Project management Each year the credibility of project portfolio management (PPM) as a means of prioritising projects appears to grow.
At its simplest PPM gives a central portfolio management office (PMO) a complete view of all projects under consideration and their status, and the power to decide whether to invest or divest in them. The PMO can also spot linkages between projects and manage resources appropriately.
According to the Association for Project Management Portfolio Management Special Interest Group (SIG), five conditions need to be in place for PPM to work: full commitment by senior management; a clear governance structure; a clearly communicated business strategy; projects that are modular or phased; and a PMO.
The SIG also stresses the PMO’s role in anticipating problems and resolving them through dependency management, and by making sure that the difficult decisions in relation to resources are taken.
Another key element of PPM is that it must be “evidence based” – PMspeak for built on accurate data rather than what is known in PM jargon as “strategic misrepresentations”. PPM proponents say precise data is the bedrock of the decision process.
The portfolio team uses data at all stages to assess the status of a project. In the first instance it decides if the budget is adequate to fund initiation, and which projects to prioritise. Subsequently, regular meetings with project steering groups determine the status of the project through the delivery phase.
Prioritisation is done by number-crunching qualitative measures that evaluate projects, usually on up to six criteria. They might include the likelihood of commercial or technical success, the likely reward, the strategic fit, levels of risk and the strategic advantage.
Such criteria can obviously be highly subjective and open to manipulation or distortion. Levels of risk are particularly difficult to assess and the weighting they are given can fairly or unfairly make the difference between a project being approved for go-ahead or being scrapped.
The function of the PMO is further complicated if it is managing projects and programmes. Although sometimes used to mean a large project, a programme is in fact a collection of interlinked projects with a shared business objective. Sometimes business as usual must be maintained while the programme is proceeding, making the PMO’s task even harder.
The British Library's digital library programme is a good illustration of PPM in action. Projects within the programme fall into three broad categories: an “ingest” process, such as digitising 19th century newspapers or web archives; providing access to content in line with legal frameworks; and infrastructure projects that support these processes. All are run in accordance with the Prince2 framework.
Terry Chapman, the British Library’s programme manager, says: “At any one time, the programme runs an active portfolio of about 15 projects, which makes resource management a key activity.”
Users are involved in deciding what functionality is critical to deliver a successful outcome within the allocated time and budget.
Progress is discussed at the weekly programme office meeting, and monthly meetings look at the forward resource plan for the programme for the next quarter.
“If any significant resource conflict arises – for example because a project is running late which will prevent the timely starting of another project – decisions are referred to the programme board to ensure that the business priorities are correctly reflected,” says Chapman.
For some the PPM approach is vital because it addresses the knotty problem of which projects to give the green light to.
Ivan Lloyd, director of Corporate Project Solutions, says: “The Portfolio approach is a hot topic. Choosing which projects to go ahead with has always been a problem. It’s in the last couple of years, when organisations have had to make cuts and prioritise, that it has come to the fore. Work cannot be truly aligned to an organisation’s objectives unless they have been debated and prioritised.”
Bob Walker, Microsoft Project technical solution specialist, says a stronger focus on resource management has also fostered the growth of PPM. “These days organisations want to do more with less. In the public sector they are using it to decide what can be done in-house now that they have to make less use of outside contractors and consultants,” he says.
Ultimately, the value of the portfolio approach has to be considered in the context of scale and the culture of the organisation. Most managers feel that small projects need a less formal approach, and some organisations prefer a more relaxed approach to project evaluating techniques.
A survey by the Economist Intelligence Unit in 2009 found that more than three out of five companies thought formal PM methodologies either “required too much paperwork” or “got in the way of our ability to solve problems.”
The PMO can serve a vital role in complex projects but it sometimes has its work cut out to persuade stakeholders that it is a positive influence, rather than a meddlesome one. ®