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1
Are You Selecting the Right Projects or
Are You Just Fishing?
Dr. Ginger Levin, PMP, PgMP
Certified OPM3® Professional A Member of PMI®’s Registered Consultant
Program
linkedin.com/in/gingerlevin
©Ginger Levin, 2014
2
Here Is What We Will Cover
Why Portfolio
Management? The need for a portfolio
process
Guidelines for success
Parting thoughts
©Ginger Levin, 2014
Key Questions
Are we executing the right
programs, projects and
operational work?
Are they yielding value and
ROI to the organization?
Are we steering ideas for
programs, projects, and
operational work to
successful implementation?
Are we terminating ones that
are not contributing? OR
Are we just
fishing??
©Ginger Levin, 2014 4
PMI’s Pulse of the Profession –
2014 and Portfolio Management
57% of high-performing organizations align
projects to organizational strategy
42% of all organizations
76% of high-performing organizations have
twice as many successful strategic initiatives
31% have high maturity in portfolio management
BUT – The results of failed projects:
For every US $1 billion spent on a failed project,
$109 million is lost and cannot be recovered
©Ginger Levin, 2014 5
But, What Are The Problems?
Difficulty aligning projects
No one wants to say NO
Budget availability issues
Benefits not defined
Business case not defined
Lack of selection and prioritization process
Lack of a common process as mixed
approaches are used 8 ©Ginger Levin, 2014
However, Remember . . .
9
“The Future Is Not for the
Faint Hearted.”
Ronald Reagan
©Ginger Levin, 2014
10
Here Is What We Will Cover
Why Portfolio Management?
The need for a
portfolio process Guidelines for success
Parting thoughts
©Ginger Levin, 2014
Key Definitions
Adapted from PMI® PMBOK® Guide Fifth Edition and Portfolio Standard Third Edition
Portfolio
Program
Project
©Ginger Levin, 2014 11
Portfolio Relationships
12 PMI Portfolio Management Standard Third Edition, p.3
Portfolio
Portfolio Projects Programs
Programs Projects Programs Projects Other Work
Projects Projects Projects
©Ginger Levin, 2014
PROJECTS PROGRAMS PORTFOLIOS
Scope Projects have defined objectives;
scope is progressively elaborated
throughout the project life cycle
Programs have a larger scope and
provide more significant benefits
Portfolios have an organizational
scope that changes with the
strategic goals of the
organization.
Change Project managers expect
change and implement
processes to keep change
managed and controlled
Program managers must expect
change from both inside and
outside of the program and be
prepared to manage it
Portfolio managers continually
monitor changes in the broader
internal and external
environment.
Planning Project managers progressively
elaborate high-level information
into detailed plans throughout the
project life cycle
Program managers develop the
overall program plan and create high-
level plans to guide detailed planning
at the component level
Portfolio managers create and
maintain necessary processes
and communication relative to
the aggregate portfolio
Management Project managers manage the
project team to meet the project
objectives
Program managers manage the
program staff and the project
managers; they provide vision and
overall leadership
Portfolio managers may manage
or coordinate portfolio
management staff or program or
project staff that may have
reporting relationships into the
aggregate portfolio
Success Success is measured by product
and project quality, timeliness,
budget compliance, and degree of
customer satisfaction
Success is measured by the degree to
which the program satisfies the needs
and benefits for which it was
undertaken
Success is measured in terms of
aggregate investment
performance and benefit
realization of the portfolio
Monitoring Project managers monitor and
control the work of producing the
products, services, or results the
project was undertaken to produce
Program managers monitor the
progress of program components to
ensure the overall goals, schedules,
and budget, and benefits of the
program will be met
Portfolio managers monitor
strategic changes aggregate
resource allocation, performance
results and portfolio risk
The Standard for Program Management, p. 8 ©Ginger Levin, 2014
13
Managing a Portfolio
14
Prioritize Programs,
Projects, and
Operations
Conduct Portfolio Management
Manage Programs,
Projects, and
Operations
Perform Program and Project Management
Conduct Operational Work
Re-evaluate Programs,
Projects, and
Operations
Conduct Portfolio Management
Immature organizations use inefficient tools and techniques
Mature organizations use sophisticated tools and techniques
©Ginger Levin, 2014
Portfolio Components –
Common Features
Represent organizational investments
Are aligned with organizational goals and
objectives
Have some common features to group
them
Can be quantitative to be measured,
ranked, and prioritized
Compete and share for organizational
resources ©Ginger Levin, 2014 15
Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, p. 5
However – “Misalignment 101”
The “crime scene” – detectives in a “film noir” More projects under way than shown in the inventory
Inconsistent benefit quantification and benefit double counting
Competing programs and projects
“Interesting or pet” programs and projects – that do not support corporate objectives
Costs exceed benefits expected
Programs and projects with a higher risk ranked higher than others in the portfolio
Lack of tracking of benefits and lack of benefit ownership
PM Network, November 2006, “The Right Fit”, p. 34
16 ©Ginger Levin, 2014
Our Goal
18
Moving From Moving To
Programs, Projects,
and Operations in
Isolation
Programs, Projects,
and Operations in
Context
Tactical Strategic ©Ginger Levin, 2014
PPM is Essential
19
Organizational Success and Survival
Strategy Formulation and Enhanced
Program and Project Management
and Operational Activities
©Ginger Levin, 2014
20
Portfolio Management
Organizational Context
Vision
Mission
Organizational Strategy and Objectives
Management of
Ongoing Operations
Management of Authorized
Programs and Projects
©Ginger Levin, 2014
Portfolio Management
Strategic Planning and Managing
Programs, Projects, and Operations
Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, p. 5
Why an Emphasis on
Organizational Strategy??
It is a plan of goals, policies, and actions
It provides the organization’s overall direction and focus
It describes how the organization’s strengths and
competencies are used to:
Manage resources effectively
Manage stakeholder value
Capitalize on opportunities
Minimize the impact of threats
Respond to changes in the market
Reinforce a focus on critical operational activities
21
Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, pp.7-8
©Ginger Levin, 2014
Why Link Portfolio Management
with Organizational Strategy?
1. Maintain portfolio alignment
2. Allocate financial resources
3. Allocate human resources
4. Allocate other resources – materials,
equipment, etc.
5. Measure performance of the components
in the portfolio
6. Manage risks
©Ginger Levin, 2014 22 Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, p. 9
23
Here Is What We Will Cover
Why Portfolio Management?
The need for a portfolio
process
Guidelines for
success Parting thoughts
©Ginger Levin, 2014
Implementing Portfolio Management
Assess the Current State
Develop the Vision and
Plan
Implement the Process
Improve the Process
©Ginger Levin, 2014 24
Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, p. 23
How Much Complexity Does the
Process Require?
Consider:
Interdependencies between programs and
projects
The rate of potential changes that may occur
The quality of the information available
The willingness to make difficult decisions
Therefore:
The culture change from “fishing” to
“structured”
©Ginger Levin, 2014 25
Set Up Portfolio Categories
Increased probability of success [revenue
increase, generation, cost reduction,
avoidance]
Risks / Rewards
Improvements in efficiency, market share,
processes, sustainability
Business imperatives [upgrades,
regulatory, compliance, foundational]
©Ginger Levin, 2014 26
Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, p. 68
27
Select Programs,
Projects, and
Operations
Prioritize
Manage Programs,
Projects, and
Operations
Best Practices
Continue Programs,
Projects, and
Operations
Prioritize
Establish a
Portfolio Management Cycle
Deliver
Successful
Results
Adapted from Rad and Levin, 2006
©Ginger Levin, 2014
28
Initial Project and Program
Selection
Project and
Program
Categories
Business Indices
Vision Model
Project,
Program, and
Operations
Model
Project, Program
and Operational
Indices
Prioritized Project,
Program, and
Operations List
Adapted from Rad and Levin, 2006
©Ginger Levin, 2014
Does Your Organization Have a
Portfolio Management Process?
If yes, how does it prioritize the
components?
©Ginger Levin, 2014 29
Prioritization Analysis
Alignment to strategic goals
Resource capabilities and capacities (people,
technology)
Legal/regulatory
Dependencies
Risks (internal and external)
Benefits – financial and non financial
Costs (lost opportunity costs)
Urgency
©Ginger Levin, 2014 30 Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, pp. 45, 67
31
Criteria for Selecting a Portfolio Model
REALISM
CAPABILITY
FLEXIBILITY
EASE OF USE
COST
TIME
UNDERSTANDABLE
INTEGRATES WITH
OTHER TOOLS
BUSINESS
RELEVANCE
©Ginger Levin, 2014
PPM Selection Techniques
Portfolio Selection Techniques
Maximize Value Balancing Alignment with
Strategy
Other Goals
Financial
IRR
NPV
Payback
Productivity
Index
Expected
Commercial
Value
Comparative
Approaches
AHP
Q-Sort
Scoring Models
Risk-Reward
Diagrams
Mapping
Charts
Scoring Models
Periodic Checks
Organizational
Metrics
Corporate
Necessity
“Pet Projects”
32
©Ginger Levin, 2014
33
Midstream Project or Program
Evaluation
Revised Project and
Program Categories
Updated Business Indices
Current Vision Model
Current Program, Project,
and Operations Model
Updated Program, Project and
Operational Indices
Prioritized Program, Project, and
Operations List
Decision to Continue the Program,
Project, or Operations Activity
Adapted from Rad and Levin, 2006
©Ginger Levin, 2014
Program, Project, and Operations
Termination Issues If the midstream evaluation has uncovered:
A change in the customer’s strategy
A lack of fit with current strategies
Outsourcing would be more cost effective
That a competitor enterprise or new technology has made this deliverable obsolete
That there are serious cost and schedule overruns
That there are high technical risks
Then, terminate the program, project, or operational activity and conduct a formal closeout
And, re-assign personnel Adapted from Cleland and Ireland
34 ©Ginger Levin, 2014
Is It Time for a
Portfolio Management Office?
Focused responsibility for management
and coordination of the portfolio
Aggregate and provide performance results
Define methodology, best practices, and
standards
Forecast supply and demand
Define the portfolio strategy
Identify, analyze, and respond to portfolio
risks
Provide oversight and manage portfolio value ©Ginger Levin, 2014
35
Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, p. 18
A Project Portfolio Management Office
(PPMO)
Strategic Steering – Link to
Executives
Improves resource
use
(Re)Allocating Resources
Enforces resource
commitment
Facilitating Coordination – Across Projects
and Departments
Reduces conflicts
©Ginger Levin, 2014 36 Source: Unger, Germunden, and Aubry, International Journal of Project
Management, Volume 30, Issue 5, 2012, p. 616
Objectives in Implementing PPM
Conduct the implementation process
effectively and efficiency
Ensure that the PPM system meets its
own objectives successfully
Avoid an overly bureaucratic process
Adapted from Rad and Levin, 2006
37 ©Ginger Levin, 2014
Nine Key Steps
1) Determine the organization’s vision for Portfolio Management
2) Determine Portfolio Management goals and the scope of its coverage
1) Assess maturity in portfolio management
2) Collect baseline data on portfolio components
3) Prepare a charter for the Portfolio Manager and PRB
4) Establish roles and responsibilities
5) Prepare a Portfolio Management Scope Statement
6) Prepare a Portfolio Management WBS
7) Prepare a Portfolio Management Plan
8) Establish a Portfolio Management Information System
9) Regularly hold PRB Meetings
Adapted from Rad and Levin, 2006
38 ©Ginger Levin, 2014
Use Portfolio Management to Best
Prepare for the
©Ginger Levin, 2014 40
Focus on long-term benefits and
opportunities
Use competencies and technologies to
outdistance the competition
Adapted from Heising, International Journal of Project
Management Volume 30, Issue 5, 2012, p. 586
41
Here Is What We Will Cover
Why Portfolio Management?
The need for a portfolio
process
Guidelines for success
Parting thoughts
©Ginger Levin, 2014
Thanks a lot for
coming!!
…let’s continue the conversation
©Ginger Levin, 2014 47
Dr. Ginger Levin, PMP, PgMP,
Certified OPM3 Professional
Portfolio, Program, and Project
Management Consultant and
Educator
954-783-9819 (office)
954-803-0887 (cell)
linkedin.com/in/gingerlevin