Cheat Sheet on Project Portfolio Management (PPM)

Project portfolio management is a set of business practices that brings the world of projects into tight integration with other business operations. It brings projects into harmony with the strategies, resources, and executive oversight of the enterprise and provides the structure and processes for project portfolio governance.

Don’t confuse PPM recent popular concepts, such as enterprise project management and professional services automation. These are an expansion of project management, but in a totally different direction. And neither addresses the alignment of projects with strategies or the science of selecting the right projects. Neither of these provides for project portfolio governance. Another key misconception is to think of PPM as the management of multiple projects. Yes, PPM does address this. But the primary and unique aspect of PPM is what it does to formalize and assist in the selection of projects.

PPM is a set of business practices that brings the world of projects into tight integration with other business operations. In the past, the absence of this integration has resulted in a large disconnect between the projects’ function and the rest of the operations of the enterprise. Without this essential connectivity, a lot of effort goes into doing projects right—even if they are not the right projects. We have projects proposed and approved that do not deliver the promised benefits. We have projects that are wrong; they are not in sync with the goals of the enterprise. We have projects that have excessive risk, yet the risk is set aside when the project is considered for approval. We have projects that get approved solely because of the political power of the project sponsor. These projects drain valuable and scarce resources from more beneficial projects. We have projects that are failing at an early stage. Yet they are continued until total failure is recognized and the team admits that the product cannot be delivered. We have projects that are designed to generate income (or cost savings), but because of various kinds of failures, they become a burden instead. We have projects that slip so badly in time that they miss the window of opportunity. Yet they are continued when they should be terminated.

So what we have here are two distinct and costly problems:

• Projects that should not have been selected to be in the pipeline

• Projects that remain in the pipeline even after they no longer serve the company’s best interests

The result is that many projects are not delivering on their promises or are not supporting the goals of the enterprise.

Moving to a PPM culture will require a top-level commitment and a mature and cooperative environment for the project and governance teams. For this small investment, you can have a significant impact on the way that the organization deals with projects and business initiatives. PPM will push the corporate culture in a new direction—one in which it really wants to go if it could only articulate it.

The PPM process starts with a rational prioritization and selection procedure. By evaluating a proposed project against a set of selection criteria, bad projects get weeded out (or modified to meet the criteria). If a proposed project can’t pass the minimal criteria, there is no need even to rank it for selection.

PPM is about having the right information so you can make the right decisions to select the right projects. It’s about bridging the gap between projects and operations. It’s about communicating and connecting the business strategy to the project selection process. It’s about making sure that intended opportunities are real opportunities. By evaluating value and benefits, by modifying benefit calculations on the basis of risk, and by forcing such analyses to take place under structured and consistent procedures, we prevent problem projects from sneaking in with real opportunities.

By evaluating benefits, risks, alignment, and other business and project factors, we can prioritize candidate projects and select the higher-ranking ones to get first crack at the organization’s limited economic and human resources.

By monitoring performance of active projects against both the project goals and the selection criteria, we can adjust the portfolio to maximize return. This means being willing to restructure, delay, or even terminate projects with performance deficiencies. The ability to monitor such performance exists in all traditional project management systems. All we add in PPM is the routine to do so and the ability to feed these data into the PPM system. This is the set of practices associated with maintaining the project pipeline.

Below are the critical question to be asked….

·        What mix of potential projects will provide the best utilization of human and cash resources to maximize long-range growth and return on investment for the firm?

·        How do the projects support strategic initiatives?

·        How will the projects affect the value of corporate shares (stock)?

Two Strategic approach organization can adopt

1.      First reviewed their current portfolio, eliminating a significant portion of their project load (due to redundancy, nonalignment with strategies, poor value, or inefficient use of resources), thus making room to add more valuable projects.

2.      Build portfolio from start in align with organization mission and goals.

Quick way to implement PPM.

·        Selecting Projects for Pipeline

·        Maintaining the Pipeline

·        Executing the Portfolio

·        Tools for PPM

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Agile PMO

Agile enterprise thrives and prosper in an uncertain , changing and unpredictable business environment by virtue of its:

  • Speed
  • Flexibility
  • Innovation

Some of the challenges faced by PMOs:

  • Lack of authority and executive support
  • Lack of demand management
  • Focus on upwards reporting
  • Process standardization and auditing rigidity
  • Over‐reliance on project portfolio management tools
  • Staff versus line organizational structure: creates overhead, lack of accountability and career plateau
  • Misalignment of tools, techniques and reporting with Agile methods
  • PMOs perceived as “process police” who block rather than enable

Vision of PMO

  • Increase ROI
  • Delivery Reliable Result
  • Expect Uncertainty and manage iteratively
  • Boast Performance and improve Reliability
  • Unleash creativity and innovation

Lean Principle of PMO

  • Throughput optimization
  • Limit WIP
  • Built process & flow orientation

Role of PMO

Agile PMOs consider agile team to be their customers, and support them in:

  • Bringing lean discipline to project prioritization & selection
  • Tracking project portfolios using Agile tracking techniques
  • Moving towards a stable teams model of resource management
  • Scaling and sustaining agile adoption by supporting and empowering Scrum teams
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Strategic PMO

The PMO is changing, to be more accurate, the PMO needs to be changing. It doesn’t matter whether a PMO to you means a project management office or a program management office; things are never going to be the same again. In recent years, organizations have embraced the idea of portfolio management to provide a common, strategically aligned approach to project execution – and now they expect the PMO to play a key role in driving that approach forward. That requires the PMO to evolve from a project support function to a vital business leadership function with accountability for leading organizational transformation.

Organizational transformation is no longer going to be an occasional activity; it is going to be the new norm. Successful delivery of goals and objectives is going to require significant contributions from all areas of the business, even groups like IT that have not traditionally been accountable for business goals. That will reduce the need for traditional project managers who focus solely on technical deliverables and require project execution (and by extension, project managers) to be focused on the achievement of business needs. This will create a new breed of business project managers who may not even initially have traditional project management skills – those can be taught. Instead, they will be managers who understand the importance of their projects to the success of the business and will manage accordingly.

As the controller of project execution within the organization, this will put the PMO into a critically important position to drive project success. The PMO will need to support and lead a very different project execution function and will have less value to offer at the individual project level; the PMs will be more capable of managing traditional PMO issues because they will have the relationships with business functions and an understanding of the business drivers behind their initiatives. This will result in the PMO needing to move to a more strategic level where they can deliver real value for the organization, and that will have a number of different elements. The PMO will need to ensure that the approved portfolio is capable of delivering the organizational goals and objectives. This will require involvement in (and capability to deliver):

Portfolio planning: The PMO should consider the project mix; this will involve the ability of each proposed portfolio to deliver the expected result as well as the ability of the organization to deliver that portfolio – everything from budget and resources to risk capacity.

Prioritization and allocation: Working with business leaders to ensure that the project budget is appropriately allocated across the organizational needs. While transformation initiatives will become more common and will drive the ability to achieve goals and objectives, there still needs to be investment in maintenance and continuity initiatives, regulatory compliance projects, etc.

Resilience planning: Projects, especially major transformations, can be extremely disruptive to the impacted business areas and consideration has to be given to ensuring that work is planned to minimize productivity impacts, avoid repetitive disruptions and align project execution with other elements of organizational change management.

Capacity planning: Ensuring that planning is in place to have the right number of people with the right skills in the right places at the right times to deliver the selected portfolio mix effectively and efficiently. This is more than just right sizing, it also requires “right skilling”.

The PMO needs to retain a business-goals focus and drive changes into the projects and programs that make up the portfolio in order to preserve strategic goal alignment.

The PMO must also look beyond its traditional scope. Portfolio management is a business function, not a project function – so the PMO can’t simply align with the project lifecycle. Instead, the PMO needs to take accountability for the portfolio from idea generation to benefits realization. In this way, the PMO can ensure that ideas are encouraged that will align with the stated goals and objectives – and that those ideas are captured and developed in a consistent manner regardless of where they originate from.

The future PMO will need a business leader with sufficient acumen to understand the organization’s goals and objectives, what needs to be done to deliver those goals and how to maintain that focus when things change. The PMO head also needs to be an individual who can build relationships in all areas of the business and can earn respect from all levels. These leaders are not common, but they are vitally important – you are giving this person control of the vehicle that will determine whether the organization succeeds. A wrong choice here can cost billions of dollars of market capitalization and several executive jobs.

Changing the culture, there needs to be public recognition that the head of a strategic PMO is a senior member of the organization. It’s not inappropriate to consider the creation of a CPO (Chief Project Officer or Chief Portfolio Officer) role as a peer to other CXO roles (COO, CIO, etc.). Regardless of the title itself, there needs to be very clear messaging that this role is a peer to department heads. If all department heads are currently Executive Vice Presidents (EVPs) and the PMO head is “only” a VP, then the credibility is damaged before the changes even have a chance to take hold. The cultural area there needs to be a commitment to the long haul in making this change. If an organization fails to achieve its sales targets for any given period, it doesn’t disband the sales department. The same needs to hold true for the strategic PMO. Not all PMOs will deliver exceptional portfolio performance in year one – sometimes because of their own performance, and sometimes because of project execution factors beyond their control.

The organization needs to look for improving performance trends and recognize that the changes that the PMO are driving are necessary for long-term growth.


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Strategic PMO

In today’s rapidly changing business environment, project management office (PMO) struggle to provide adequate support for shifting priorities and faster delivery cycles. To remain viable, they must evolve from a reporting and prioritization function to enabling leaders to develop and implement strategies which drives the business outcomes. Building transparency and consistency into portfolio planning, design innovative execution method and driving learning and development, high performance strategic PMOs are empowering their executives to act with greater agility and achieve better business outcomes. Focus of next level of PMO evolution will move into strategic planning and business governance.

According to Forester study, below are the findings about successful PMO’s

  1. They have a seat at the executive table. Strategic result require strategic positioning. PMOs that are highly effective in driving the business growth report varying level of executive management.
  2. They are a vital part for the Strategic Planning team. Since portfolio management is a core competency, PMOs actively participate in strategic planning and help shape strategy by providing directions and facilitation.
  3. They embrace core competencies. Excellence in project management remain critical capability for PMOs. The most successful organization recognize the specific role of the project manager and build significant learning and development programs to mature project management skills.
  4. They use consistent objective across industry and regions. Customer-facing or Business-facing, strategic PMOs share the same objectives.
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PMO to drive project by Business Case

Most PMO are driven by project requirements, but to make PMO effective, project need to be driven by Business  Case. PMO builds the Business Case encompassing the Financial and Sourcing model. Sourcing model identifies the Geo-Mix & Resource Pyramid which inputs the Financial model for effect allocation of funds. Two concepts Cost optimization and Resource optimization build the pillar for the Business case. A Business Case will act as road map for all project decision starting from requirement gathering and final delivery. Bit  confused??? Yes, since theoretically it looks very good but in practices it works wonders. To make it works focus should be to identify each requirement from Financial perspective and impact on the business users. Build the resource optimization around the requirements since the skill required to drive the requirements. Geo-Mix and Resource Pyramid balance should be achieved to make the requirement financial billable. Rest detail on this approach will follow soon on my next post.

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Dimensions of distributed Project

  • Type of Project
  • Structure
  • Perceived distance
  • Synchronization
  • Complexity
  • Culture
  • Information system methodology
  • Policies and Standards
  • Level of dispersion
  • Stakeholder
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PMBOK supplements CMMI

  • PMBOK provides additional project management processes not address by CMMI
  • CMMI addresses most of the PMBOK processes and provide a process management structure as well as systems and software best practises
  • CMMI
    • Addresses project of engineering scale
    • Addresses a larger organization
    • Addresses complex organization process
    • Support organization process for improvement for attaining maturity/capability level
    • Address Project Management without addressing any type of project or organization or complexity
    • Support training of Project Managers for PMP
  • Process addressed by both
    • Requirement Management or Scope Management
    • Project Planning
    • Managing and Controlling Project execution
    • Quality assurance & control
    • Supplier or Procurement Management
    • Risk Management
    • Measurement
  • Area partly address in CMMI
    • Human Resource Management
  • Area’s partly address in PMBOK
    • Configuration Management
    • Causal Analysis
    • Generic Practices
  • Contextual difference
    • Risk is uncertainty and can be positive or negative as per PMBOK
    • PMBOK addresses both seller and buyer views
    • Verification and Validation are defined just opposite in both document
  • Guidance and detail on planning for CMMI
    • Scope Management Plan
    • Schedule Management Plan
    • Cost Management Plan
    • Staff Management Plan
    • Communication Management Plan
    • Procurement Management Plan
    • Project Time Management
      • Activity definition
      • Activity sequencing
      • Activity resource estimating
      • Activity duration estimating
      • Schedule development
    • Earned value analysis
    • Integrated change control
    • Human resource management
      • Human resource planning
      • Acquiring project team
      • Developing project team
      • Managing project team
    • Quality Assurance and Control
      • Quality planning
        • Cost of Quality
        • Tools like DOE, cost-benefit analysis, benchmarking
      • Quality control
        • Tools & technique like cause and effect diagram, control charts, Pareto’s …etc
        • links output back into the implementation process
    • Risk planning and budgeting, qualitative and quantitative risk analysis, risk response planning
    • Complete contracting scenario from selecting supplier to closure and payment
  • Project Charter as per PMBOK
    • Provide justification for the project undertaking
    • Authorize the Project Manager for initiating the project
  • Project Closure
    • Create administrative and contract closure
    • Procurement audit
    • Verification of work and deliverables
    • Formal acceptance of the final product
    • Update of organizational process assets
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Steps to build risk register

  • Identify the risk across the phases of the project
  • Identify risk risk across different category (cost, quality, time, scope, resources, requirements …etc.)
  • Classify the risk based upon priority
  • Give a unique nos. to the every risk
  • Describe the risk in details
  • Set the role & responsibility for identifying, tracking & monitoring and migrating risk
  • Set a matrix for the likelihood of occurrence of risk (scale 0 to 5)
  • Or Probability of risk (e.g. 25%, 50%, 75%, 100%). There is no such thing like zero probability of risk
  • Set the impact parameter for the risk (scale 0 to 5)
  • Risk raking for prioritizing the risk and action to be take (Occurrence X Impact)
  • Action status
  • Type of action taken

Before building risk register, Risk Management Plan must be prepared. High level risk should be defined at the business case level and project inception which can be further drill down to micro risk level. No risk must be left of risk register no matter how small the impact or occurrence.

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Why PMO fails?

Below are some point for PMO failure. The list can be endless depending upon industry, domains and business.

  • Lack of management support
  • Objectives of PMO setup are not clear
  • Most of the Project Manager belong to technical background and with no proper project management skills
  • PMO approach is taken from a short term view
  • Quick solution is expected resulting in overloading the PM with lot of information
  • Too much academic approach results in missing out on practical aspects
  • PM resistance for PMO implementation since they do not want to be taught
  • Trying to take a big leap, PMO is maturity is gradual progress and takes time as the organization matures
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Top five challenges for Project Managers

1. Managing the Scope: Unrealistic and changing requirements act as hurdle for defining the scope which can be minimize by setting certain standards for the project/products will follow

2. Managing the Budget: Pour down of the scope creep results in budget overshooting. Not proper understanding of project requirements in terms of resources results in incurring more cost. The approach should be to clearly define the resource requirement based upon the project requirements and scope in order to avoid extra cost creeping in.

3. Managing Timeliness: Most project managers fails to adpat and use CPM-PERT methods for scheduling and setting the timeliness result in crunch deadlines. One should adopt CPM-PERT methods rigorously to minimize the time crunch.

4. Identifying & Managing Risk: Most Project Manager acknowledges it but fail to make definite plan for managing risk. Risk monitor and control is missing from most PM’s plans. One should identify the risk importance from the conceptualization of the project till closure and a tracking, monitoring and control mechanism must be place. Most commonly used methods are risk register, risk management plan which some time miss out the mitigation plan, how to control and convert risk threat into opportunity.

5. Deciding and Managing quality: One should not try to over do and set very high expectation in terms of quality with the client thus offsetting the cost and risk parameters.

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