Archive for May, 2010

PostHeaderIcon The Goals of Portfolio Management

Not such an easy target

Project portfolio management is gaining traction inside organizations as business imperatives, competitive pressures and the availability of better tools create a compelling value proposition. Effective portfolio management responds to fundamental questions, such as:

  • What projects are going on?
  • How well do our projects support business strategies?
  • Are we investing in the most appropriate way?
  • How far are resources overstretched?
  • How well are projects meeting performance targets?
  • Are project priorities clear and being acted on?
  • Are projects delivering anticipated benefits?

Three Overarching Goals

All these types of questions point to measurable indicators of portfolio efficiency, which is itself driven by achievement in meeting the three primary goals of portfolio management:

1 – Align Projects with Strategy

WHY? To validate that each project is evaluated on it’s own merit for contribution to strategic objectives.

HOW? Establish impartial criteria for judging project importance. Strategies must be the starting point for determining these criteria – which naturally implies that strategy needs to be clear. Weight the criteria to reflect the more important strategies and avoid excessive focus on financials.

2 – Maximize Value of Utilized Resources

WHY? To achieve the best return from available funds and people.

HOW? Consider alternative investment options for each individual candidate project. Insist on accurate resource forecasts for all projects. Use phase-planning on major projects with stage-gates to control execution. Optimize project resource utilization in conjunction with strategic importance.

3 – Achieve Balance

WHY? To ensure appropriate attention is given to necessary, internal capability-building projects as well as those exciting, high-earning customer-facing projects.

HOW? Set up separate sub-portfolios or ‘domains’ for projects of a similar nature, each with their own relevant prioritization criteria. Systematically re-assess project investments, execution performance and delivered benefits across domains.

The Bottom Line

Getting all this done requires (a) strong top-down support, (b) the right framework to operationalize portfolio optimization, (c) a highly effective Portfolio Support Office, and (d) proper project management in place across the organization. Deficiencies in any one of these will always compromise success.