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Managing cost and time in a large

portfolio of projects

If you can`t manage the time you can`t

manage the project….

(this applies for cost as well off course)

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So what`s the problem?

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Fundamentals

• What are a large portfolio?

• What are the governing principles or KPI in the

portfolio?

• How will a socio technical system behave?

• What kind of management best to the strategic

targets?

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Context 1

• A 5 year dataset of milestone delays from 2008-2012

• All projects in the study are in the acquisition phase, they are

funded and has been through a 1-2 years of pre-planning

• Number of projects vary 334 - 415 a year

• Total budget approximately a billion USD

• The portfolio is organized in 5 programs in 5 different

organizations

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Context 2

• Between 2008-2012 no limit in going fast where given, PM

planned with orders to use funding at a maximum rate.

• Every year, in January, PM must plan a new baseline plan,

which is the reporting baseline.

• Project milestones are internal, but Program Milestones are

logged by the portfolio manager

– four types are defined; contract, delivery, terminate and others

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Context 3

• Every month PM must report deviations;

– Schedule, deviation on so called program milestone

• Common database logged by the portfolio manager

– Budget

– Economic prognosis

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Deviation from baseline plan made in jan/feb – arimetric mean for the hole dataset

What is this knowledge used for?

• The PMI report “pulse of the profession” in 2012

describes trends showing that delays are a global

project management challenge.

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PMI – Pulse of the profession – global survey

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What is this knowledge used for?

• Portfolio management objective is to govern towards

budget = result

• Delay tendency gives information of a “macro

behavior”, the planning fallacy, optimistic time

predictions

• Human error in a system must be compensated for

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What is this knowledge used for?

• In this case, they compensate for human behavior,

the delays, by adding more projects than economy or

budget can hold / overbook the portfolio at the start of

the year.

• The portfolio manager / strategic management plan

with an economic overheight 14-18% more than

budget

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What is this knowledge used for?

• Compensate for human behavior, the delays, by

adding more projects to the portfolio. The portfolio

manager / strategic management plan with an

economic overheight 14-18% more than budget

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Summary

• It is likely that a large project portfolio will be 35-45 % delayed

(or more, according to PMI world survey)

• Depending on business framework and strategy strategies to

compensate can be enforced, in this case;

– Plan with economic overheight

– Observe milestone achievement and economic uncertainty.

– Find the few large projects with cost flexibility and manage their

economic milestones toward the end of the year.

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Conclusion

• Success on project level is not necessarily the same

as success on the portfolio level

• You must know the objectives of the business

strategy and the behaviouristics of your business to

find the right governance strategies

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