What is Project Portfolio Management, Anyway?
Simply put, Project Portfolio Management, for short Portfolio Management, means overseeing a set of related projects or programs within an organization from conception to delivery. Just as program management refers to managing a set of projects, so portfolio management refers to managing a set of related programs.
To give you an example, a cyber security portfolio would contain all of the security-related projects and programs within an enterprise. That might include ongoing efforts by the IT Team to make their data more secure, an external marketing campaign to assure customers, the legal team’s assessment of potential litigation around security breaches, internal employee education campaigns around cyber security and so on.
Considering all of an enterprise’s related programs together has obvious advantages, although it can be challenging to do well. Since a common problem in companies is too many ongoing projects and programs, or too few resources, or both, portfolio management can help address those issues with its big-picture view.
With good portfolio management, programs can be compared for relative progress and success, priorities can be adjusted to meet strategic goals, redundant or failing programs can be ended, troubled areas can be corrected more quickly once they are spotted by the more objective portfolio management group, and resources can be shifted among projects and programs for maximum returns. Also, the firm’s overall risk can better be assessed, rather than the individual risk presented by an individual program.
As there is a large scope, a portfolio manager could be a single individual. But it is more likely, especially at larger companies, that the portfolio will be managed by a team of leaders who meet regularly to monitor ongoing projects and programs, and to vet new ones.
Finally as organizations adapt to more agile and modern ways of working, the processes for managing the portfolio need to adjust as well. As trends like Agile Portfolio Management, Lean Portfolio Management, Portfolio Kanbans and Portfolio Canvases become more commonplace companies may benefit from bringing in consultants to help set up and train individuals on the new ways of working. That’s where a company like MI-GSO | PCUBED comes in. We have been working clients for over 25 years helping them to visualize and manage resource demand, implement a framework for Portfolio Management and track the benefits realization across the portfolio.
What’s the Difference Between Projects and Programs?
Sometimes, people call something a “project” when they’re really talking about a program, and vice verse. A project is aims for one specific, tangible good or service (otherwise known as a “deliverable”) as efficiently as possible. Programs, on the other hand, organize several related activities to deliver benefits over time. (PMI, 2010)
For example, the Apollo 11 mission was a project because it had a singular goal: land people on the moon. But, the Apollo program was, well, a program. It contained all of the research and experiments to get crews up to the lunar surface.
While it’s not always straightforward, equipping yourself with the right vocab will help you make informed decisions. It puts nebulous plans into a defined scope. One organization may need a project to achieve its goals, while another requires a program that rallies many team members together.
So What’s a Portfolio, Then?
In short, a portfolio is the combination of projects, programs, and other work. By gathering everything together, PMs can effectively manage goals to meet strategic business objectives.
Just like with financial portfolios, project portfolio management is all about balance. Riskier projects or programs can be offset with more sure-to-succeed programs undertaken at the same time, so that the company’s overall risk remains manageable.
“Portfolio management is important today, because while we have lots of different methodologies around, portfolio aligns at the executive level. It helps executives and senior management, realize the benefits, and how they’re going to achieve their strategies, as well.”Alf Raju, VP San Francisco Hub
Figuring out risks and rearranging people and funds could result in monumental cost savings. Those savings could then be used to grow the organization into something bigger and better.
Journey Back to the Moon
Portfolios are not static. They are constantly evolving entities that have to get updated with changing needs and priorities. In the case of the U.S.’ space portfolio, manned space exploration was in sore need of attention.
To remedy this need, NASA introduced the Artemis program, named for Apollo’s twin sister and goddess of the Moon in Greek mythology. Along with domestic and international partners, the Artemis program’s goals are to:
- Land the first woman and the next man on the Moon
- Establish a long-term, sustainable presence there to build a lunar economy
- Use our nearest celestial neighbor as a launch point to get to Mars.
Just like Apollo, the Artemis program is a just that – a program. It’s just one of countless projects and programs within NASA to find peaceful applications of space science.
What Are The Typical Challenges in Portfolio Management?
The key to getting portfolio management to work requires Portfolio Managers or Project Managers to get everyone on the same page as to why it’s important. However, getting anyone to change their habits is difficult. Knowing common barriers to adoption ahead of time can give you an idea of how to finally implement a portfolio management process.
Common barriers to adoption include:
- Senior stakeholders can’t (or won’t) buy-in or align.
- Data and facts are too painful to face.
- It’s too difficult to show results or agree on success measures.
- Maturity levels are low, and there are too big of jumps or poor discipline.
- Silos aren’t aligned.
- Enterprise project management offices don’t understand everyone’s roles and responsibilities.
- Stepping from annual to in-year management regimes.
- Business cases are viewed internally as an approval hurdle, not as something real.
- Rationalizing assets isn’t done; the project roster never really changes.
- Benefits management is lacking.
- Cultural change is weak; the organization is too tools-centric or won’t commit enough budget for change.
Read also: our guide to introduce Project Portfolio Management to your executives.
How Can Portfolio Management Benefit You?
Now that you know those common barriers, here’s a starting point to frame the benefits that’ll come with getting on board with portfolio management.
1. Gain Visibility
One of the first tasks in Portfolio Management is to assemble a list of projects and programs currently in flight. A common pain point is not knowing all the projects that your resources are working on at a given time within the organization. By compiling a Portfolio Inventory, your management team will gain complete insight into the entire log of projects and programs currently underway. If you have a centralized PMO, they will typically assist with standardizing data across all ongoing projects and all new requests so you have clear visibility on where your projects are at. Better insights, better decisions.
2. Select the Right Projects
Establish a framework and process to allow your organization to select the right projects, not only the “pet” or special projects. This will allow you to achieve maximum value for your investment. To do so you will need to establish key strategic drivers by which your projects can be more objectively reviewed and scored against, including:
- Contribution to strategic objectives
- Assessment of business cases
- Levels of risk, financial, and non-financial benefits
3. Stop Low-Value Investments
By employing an objective methodology when prioritizing and optimizing the portfolio, you can stop current low-value or under-performing initiatives, allowing you to then reallocate your resources to high-value new investments. Without the right tools and processes in place, reallocating your resources at the speed of today’s market is nearly impossible. Make sure to select the right Project and Portfolio Management tools that can give you the efficiency in decision making that you need to be successful.
4. Improve ROI, Decrease Execution Risk
Portfolio Management is not a set it and forget it methodology. Task your centralized PMO with managing Portfolio Delivery and Benefits Realization to decrease execution risk and improve your ability to achieve a return on your investments. Advanced portfolio models will allow you to achieve a maximum of objectives while proactively mitigating risks.
5. Realize Strategy and Goals
By putting the right people, process and tools in place, like Portfolio Dashboards, your organization will gain confidence in its ability to execute and deliver value through new initiatives. You will be able to better realize your strategy, as it is today, not last year, because you have a centralized portfolio of projects and programs which are now objectively measured and prioritized to maximize strategic return.
Putting it into Practice
Project management aids getting one deliverable across the finish line. Portfolio management can organize multiple efforts to achieve success over time. The firm’s overall risk can better be assessed, rather than the individual risk presented by an individual program. At the end of the day, the organization will be healthier and achieve whatever it sets out to do.
General Motors PLM Program Management | Case Study
MI-GSO | PCUBED partnered with the General Motors (GM) Product Development organization to help structure and deliver a Global Business Transformation Program. The Product Lifecycle Management (PLM) program was focused on improving first time quality and reducing non-value added activities by streamlining business processes and improving systems integration across the full Product Development Lifecycle.
However, the existing PLM program was not delivering the expected value and therefore the overall success of the program was at risk.
– All stakeholders did not have true visibility of program health and status.
– The complexity of the program required more robust change controls to manage timing and cost risks.
– Business priorities were not clearly aligned with the technology roadmap.
– Benefits and business case were not fully validated or accepted.
– Business requirements were not aligned to core PLM capabilities.
MI-GSO | PCUBED conducted a Program Portfolio Diagnostic assessment based on our industry leading transformation model which enabled GM to quickly realign program deliverables and timing with stakeholder expectations across the organization. Recommendations from our assessment identified several roadblocks that needed resolution for GM to successfully deliver their PLM program:
– Establish a program office (PMO) to effectively manage program delivery
– Develop an integrated program roadmap to align requirements, capabilities and timing
– Establish a portfolio benefits framework to re-establish commitment to the overall program business case, and
– Develop a “PLM Process Playbook” so the impact of changing business requirements can be fully understood at the organizational and system levels.
MI-GSO | PCUBED’s disciplined program and portfolio management approach enabled GM to overcome the identified roadblocks and establish a roadmap for success. The overall benefits expected at program completion were determined to be much more significant than originally anticipated.
– Fully integrated engineering systems allowing dynamic configuration of “anything” by “anyone” at “anytime”
– Fewer systems, reduced IT costs, less customization – leveraging Siemens Teamcenter COTS capabilities
– A single gold source of data and point of entry for everyone
– Over 100 business processes re-engineered to reduce effort, improve cycle time, and enable for tighter integration between systems
– Double-digit productivity gains on core processes
– Significant ROI at program completion
Leveraging the enhanced Portfolio Governance Framework and Program Delivery Processes, MI-GSO | PCUBED helped position GM for future success in delivering their portfolio of programs and projects. GM’s PLM governance council oversees the product development portfolio and the newly established PMO ensures successful delivery of programs and projects using a structured management approach.
“At first, we hired MI-GSO | PCUBED, then we built the solution together. I’m now the happy owner of a PLM PMO which sets the standard for everyone else.”Craig Brown, PLM Leader at General Motors
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