A Closer Look at the Portfolio Management Approach
You’ve seen it before, when multiple projects need to be completed, energy is high and people are eager but the environment is unorganized chaos. In this situation communication breaks down, milestones fall through the cracks, and budgets are blown.
Project Management Offices (PMOs) can eliminate many of these issues and deliver much needed structure, but problems may arise from the outset if goals are attempted all at one time. Effectively managing a project requires full participation and executive buy-in, a disciplined project management framework, and a reporting structure to support the portfolio positions, all of which are difficult to orchestrate in a short period of time.
A stepping stone to implementing a full-fledged PMO is introducing a Portfolio Management approach. This approach allows for the control of all ongoing projects, through inception, approval and periodic health checks. By doing each of these steps accurately, organizations can maximize constrained resources on projects with the best benefit.
Step 1: Establish consistency of project status reporting. If you are considering undertaking a Portfolio Management approach, a number of key reporting requirements must be supported. Initially, one must determine project status reporting frequency and review timeframes. At the project concept stage, Key Performance Indicators should be documented and users should be educated on the benefits realization expectations for the project. It is important to clarify that these will be monitored and validated throughout the project lifecycle. Project reporting must be completed on a consistent basis and communicated to the senior level executives/stakeholders as part of the portfolio review. Illustrating the current status, forecast, and risk mitigation strategies for all projects at regular intervals is critical, whether you have a portfolio management program or not.
Step 2: Establish a repository of project information. Representing an entire stream of projects in a single repository is necessary to support project reporting. It also sets the stage to develop a Project Portfolio Management (PPM) information system, which will eventually support a PMO framework. Many factors must be considered when determining a suitable PPM environment and/or application, such as unique organizational requirements, interfacing to other systems, timelines, on-going support and maintenance. It is critical to remember that the solution for today must be adaptable enough to work tomorrow.
Step 3: Align the criteria for project selection and evaluation with the business strategy. Ask yourself why the organization is executing the projects that are currently in the pipeline? If that is a difficult question to answer, create a series of selection criteria based on business goals and strategies to ensure consensus from stakeholders around project selection decisions and periodic evaluations. It’s easier to get buy-in if the criterion is determined by stakeholders up front and if there is a strong linkage to the strategy and corporate goals of the organization. Once projects are “in flight”, evaluations need to be conducted regularly and based off of standardized decision criteria. The project contributions that are strategically aligned to organizational success will be emphasized. The project must continue to support the major business goals, even if there are major changes to the project requirements.
The payoff introducing a Portfolio Management approach can be as enriching as the implementation of a proper Project Management Office. Accomplishing any of the steps in the portfolio management approach will contribute positively to an organization and make the final step to a fully functioning PMO less intimidating. Beginning the individual project fundamentals of control, reporting, and risk avoidance will build towards the benefits of a total portfolio based project management system – where your organization is working on the right set of projects at the right time.
The Take Away
Rome wasn’t built in a day, and your PMO won’t be either. Utilizing a Portfolio Management approach can set the foundation for a trusted and respected PMO operation in any organization.
- Establishing consistency of project status reporting will allow projects to be benchmarked across the organization and provide accurate information for PMs and leaders to make mission critical decisions.
- Having a centralized hub of project information will facilitate information being shared across the organization. It also is an important first step in implementing a proper Project Portfolio Management information system across the organization.
- Make sure that the criteria you use for project selection is aligned with the vision, goals and strategy of the organization. By maintaining alignment and engaging stakeholder input, buy-in at all levels will be easier to achieve and it legitimizes your process.
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