Projects, Projects Everywhere: A Project Portfolio Management Approach
by Kathy Martucci, PMP:
Everybody’s project is this year’s priority. Everyone is a project manager. Every manager thinks her initiatives should receive major portions of the limited funding that is available these days. Every team wants Information Technology resources and assumes they will be there, no questions asked. Projects, projects everywhere; and NO ONE knows what is really going on!
It has been recognized that organizations that conduct Project Portfolio Management gain a competitive edge in their market by doing the right projects at the right times for the right reasons. How does an organization identify, understand, prioritize and move forward to implement the right mix from the myriad of projects proposed from all different departments? Let’s talk about this.
But let’s talk about this with the assumption that our organization (say ABC Financial Services) has a firm grasp on the company’s core goals and objectives for the near future. Perhaps formal strategic planning has already taken place; regardless of how it got there, let’s say our company can align project proposals with corporate strategy. The conversation about an organization that can’t do that is for another day.
How does an organization identify projects? It may seem obvious, but a company should define what a project is and what parameters will be examined to make informed decisions about its eventual disposition. Parameters should include: cost, scope, schedule, resource requirements and complexity. For instance, ABC Financial Services defines a formal project as one that:
- will cost over $100,000;
- involves a core competency (for example, a dashboard for online clients);
- requires a project manager, subject matter experts, technology staff and affects more than 15 end users; and
- is of high complexity (e.g., will introduce new technology into the company).
Every manager who determines that his department’s initiatives fit these criteria is required to submit a high level project proposition for each initiative to the Portfolio Management Committee (PMC) well before next year’s project planning process. The PMC is comprised of senior staff who understand the global, integrated needs and objectives of the organization and who can make decisions on where to expend scarce resources with a big picture view.
How does the Committee (representing the company, of course) understand the projects proposed? A preliminary screening of the initial propositions may eliminate a percentage of them based on the project criteria above or the fact that they may immediately be deemed outside of the company’s goals. For each proposal passing the first gate, a robust business case must now be developed. The business case is a key document; it describes the reasons and the justification for the project’s undertaking based on its estimated costs, the risks involved and the expected future business benefits and value. Managers may find that writing a good business case is a project in and of itself and may require more work than was anticipated. That’s a good thing; a department must be willing to expend energy and resources to thoughtfully and completely flesh out and present their case.
How does the Committee prioritize the projects? Objective criteria should have been developed to guide the PMC in its prioritization of the proposals that make it through the second gate (business case). Subjectivity has no place in determining where a company should spend its valuable (and often scarce) resources. Criteria such as value to the company (Return on Investment, larger market share, etc.), alignment with strategy, risks of not doing the project and other factors could be assigned weights much the same as a matrix developed for the evaluation of Request for Proposal (RFP) responses is done in Procurement Management. Those projects that fall below a certain score might be tabled for another year or abandoned altogether.
Once the Project Portfolio is developed, the organization has a good understanding of the money and human capital to be spent in the coming fiscal year and perhaps beyond. What happens next may assist the organization in gaining that competitive edge…or not. What does happen next?
Find out in part two of this series.
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