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Project Portfolio Management
Reporting and Review

By Kathy Martucci, PMP:

Note: This is part 4 in our series on portfolio management. Part 1 is Projects Projects Everywhere: A Portfolio Management Approach, part 2 is Elements of Portfolio Management: Developing the Compelling Business Case, part 3 is Portfolio Management: Developing Tools for the First Gate.

Finally! The Portfolio Management Committee (PMC) has established the project portfolio for the fiscal year and perhaps beyond. It’s time to dissolve the group until next year’s caucus and the flurry of activity around evaluation and selection.

BUT WAIT!

The PMC must never lose sight of their ultimate responsibility. As the attention and efforts of the organization shift from planning to implementation, the work begins of constantly reassessing original business case validity, analyzing the project’s progress against baselines and forecasting the achievement of projected benefits.

What types of metrics might be employed to avoid status and progress reports that answer questions such as, “How far along is the project?” or, “How is the project tracking against budget?”

These questions are vague, and so the equally vague answers of, “We’re 50 percent complete,” or, “We’re on budget,” might be expected but are wholly unsatisfactory.  What does 50 percent represent? Is it a best guess or a sound estimate based on meticulously measured project parameters? In project portfolio management, only facts and figures that have been carefully recorded, reported and analyzed are the solid foundation on which to base strategic decisions.

The PMC should establish a scorecard that describes what it means to be a project that is contributing to the strategic plan of the organization and therefore should remain in the portfolio with all the benefits that implies. The scorecard should include:

  • Project management metrics covering estimated effort, project duration and cost;
  • Technical metrics such as defect rates, rework targets and other product characteristics; and
  • Stakeholder satisfaction with the process and results to date.

To be more specific, the PMC could mandate that each project measure and report on a regular basis the:

  • Total capacity: how many potential hours the staff is available to work
  • Utilization rate: the percentage of time that people are actually allocated to categories of work
  • Available hours: a forward-looking metric that shows how many hours people are unassigned in the future
  • Budgeted cost versus actual: should be tracked for each project in the portfolio and then rolled up at the portfolio level
  • Project schedule versus actual: If projects are tending to run over their deadlines, it may mean that other projects will not be able to start because the resources are still tied up on other projects.
  • Rework and defects: Projects experiencing rework and defects are likely to be over budget and delayed. In addition, stakeholder satisfaction may be suffering.
  • Stakeholder satisfaction: This is probably the toughest parameter to measure accurately; however, all projects should be reporting some kind of stakeholder satisfaction metrics.

Of course, it is not enough to require regular reporting and dictate what the reports will detail. The PMC has the responsibility to then analyze the data and make thoughtful decisions to continuously optimize the performance of the entire portfolio and foster the greatest benefit to the organization.

For example, let’s examine two of the most critical metrics the PMC will consider: cost and time.

Although some projects may not exceed their budget, they may still miss their required deadline or they will take longer than estimated. The PMC must constantly weigh the “success” of being under budget with the fact that resources are tied up on this project rather than being able to start on other projects. This is a concern for both current and subsequently scheduled projects because they may be delayed not by the lack of funds but by not having the required resources available.

For a project budget overrun that is relatively small, the PMC would most likely approve the increase. However, if the cost overrun is substantial, it may require that the entire business case be re-validated for that project. A project that makes good business sense at a certain investment level may not make as much business sense at a higher cost level. Of course, money that is already spent must be regarded as “sunk cost,” and does not figure in future planning. The real question is whether the additional funding is better spent on the current investment or on another high priority project.

Sound portfolio management requires that the PMC review the data and make the tough decisions. They must support the projects that are making positive contributions to the organization, and they must eliminate efforts that no longer make business sense. It is always a dramatic step to cancel a project that is in progress, but if the business case no longer supports the investment, canceling the project may be the right course of action for the organization.

What type of reporting does your PMC require? Would your project survive the reassessment of its business case and remain a viable and valuable effort?

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