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Project Portfolio Management Corner

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Project Prioritization Survey Outcomes – Do your practices compare?

 

Project Prioritization means Focus

As part of a world-wide study on Project Prioritization, MBA student, Stephen Wessels conducted a study of 74 project management professionals on the way they and their organizations currently go about project prioritization.

We’ve written a number of articles in the past outlining the importance of project prioritization and strategic alignment. Overall, the topic has been quite well documented and it was pleasing to see that 55% of respondents believe their organization considers value creation when prioritizing projects and 64% agree that their current prioritized projects within their organization could be considered as value-to-business projects.

So, how are they prioritizing their projects?

 

Amount of Use

 

 

 

 

Prioritization Method

Consistently

Often

Infrequently

Rarely

Never

Net Present Value

20%

35%

 

21%

13%

Benefit/Cost ratios

27%

34%

20%

11%

 

Return on Investment (ROI)

32%

32%

14%

16%

 

Payback period

19%

42%

16%

13%

 

Internal Rate of Return (IRR)

 

28%

20%

21%

17%

Expected Commercial Value (ECV)

 

19%

14%

13%

40%

Hurdle rates

9%

 

19%

27%

35%

Scoring models

 

28%

19%

20%

17%

Ongoing cost of ownership

19%

42%

14%

 

11%

This helps to demonstrate the dominant prioritizing methods, which include ROI, payback period, and ongoing cost of ownership, all of which relate to the bottom line. Again, it suggests that perhaps we are placing a lot more value on the financial outcome rather than the value add or strategic alignment when selecting projects.

On the other end of the spectrum, hurdle rates, ECV, IRR and scoring models are less commonly used. Whilst these aren’t all directly related to adding value or strategic alignment, they are further removed from the focus on cost.

While, these findings help to spot industry trends and provide bench marks to compare our own practices, they don’t necessarily point out what best practice should be.

Overall, the findings highlighted do show that in general it appears that the cost of a project will still determine whether or not a project gets prioritized even after it may have been initially considered because of the potential business value it could create. With limited resources, these results aren’t surprising.

So, how do your prioritization practices compare to these findings?

 

If you're interested in learning more about project prioritization, join us for our 'How to Prioritize Projects When Each One is Critical'

 

Image credit: woychickdesign.com

Project Management - what is the best approach to take & when?

 

Exactly how a project should be managed and with what methodology is a topic that is quite open to debate, which it was recently in a project management group on LinkedIn.

After reading an intriguing article on PM Hut about Agile vs. Traditional project management, I opened up the topic for discussion on LinkedIn, which was met with numerous comments and is still seeing an ongoing conversation well after being posted. Since this was a popular topic with some great discussion, I wanted to share some of the key points about traditional and agile methods, as well as the key out-takes from the group discussion.

This is something that I'm sure you all have your own view about, but here are the key points that the LinkedIn group came up with.

Approaches to Project Management resized 600

So what are your thoughts on the topic? Do you prefer one method over another?

We would love to hear your thoughts, so please make sure you share them in the comments below.

 

 

The Strategic CIO - An evolving role

 

The IT department has notoriously been known for responding to requests rather than having a strategy in place which dictates what they work on. However, with an ever changing business environment and the business’ understanding of how important IT can be in meeting the company’s overall strategy from a technology standpoint, this is all changing. The Strategic CIO

Last year The Economist conducted a study of CIO’s from a variety of organizations to gain further insight into the current risks, opportunities and outcomes that they were experiencing. One particular area of interest was the concept of CIOs having an expanding role in the business.

These CIOs felt that they needed to have a greater role in being more strategic, which was exemplified by Patty Morrison, CIO of healthcare services company Cardinal Health who said “All the senior executives of a company have to play a role in driving strategy based on where they are adding value in the market.”

Despite this greater sense of accountability many of these CIOs felt that they still weren’t being engaged in the early planning stages of setting the strategy. Only about half of survey respondents indicated that they are an early-stage stakeholder in—and adviser to—all mission-critical projects with a technology component.

The majority of CIOs are consulted prior to project execution, but primarily in support roles. Also, 62% of CIOs polled say their companies view the role of technology within the business as “tactical, primarily to drive efficiencies and increase productivity.” This does little to help CIOs to be proactive in setting technology strategy and makes it difficult for them to create added value in this area of the market.

It was further observed that in the middle market, IT tends to be less strategic and more tactical. This may be a factor of size, but when looking at the competitive landscape it could prove to be a  disadvantage. “Even mid-size companies find themselves at a disadvantage against competitors that embrace technology as more than just a way to cut costs or improve operations,” maintains Tim Theriault, CIO of drug retailing chain Walgreens.

CIOs also report that their C-suite colleagues are more tech-literate, making collaboration across business lines simpler than it previously was: 80% of CIOs say their business counterparts have “high” or “moderate” knowledge of technology trends; 90% say they themselves have a “high” or “moderate” level of technological literacy. This may explain why businesses haven’t necessarily adopted their CIOs as part of their early technology strategy discussions.

Additionally, it may because the role of a CIO is also expanding into other areas, rather than just their approach to the role. In some cases, CIOs are also responsible for human resources or customer service functions within the same organization. Mr Theriault, for example, holds many titles: CIO, chief innovation officer and chief continuous improvement officer. The CIO’s role is expanding to encompass a number of new business responsibilities.

With the expanding role, CIOs may have a greater influence across other business aspects, but what is key to their expanding role is taking a strategic approach. CIOs need to move away from tactical or simply responsive and move further towards a strategic approach to better help position the business in the competitive landscape. This is also where their priorities should lay.

Most CIO survey respondents consider developing a strategy to integrate emerging technologies into the enterprise either a “high priority” (31%) or a “moderate priority” (54%), CIOs interviewed for this report consider this an essential part of their responsibilities. Additionally, they are better positioned to do so. When asked to compare their current roles with the past, 49% of CIOs report that today they are “well positioned to promote game-changing innovations” within their companies while only 26% would have said the same three years ago.

We would love to hear your thoughts on this subject - Do you believe your CIO has a sufficient input in developing strategy around technology initiatives in your organization? Do you think it is important that they do?

Project Portfolio Management Predictions 2014

 

With 2013 coming to an end, many are looking to 2014 and the predicted changes and other happenings that may come along.

Personally, I love to see the many different predictions that come out - many of which seem quite unlikely and others that generally hit the mark.

In light of this, I have gathered the most likely, reasonable predictions that I could find regarding project portfolio management in 2014.

Most will come of no surprise, but hopefully they will act as a good reminder for where your focus should be.

Most of the predictions below have come from IT Consultant, Andrew Makar who recently posted his predictions on techrepublic.com

 

Project Portfolio Management Predictions  

 

Now your turn - What are your predictions for Project Portfolio Management in 2014?
Please share them below!

 

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The PPM Tools Market has a New dividing Line - Which side should you choose?

 

It is not surprising that we are seeing an alter in the Project Portfolio Management (PPM) landscape and the emergence of a new dividing line when you look at the impact that social, mobile, cloud, and big data trends are having on organizations. Not only this, but with the need to support Lean and Agile processes it has made today’s PPM tool choice more difficult than ever before. These changes have created a new dividing line between above-the-line and below-the-line tools. 

The PPM Market Has A New Dividing Line   Which side should you be on

 

A clear description of these tool definitions was provided in Forrester’s Project/Program Portfolio Management White Paper from Q4, 2012. In this paper, they have defined above-the-line tools as those which support strategic planning focused on value, risks, and benefits and below-the-line tools as those which focus on managing demand and day-to-day work. This whitepaper concluded that several vendors have functionality that straddles the line, but few vendors are strong across the board. So, what does this mean for organizations looking for a PPM Tool? How should they determine which side of the line they should gravitate to?

The Project/Program Portfolio Management White Paper determined that much of the traditional tooling used particularly by business technology organizations is in a state of change and renewal to better support short sprints of development activity, team-oriented execution, resource allocation, and other Agile practices. This is something that anyone involved in project or portfolio management has surely heard a lot about and even seen common practices changing. What this means for the PPM tool market is that segmentation has become much clearer based on changes largely driven by the adoption of Lean governance in support of Agile development. So, depending on the current state of your governance an above-the-line tool or a below-the-line tool may be better for your needs.

The Forrester evaluation uncovered a market in which significant differences exist among vendors and offerings, which has largely made them either an above-the-line tool or a below-the-line tool, but rarely strong in both areas. Above-the-line vendors have more sophisticated strategic portfolio planning functionality, targeting analysis that considers benefits, value, and fit, while work-oriented vendors emphasize transactional project health such as scope, cost, and time. This not only helps you to determine what you need based on governance, but also what you need based on your maturity.

In making your decision on which PPM tools you should consider, Forrester has defined the leading vendors as those who provide robust top-down reporting capabilities, allow organizations to perform critical alignment and value-based analysis based upon user-entered information as well as data automatically imported from third-party tools and they support strategic, project, application, and service portfolios to varying levels.

This new dividing line can help you determine which side of the fence you need to sit on right now, but there are also many other aspects that you need to take into consideration when selecting a tool. For more insight into determining the right tool for you, check out, ‘What to look for in a Project Management Software Package.’

Image Credit: favim.com

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Facing the challenge of Sustainability in Project Management

 

Although we already know many ways to become more sustainable, there is still great room for improvement to enhance the connection between sustainable business and project management. Addressing sustainability through project mangement

Boston University Dining Services has already seen the importance of this connection between sustainable business and project management. They underwent a major project to change how things were done in their kitchen and dining rooms, whilst communicating both the challenges and benefits to their main customers - students.  By making students aware of their initiatives, goals and challenges, they have hoped to create knowledgeable and empowered consumers and operators, who will demand high standards from their food sources, both while on campus and as they make their own path after graduation. They have realized the value of extending a project’s lifecycle to benefit future generations.

On a larger scale there are now a number of project management organizations who also see the value of enhancing the connection between sustainable business and project management. One such organization is Green Project Management whose project methods, training programs and professional certifications set the standard for advancing sustainability in project management.

Universities, companies and individuals are all getting the sustainability message, but for this to further expand it requires further change, and change agents (project managers) to implement it.

Charles Darwin puts it best - “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” With projects and project management becoming a more crucial activity of organizations, project managers need to step up to the challenge to not only be interested in their processes and projects, but also in making them more sustainable. 

Sustainability is without doubt one of the most important challenges of our time and the immediate future. Companies have begun integrating ideas of sustainability into their marketing, communications, and reports, but through the assistance of project management and project managers they can greater integrate it into their actions. It is inevitable that sustainability will further find its way into project management methodologies and practices.

Change management is nothing new for project managers, it is an area that they have had to master to ensure the success of their projects and for this reason they must step up to the challenge of addressing sustainability through project management. This will require them to increase the scope of projects by adding both the local and global society into the mix for consideration - this goes a lot further than the traditional project lifecycle and expands to better impact the current and future generations.

So, are you up for the challenge? How have you begun addressing sustainability through project management?


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Image credit: www.inteb.co.uk 

PPM Stakeholder Management Shouldn’t Just Be a One-Time Thing

 

As defined by Freeman (1984), project stakeholders can be defined as individuals and organizations that are actively involved in the project or whose interest may be affected as a result of project execution or completion. This may further be broken down by primary and secondary or even internal and external stakeholders.

In reality all projects have finite resources and cannot always address the concerns of every potential stakeholder, but only those of the most relevant claims.

Explicit lifecycle-based views of project stakeholder management are missing in project research. Research has however focused on the need to involve project stakeholders as early as possible. This is important, but is only one piece of the larger picture.  Taking a whole lifecycle-based approach is important in effectively managing stakeholders as different social and environmental risks and opportunities are present in each phase of the project lifecycle and not just at the very beginning.

Using effective stakeholder management throughout the different phases of a project - project initiation, planning, execution and closure allows a project manager to manage and influence stakeholder requirements to ensure a successful project.

Stakeholder management throughout the project lifecycle

Managing project stakeholders comes down to increasing support and minimizing resistance, so communicate, communicate and communicate!

Looking for more insight into project success? This article looks at whether scope, budget and schedule should be replaced with new measures of project success.

 

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Why you should take a unified approach to resource management

 

 

In numerous surveys conducted recently, resource capacity has been identified as one of the top business challenges. In our own survey, it was revealed that resource capacity and planning is the top business challenge for 58 percent of respondents. As employees are often the most valuable assets to an organization, as well as the most expensive, any challenges surrounding them should be made a top priority, which makes resource capacity and planning key areas of focus.

Senior Business Process Consultant at Daptiv, Alan Shefveland, argues in his projectmanagement.com article - Understanding the Concept of Strategic, Tactical and Operational Resource Management, that having a hierarchical approach to resource management should be adopted by organizations. His argument identifies the key benefit to this approach as having the ability to communicate unified information across the enterprise in order to make smarter business decisions across all levels. This is obviously an optimal outcome that most, if not all, would like to accomplish. So, how can this be achieved? Shefveland suggests a unified strategic, tactical and operational resource management approach.

Being strategic essentially relates to looking at the bigger picture rather than just the outcome they would like to achieve. Shefveland states that organizations ignore resource impact until they are ready to execute on the initiatives, which is obviously not strategic, but rather short-sighted. Making decisions without looking at all elements that will be impacted can certainly lead to resource capacity issues. Executives must make sure that capacity needs are addressed and available to make things happen. Strategic is important, but it is not its most effective when used in isolation.

Managing uncertainty in resource availability

The next type of resource management that Shefveland suggests using is tactical resource management, which takes a deeper look into the project relationships and dependencies of projects. This approach allows for projects to start when resource availability is aligned with project requirements. Combining this with the strategic approach will mean that the right projects are selected and implemented, as well as being planned with visibility and understanding of the type of resource needs without having to know exactly who these resources are at this stage. This involves bringing resource managers into the planning process early to help create a plan that meets the organization’s determined needs.

One key concern and possibly even a flaw in this tactical approach is that relies on the resource manager maintaining project demand, as well as resources keeping the resource manager informed on non-project and non-working events in order to maintain an accurate capacity forecast. This may just be part and parcel of working with human beings, but addressing accountability is important in helping to make this combined approach work. 

On the other hand, Shefveland states that by effectively implementing a strategic and tactical approach project sponsors have a higher level of confidence on when their projects will be executed whilst placing a higher level of accountability on the resource managers to deliver the resources when needed.

Succinctly put by Shefveland, having the right people to work on the right tasks at the right time is paramount to successful project execution. This is where the final element of operational resource management comes in. It is here that a detailed staffing plan at the project level is put together with the resource manager and project staff to determine how to meet project deadlines. However, for the staffing plan to be successful it again relies on resources regularly updating their timesheets and submitting for approval to close the feedback loop to the resource and project management processes.

Unfortunately, with the limitations of human nature there is not fool proof plan to successfully managing resource capacity, however this three-prong approach identified by Alan Shefveland gives us some food for thought about the necessary unification needed across the organization to effectively address resource capacity and planning challenges. By doing so, the organization as a whole will be in alignment with what needs to be executed, how it should be done and who needs to do it. 

Interested in learning the other results of our State of PPM Survey? 

View our State of PPM Survey Results

Next Generation Project Portfolio Management

 

There is no doubt that the practice of Project Portfolio Management (PPM) has expanded over the past few years, but it has also evolved. We have previously touched on the need to evolve in 'Should Scope, Budget & Schedule be Replaced with New Measures of Project Success?' and 'Is it time to change the traditional project management process?' These articles pose the question of change, but in a recent Forrester report - 'Map Your Journey To The Future With Next-Generation Portfolio Management,' they detail the changes that are happening now.

This report has three key takeaways, which are identified in the infographic below.

Next Generation Project Portfolio Management

Business success today requires the rapid realization of value from business, product, and technology investments. Firms need a single source of the truth that allows everyone to understand demand and evaluate which requests are worthy of investment. Most organizations do not lack opportunities, but rather, they lack the insight necessary to see the best option out of a pile of potential initiatives. Without a clear picture of who is consuming resources and why, it’s easy to lose focus. When managers don’t have an honest and complete picture of resource consumption, they end up putting key resources into firefighting mode.

Hopefully, this will provide you with some food for thought and more importantly inspire you to make the necessary changes in your organization.

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Why CFOs Need to Embrace Project Portfolio Management

 

With Project Portfolio Management being traditionally applied to IT projects, we often focus on it from a CIO’s perspective. However, because PPM strategies and applications integrate people, processes and technology into performance dashboards, they can also help other executives such as CFOs to improve their visibility into projects, allowing them to identify problems or pull the plug on projects that are no longer vital. CFOs to lead PPM initiatives

Bryan R. Funkhouser, principal, Technology Strategy for Deloitte, expands on the importance of PPM for CFOs in his recent article ‘Gaining Financial Visibility into Your Project Portfolio.’ He also notes the expansion of PPM amongst departments, stating that “Enterprise PPM” is an emerging business practice that extends many of the principles used in the management of IT project portfolios to the management of project portfolios in such areas as capital improvements, R&D, new product development and sustainability programs. In this article, Funhouser goes on to explain key areas or questions that CFOs can address with PPM along with the key benefits that they can realize.

No matter which department a PPM initiative is deployed in it can be used to address these 5 key questions:

  1. What are the right projects to do?
  2. Are the right projects being done now?
  3. Are we allocating scarce resources in the most effective way?
  4. Are the right projects done right?
  5. Are we getting the results we want?

So, what does this mean specifically for CFOs? Well like their CIO colleagues they can benefit greatly from the visibility PPM provides for better decision making on project selection, prioritization, and alignment with business strategy and resource management.

In Funkhouser’s article, he identified 5 key benefits for CFOs and whilst many of these are similar to the benefits other executives can realize, it does paint a clear picture of why CFOs should be embracing and even championing more PPM initiatives.

1. Improve project budgeting, evaluation and selection processes 

Having a PPM tool  enables a portfolio-level view, meaning that project synergies can be established in advance to reduce duplicative efforts and support economies of scale. This in turn allows for better, more accurate project budgeting.

As project performance tracking is implemented, projects can be reviewed more easily, allowing revenue-generating initiatives to be prioritized and ineffective projects to be shut down, which again allows for better use of financial, technical and personnel resources.

2. Integrate tax planning into project initiatives

This is one benefit specific to a CFO and as Funkhouser describes in his article “a tax-effective PPM solution is based on the premise that tax data can be captured more effectively as the project progresses rather than compiled at a later date using estimates and assumptions.” A PPM tool can greatly benefit a CFO with its ability to capture information for both financial reporting and tax purposes.

3. Enable “what if” capabilities

Although a CFO may not always be tasked with conducting a “what-if” analysis based on different scenarios, having these capabilities, no matter who conducts the analysis, allows for the ability to see how changes such as budget cuts can affect the health of the overall portfolio.

4. Improve resource allocation and resolve conflicts from interdependencies among projects

By tracking all forms of resources, a company can avoid costly issues caused by insufficient capacity or competing priorities. For CFOs this plays an important role on budget and cost management.

5. Establish greater controls over project execution and outcomes 

By leveraging PPM, CFOs can gain greater control and oversight of critical business initiatives so they can assess if the right results are being achieved.

Whilst these questions and benefits aren’t necessarily new or unique to CFOs, they do help build a case for project portfolio management. Hopefully, as PPM continues to become the norm in many industries, we will see an increase in CFOs championing these initiatives.

 

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