www.apmg-international.com

APMG-International WebinarIntroduction to MoP™

Wednesday 2nd November 2011 / 14:00 GMTPresented by Stephen Jenner

www.APMG-International.comMoP™ is a Trade Mark of the Cabinet Office.

Agenda• Welcome & introduction• About your presenter• Introducing MoP™

– Overview– An Active Process– A Value-Led Process– An Evidence-Based Process– Fast and Frugal Decision Making

• Questions & Answers

About APMG-International

• Global Examination & Accreditation Institute• Official accreditation/qualification body for Cabinet Office

(formally OGC) PPM portfolio• Full portfolio of professional management qualifications• Accredit ATOs & ACOs (250)• HQ in UK; Operational offices in 9 countries• Over 15,000 examinations sat every month• Full details at www.APMG-International.com

Presenter• Stephen Jenner Mst, MBA, BA (Hons), FCMA, FAPM

• MoP Chief Examiner & Co-author• Portfolio and Benefits Management Professional• Author of several publications in portfolio and

benefits management fields• Extensive experience in managing large and complex

portfolios, programmes and projects• Designed, implemented and operated the CJS IT approach to

Portfolio & Benefits Management, recognized internationally• www.stephenjenner.com / Stephen.Jenner5@btinternet.com

IntroducingManagement of Portfolios

Realizing Business Benefits from Project Portfolio Management

Project Portfolio Management

UnderstandCategorise

Prioritise

Balance

Benefits Management

Financial ManagementManagement

Control

Resource Management

Portfolio DefinitionPortfolio Definition Portfolio DeliveryPortfolio Delivery

Risk Management

Stakeholder Engagement

Organisational Governance

Plan

Organisational Energy

Doing the ‘right’ things Doing things ‘right’

© Crown Copyright 2011 Reproduced with permission from the Cabinet Office

With potential benefits in terms of...

• Improved strategic alignment - more of the ‘right’ projects are undertaken

• Removal of redundant, duplicate and low value/high risk projects

• More effective implementation of projects and programmes

• More efficient utilization of limited resources• Greater benefits realization• Improved accountability and corporate governance

But...• Jeffery and Leliveld at MIT found that 65% of CIOs surveyed

believed IT project portfolio management yields significant business value, although only 17% appeared to be realizing the potential value in practice

• P3O® notes that around half P3Os are restructured or closed within 2 years

• One APM report notes that, “of fifty portfolio management implementations…fewer than 25% were still in operation 12 months later.”

• And in the US, a survey reports, “only 30% of portfolio management functions had been in place for more than two years.”

P3O® is a Registered Trade Mark of the Cabinet Office.

Perceptions of Project Portfolio Management Maturity Average rating out of 10

1. There is a clear view on what projects and programs are being planned and undertaken, what they will cost and what business impact is anticipated.

5.52

2. Our investment appraisal and portfolio prioritization processes ensure limited resources (money, skills, equipment etc) are allocated to those projects/programs with the greatest impact on organizational priorities subject to consideration of risk.

4.69

3. The forecasts used to inform investment decisions are accurate and reliable. 5.21

4. Project/Program scheduling is matched to the organization’s capacity and capability to deliver projects and programs and manage business change.

4.77

5. Funding allocations are adjusted to reflect changes in current organizational priorities and project/program performance so that spend remains aligned with strategy.

5.37

6. Limited resources (e.g. skilled staff) are managed to ensure efficient delivery i.e. demand and supply for in-house resources are matched, with appropriate and managed reliance on consultants and contractors.

5.06

7. Portfolio Delivery Management - dependencies, inter-dependencies and risks are managed effectively and for the benefit of the portfolio as a whole.

4.56

8. There is a clear view of project and program performance against key milestones and costs, and effective action is taken to address any slippage that might affect portfolio delivery.

5.63

9. Projects and programs are delivered consistently on time and to budget. 5.1510. Benefits forecast are realized in practice and value created is optimized from our accumulated investment in change.

3.83

And a recent survey indicates room for improvement

A “discipline whose time has come”

Effective Portfolio Management is built on...

© Crown Copyright 2011 Reproduced with permission from the Cabinet Office

Realizing the (potential) Business Benefitsof Project Portfolio Management

1. An Active process

2. A Value-led process

3. An Evidence-based process

4. With Fast and frugal decision-making

1. An Active Process – Staged Release of Funding

“You got to know when to hold ‘em, know when to fold 'em.

Know when to walk away, know when to run.”

Kenny Rogers, The Gambler

1. An Active Process

The BCG Matrix Portfolio Planning Model

1. An Active Process

The result should be a funnel, not a tunnel

2. A Value-Led Process – Portfolio Segmentation

STRATEGICInvestment in IS/IT

applications that are critical to sustaining future business

strategy

HIGH POTENTIALInvestment in IS/IT

applications that may be important in achieving future

business strategy

OPERATIONALInvestment in IS/IT

applications on which the organisation currently depends

for success

SUPPORTInvestment in IS/IT

applications which are valuable but not critical to

success

The Cranfield IS Investment Portfolio

2. A Value-Led Process – Strategic Contribution Analysis

2. A Value-Led Process – ‘Driver-based’Analysis

Heskett, Jones, Loveman, Sasser and Schlesinger, (2008) Putting the Service Profit Chain to Work.

2. A Value-Led Process – ‘Driver-based’ Analysis

Citizen Trust &Confidence In

Public Institutions

Citizen/Client

Service

Satisfaction

Employee

Engagement

DRIVERS OFPERFORMANCE

DRIVERS OFPERFORMANCE

DRIVERS OFPERFORMANCE

©Heintzman and Marson 2006

3. An Evidence-based Process

“The best project selection system in the world is worthless unless the data is sound.”

Bob Cooper & Scott Edgett

BUT (and it’s a big BUT)....

3. An Evidence-based ProcessUnfortunately...“There is a demonstrated, systemic tendency for project appraisers to be overly optimistic. This is a worldwide phenomenon that affects both the private and public sectors…appraisers tend to overstate benefits, and underestimate timings and costs.” HM Treasury

“it is found with overwhelming statistical significance that the cost estimates…are highly and systematically misleading.” and demand forecasts are “significantly misleading (inflated). The result is large benefit shortfalls”. Flyvbjerg

“Delusional optimism: we overemphasize projects’ potential benefits and underestimate likely costs, spinning success scenarios while ignoring the possibility of mistakes.” Lovallo and Kahneman

3. An Evidence-based ProcessSo...

1. A Benefits Eligibility Framework

2. Reference Class Forecasting

3. With Staged release of funding

4. And Multiple-criteria analysis - appraising potential investments from more than one perspective…

3. An Evidence-based Process – Considering Risk and Return

4. Fast and Frugal Decision Making

QUESTIONS & ANSWERS

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