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Project Portfolio Management is Your Friend

  • October 27, 2003
  • By Jeannette Cabanis-Brewin
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Three reasons for project managers to embrace PPM—Realism, Rationality, and Visibility

Project portfolio management (PPM) is HOT. On a recent morning, my inbox yielded five Gartner, Inc. announcements about major software players (including Primavera and Microsoft,) adding to their PPM capabilities. Books, articles, white papers, Web sites, and conferences on the topic proliferate.

"So what?" you may ask. I understand; for the project managers and teams working "in the trenches" of projects day to day, the latest trend in project management theory or software often looks like "more work for me" or "more empty rhetoric from consultants and management." But here are three reasons why the rank-and-file of project management should not only welcome PPM initiatives, but actively work for them at the grassroots level:

  1. PPM brings realism to an organization's planning processes. The Balanced Scorecard Collaborative estimates that upwards of 80% of corporate strategies are never implemented. While the reasons for this are complex, at least part of the problem is that "strategic thinkers" dream up initiatives that the company has no hope of carrying out. Likewise, the hammering project management takes for "bad estimates" and project failure often begins in the executive suite with unrealistic targets, deadlines, and budgets. PPM aligns what an organization wants to do with the resources—the money, hours, people, time, and equipment—required to get it done.

    Whether the "portfolio" consists of IT projects alone, or a more ambitious list of projects from across the enterprise, a complete list of all the initiatives competing for resources is a baseline requirement to even begin portfolio management. For many companies, simply asking, "What projects do we have?" is a kind of revelation. Counting projects derives instant value from portfolio management, because certain realities are quickly revealed: If you schedule 130% of your human resources to projects, for example, a lot of things will not happen. Projects that duplicate or cancel each other out can be eliminated. Large projects must be "chunked" for portfolio analysis. As we have learned to segment large projects into smaller initiatives, project failure rates have dropped.

  2. PPM brings rationality in the allocation of resources, both human and financial. After project inventory, the next important step in creating and executing a PPM process is to establish budgets (dollars and human resources), and define start and finish dates for these initiatives. Future projects or programs are also forecasted and added to the organization's potential portfolio of work. Also, at this stage, good PPM processes count heads. For some companies, the scarcest resource isn't money but project managers. A critical factor in project selection thus becomes: Do we have a PM who can manage it? Which brings me to my third point:
  3. PPM brings visibility to project work and project people. The recent trend toward improved resource tracking and leveling functionality in PM software is a great boon to the portfolio manager. In fact, without a system for knowing what each person in the pool of potential project personnel is capable of, and when they will be available, you cannot really be said to manage a portfolio.

In addition, PPM requires an organization to be sufficiently "mature" enough to pull it of. That means the following organizational attributes and infrastructure are in place:

  • The organization knows how to manage projects. Without project management methodology and practices in place, you don't have the most basic data to work with. Bad project management means cost and schedule estimates that are exercises in fantasy.
  • Good information is available on every project in the portfolio. Gathering data in such a way that it can be put into context and become information is where software reigns supreme. How long will each project take? How much will it cost? What's the expected ROI? What's the status on the projects already underway? This is where the enterprise-level project management tools with portfolio management capabilities really earn their keep. Suddenly, project information is flowing from team level to executive dashboard level, making project management less of a mystery and more of a value-adding necessity to corporate leadership.
  • A project office is in place. While intra-departmental portfolios may perhaps be selected and balanced without involvement of a project management office, it's doubtful that anything on a wider scale can succeed ... and you can't optimize the system by balancing only parts of it. If a project management office does not own the process of project inventory, prioritization, and selection, it cannot be done well. Research analysts from the META Group recommend this strategy, and those companies that have put enterprise-wide PPM in place, such as Cabelas and Northwestern Mutual Life, have relied on it. A project office is good news for project managers, as it focuses attention on the training, rewards, and career path of the project professional.

Your Mission

Project managers take a lot of heat when "project management" doesn't deliver organizational nirvana, but the business of selecting which project to invest in must be carried out at the executive level, via the process of project portfolio management. If your executive leadership isn't yet on the PPM bandwagon, it shouldn't be too hard to convince them: Just peek at bottom-line yields. Research by Cooper, Edgett, and Klienschmidt reveals that, for R&D portfolios, the 20 percent of top-performing companies had an explicit, established method of project portfolio management, consistently applied across the organization. Want to be a hero? Inventory your department's projects. Gather information about project portfolio management tools and educate yourself on their use.

PPM Resources

About the Author

Jeannette Cabanis-Brewin (jcabanis-brewin@pmsolutions.com) writes on the organizational and human side of project management for the Center for Business Practices, the publishing and research division of Project Management Solutions, Inc. A former staff writer and editor for PMI's PM Network magazine, her feature articles have been widely reprinted and quoted in project management publications in the U.K., South Africa, and Australia. Recently, her articles on project management topics have appeared in Projects@Work, Primavera Magazine, myplanview.com, People On Projects, and the Best Practices e-Advisor. She is the editor of several award-winning project management books, and author/co-author of two books forthcoming from Marcel Dekker/Center for Business Practices.






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