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8/10/2019 Portfolio Lifecycle PPT
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What Are We Presenting?
Project Portfolio Management…. PPM2
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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 .
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A person who undertakes to
carry a cat home by the taillearns ten times as much as a
person who simply watches.
Mark Twain
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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
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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.
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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.
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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.
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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
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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.
Note
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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.
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the portfoliomanagementprinciples providethe context withinwhich the portfoliodefinition and
portfolio deliverycycles, and theirconstituentpractices, operate.
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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
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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.
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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.
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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
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PRINCIPLE 3: STRATEGY ALIGNMENT
Strategic alignment means that the allocation of
funds to different types of initiative (for example,infrastructure, research, strategic, operationalsupport etc.)
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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
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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.
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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.
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PORTFOLIO MANAGEMENT CYCLES
PORTFOLIO DEFINITION CYCLEPORTFOLIO DELIVERY CYCLE
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THE PORTFOLIO MANAGEMENT CYCLES
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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.
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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
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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.
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PORTFOLIO DEFINITIONCYCLE
five practices found within the portfolio definition
cycle: Understand
Categorize
Prioritize
Balance
Plan.
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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.
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PRACTICE 2: CATEGORIZE
Categorization organizes change initiatives intogroups, segments or sub-portfolios based on thestrategic objectives or other groupings asrequired.
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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?
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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.
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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.
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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
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PORTFOLIO DELIVERY CYCLE- COMPARISONBETWEEN : PMI & MOP
MoP: Portfolio is divided into2 cycles which are:
5 Definition Cycle:
Understand
Categorize
Prioritize Balance
Plan
7 Delivery Cycle:
Management Control
Benefit Management
Financial Management
Risk Management
Stakeholder engagement Organizational Governance
Resource Management
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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
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The aim of the portfolio is to co-ordinate projects and programs!
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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.
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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.
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A PORTFOLIO IS A RELATED SET OF ASSETS THATCOMPETE FOR RESOURCES AND DELIVER VALUEFOR AN ORGANIZATION.
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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
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PPM SPECTRUM
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Initiative
Objective
Goal
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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
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WHY PPM?
Central oversight of budget
Risk management
Demand and investment management with thestandardization of investment procedure, rules,
and plans
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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
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WHY PPM
Do the right work
Use the right resources
Identify problems and solve it easily
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PORTFOLIO LIFE CYCLE MANAGEMENT
52Contributed by Shawn Maynard. 2005
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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
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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.
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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).
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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.
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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.
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Portfolio success is measured in terms of the
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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.
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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.
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Differences;
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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 .
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Thank You
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