portfolio strategy and delivery planwhich will be approved by portfolio directiongroup / investment committee.

PORTFOLIO DELIVERY CYCLE-COMPARISON BETWEEN : PMI & MOP

PMI : Portfolio is divided into 4phases which are:

Phase 1: (Prepare)

Categorization

Identification

Phase 2: (Plan)

Evaluation

Selection

Prioritization

Balancing

Phase 3:(Execute)

Authorization

Activation

Phase 4: (Harvest)

Reporting

Review

Benefit

Change

PORTFOLIO DELIVERY CYCLE- COMPARISONBETWEEN : PMI & MOP

MoP: Portfolio is divided into2 cycles which are:

5 Definition Cycle:

Understand

Categorize

Prioritize Balance

7 Delivery Cycle:

Management Control

Benefit Management

Financial Management

Risk Management

Stakeholder engagement Organizational Governance

Resource Management

PORTFOLIO LIFE-CYCLE-PMI

Unlike projects and programs, portfolios are lesslikely to have a defined start and finish.

Portfolio management is a more continual cyclecoordinating projects and programs.

It may, however, be constrained by a strategicplanning cycle that reviews strategy over adefined period.

If an organization has, for example, a three-yearstrategic planning cycle, then the portfoliocycle will have compatible time constraints

The aim of the portfolio is to co-ordinate projects and programs!

Initiation – This is a one-off phase that represents the

point at which the host organization decides to setup a portfolio. It is where the infrastructure is createdthat enables the portfolio cycle to operate

Definition – the projects, programs and change tobusiness-as-usual required to meet portfolioobjectives are identified and evaluated in aselection process that maximizes the effectivenessand efficiency of the portfolio.

Categorization – the projects and programs may be

organized into ‘sub-portfolios’ or groups that sharecertain characteristics, such as alignment withparticular strategic objectives.

Prioritization – priorities can be set by strategic objective,

return on investment or any other chosen metric. On theassumption that no organization has sufficient resource

to do everything it wants, the prioritization process formsthe basis of the next phase.

Balancing – the portfolio must be balanced in terms ofrisk, resource usage, cash flow and impact across thebusiness.

Portfolio management incorporates the overallgovernance of projects and programs within the hostorganization. The portfolio management team may be

responsible not only for coordinating the projects andprograms to deliver strategic objectives, but also forimproving the maturity of project, program and portfoliomanagement.

A PORTFOLIO IS A RELATED SET OF ASSETS THATCOMPETE FOR RESOURCES AND DELIVER VALUEFOR AN ORGANIZATION.

Portfolio

Asset 5

€ $ ¥

Asset 4

€ $ ¥

Asset 3

Asset 2

€ $ ¥

Asset 1

€ $ ¥

ValueDelivered

Interactions among the assets increase the complexity of portfoliodecision-making. Examples:• Synergy, cannibalization, and halo effects among assets• Common variables that affect multiple assets (e.g., oil price)• Contribution to the same organizational objectives• Competition for multiple types of limited resources

LimitedResources

PPM SPECTRUM

Initiative

Objective

WHY PPM ?

Enables to use the resources efficiently

Can get the support of organization

Help organization to align its projects workload

to meet its strategic goal

Make PM’s life easier and more rewarding

Organizations implement projects

within limited time and budget

WHY PPM?

Central oversight of budget

Risk management

Demand and investment management with thestandardization of investment procedure, rules,

and plans

WHY PPM?

Improved ability to deliver project

Faster response to the changing circumstances

Focus on more important things

Seek for the same goal

Easier to find dependencies among projects

WHY PPM

Do the right work

Use the right resources

Identify problems and solve it easily

PORTFOLIO LIFE CYCLE MANAGEMENT

52Contributed by Shawn Maynard. 2005

A portfolio manager needs to design, develop,implement, and maintain a portfolio managementinformation system but how the available solutionslook like and how their performance.

These information systems not only provide dataacquisition and management but also decisionsupport, and reporting and graphing.

Making project portfolio data entry, change and

review easy, the tools may include features tosupport project selection, project management,and resource allocation

UNSUCCESSFULPORTFOLIOS:

Kendall & Rollins (2003) state that thereare four major reasons why portfoliosare unsuccessful. These reasons are:

(i) too many projects in the portfolio,

(ii) the wrong projects are in theportfolio,

(iii) the projects are not linked to thestrategy of the organization, and

(iv) the portfolio is unbalanced.

SUCCESSFUL PORTFOLIOS:

In contrast to the PMI definition, portfolio successis defined by:

(i) the average project success over all projects,

(ii) the exploitation of synergies between projects

within the portfolio that might additionallyincrease the overall portfolio value,

(iii) the portfolio fit to the organization's businessstrategy, and

(iv) the portfolio balance in terms of risk, area ofapplication and use of technology (Beringer,Jonas, & Kock, 2013).

PORTFOLIO SUCCESSCRITERIA:

The main portfolio success criteria accordingto Beringer et al. (2013) and Meskendahl (2010) are the:

1. maximization of the financial value of theportfolio,

2. linking the portfolio to the organization'sstrategy,

3. balancing the projects within theportfolio taking into consideration theorganization's capacities.

4. and the average single project successof the portfolio.

CONCLUSION:

Companies are using the project managementdiscipline to manage multiple projects with

limited resources in a competitive environment; A successful portfolio management strategy

must comprise an end-to-end framework thatmethodically guides organizations from projectselection through execution.

The success of a portfolio is also measuredagainst the benefits that need to be realized.

Portfolio success is measured in terms of the

CONCLUSION:

Portfolio success is measured in terms of theaggregate investment performance andbenefit realization of the portfolio (Project

Management Institute, 2013b).Portfolio management is focused on the

achievement of the organizational strategiesand objectives.

Measure the success of a portfolio remainsdifficult as the strategies and objectives spanacross the entire organization and all itsdivisions.

The success of a portfolio is therefore complexand integrated.

CONCLUSION:

PMI or Prince 2?

Similarities;

Both focus on elements like Strategy, prioritizing,balancing, categorization, planning, defining,etc

Both make it clear about the roles of key people

who are involvedBoth have great graphical examples of things

like categorization, and weighted scoring ,, soyou can’t go wrong with either.

Differences;

PMI publication is massively process based thereis inputs and outputs for everything and each

process in detail.Mop does not have a process any where it has

principles and practices which are allhappening at the same time because it

represents the real world.

Real case studies in Mop and no cases in thePMI

Mop puts people and organizational energy atthe heart of the portfolio management model,however there is no reference to any people .

Thank You

Portfolio Lifecycle PPT

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