Key Questions of Project Portfolio Management

PPM invariably changes the culture of the business because it demands we ask the hard questions. There are five basic questions that rise to the top of the list as shown in the graphic. Let us explore these questions together.

The Organization ability to answer these questions accurately will determine how well organization have implemented project portfolio management.

  1. Are we investing in the right things?
  2. Are we optimizing our capacity?
  3. How well are we executing?
  4. Can we absorb all the changes?
  5. Are we realizing the promised benefits?

 Question 1: ‘‘Are we investing in the right things?’’

Any task, activity, project, or program requires either money, equipment, material, people’s time, or some combination of these (resources) and when you look at it, the equipment, material, and even people’s time can be readily converted to a common unit of measure: money. So its all about Money. In current circumstances from US to EU and Middle East to Asia the economic conditions are tough and every dollar matters.  Therefore, since PPM is looking at these things as a whole, and they all take money in some form, then it only makes sense to view them as ‘‘investments.’’ If our projects are investments, then doesn’t it make sense to ask whether we’re actually spending our money and time on the right things? And, so, we have the first question: ‘‘Are we investing in the right things?’’

A sound PPM capability requires, at a minimum, four things:

  • Informed Managers
  • Involved Participants (including the right level of executive sponsorship)
  • Good Facilitation, and appropriate processes
  • Systems, and tools.

Since money is very much a limited resource in every organization, we must figure out a way to invest in the right things. This is a balancing act between the desires to fulfill the business strategies, the limited money we have to invest, and knowing when is the right time to start a project. Along with deciding which new projects deserve investment, we need to monitor the progress of active projects so that, if they’re not reaping the expected benefits, they can be closed down, and their allocated capital can be recovered to apply to more beneficial projects. I guess by now you all folks know that I am discussing the core of portfolio management.

However, this is not all. Businesses operate in a dynamic environment that shifts strategic objectives over time. Projects that are strategically aligned today may not be tomorrow. So PPM must also be a dynamic process. Ideally, the portfolio would be optimized in real-time (or near real-time). Also, since not all good projects can be approved immediately, what is ‘‘right’’ for the portfolio may not be optimal for all the potential projects competing for funding.

So we have to be dynamic in our portfolio system to support business get real value of Portfolio management.

Question 2: ‘‘Are we optimizing our capacity?’’

This question puts into fancy words a simple concept: since we only have so much money, time, equipment, material, and skilled people, are we using them in the best way we can to get the ‘‘biggest bang for the buck?’’

Capacity optimization can also be called portfolio resource optimization which is the heart of portfolio management.

There are two key principles to understand here:

  • Optimizing resources is about balancing the demand for resources with the supply.
  • The primary aim of resource optimization is to create an open dialogue, based on factual analysis, between

The portfolio management office and the business project sponsors (the decision makers). Resource optimization is achieved through the balanced management of our resources. It is about understanding, managing, and balancing the demand side and the supply side of the resource management equation.

 

Question 3: ‘‘How well are we executing?’’

Doing the work of business enables us to reap the rewards. So it only makes sense that once we set plans in motion, we should check to see how well we are performing against those plans. However, as many of us have discovered through the ‘‘school of hard knocks,’’ the world does not hold still for our plans to be executed the way we envisioned.

PPM enables us not only to know how well we are doing on our projects, but also gives us the information we need to decide what we can do to stay in tune with the demands of the marketplace and emergent situations in the business. This may involve moving people from one project to another to meet emergent demands and knowing just what the impact will be on all of our projects as well as our entire business. It also enables us to know when to stop throwing our money at projects that just aren’t producing the expected results.

The world is dynamic. PPM is as well. And just as it’s important to know how well projects are performing according to plan, it is also necessary to know how well PPM is performing—how mature, efficient, and effective PPM practices are in our organizations. To understand our PPM performance, we need to assess where PPM is now in our organization and what pieces are missing. Equally important is creating a clear view of this current state and gap assessment to ensure that we can progress on a defined path in adding those missing pieces. Ideally, the assessment results will show that our organization is on a process improvement path with ever increasing effectiveness toward the governance of our portfolio.

 

Question 4:‘‘Can we absorb all the changes?’’

Ideas for new changes to our business processes, products, organizations, computing systems, and so on simply seem to have no end. However, not every idea is a good one. And not every good idea should be implemented right now.

This is what the fourth question in PPM addresses. Given the limitations of what resources we have, as we talked about in question two, and the need to track performance against plans, discussed in our considerations of question three, PPM allows us to determine what the right thing is to do at just the right time for the biggest benefit.  It gets back to having the facts in order to make good decisions. What we have seen all too often is that we decide to move forward with a project solely on the merits of the individual project, while hoping the business can do the job. Without a way of looking at the landscape of projects, it is virtually impossible to know if a new project can even be done given the availability of our current resources for it to gain the company any benefit at all.

Another way to look at it is from a nautical standpoint. As an admiral of a fleet of ships, I make the decisions on when to launch my ships and where to send them. Oh yeah, one little detail: we haven’t yet invested in a tracking system for the fleets—but we’re considering it! So I have no way of tracking where all the ships are at any given time. Now back to my plans: I can look at my ships and crew for launch whenever they are ready, and then give the order to launch. Or I can look at the whole of my fleet, review my strategy and purpose for the fleet, and then deploy the right ships to the right places to effectively execute the desired job.

 

Question 5:  ‘‘Are we realizing the promised benefits?’’

Now that we’ve launched our projects, the payoff to all our hard work will just happen! What? You say that isn’t necessarily so? Why not? Didn’t we know what the benefit of doing the project would be? Didn’t we have a way to keep tabs on the project’s impact on the object of change? Didn’t the money just roll in?  This brings us the final key question that PPM addresses. Or as the lady said in the old television commercial: ‘‘Where’s the beef?!’’

Effective PPM enables us to know what benefits to expect from a project and to track the realization of those benefits as the project progresses. Realizing benefits in practice is dependent on deliberate management action: staffs need to be trained to use the system and to exploit its capabilities; business processes need to be reengineered; and resources need to be redeployed. Unless this happens, the full potential benefits of our investments may not be realized. It is this problem that benefits realization management seeks to address.

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The Corporate Governance

 

IGovernanceit has been two years now since I have been working in corporate governance office. I found there is great misconception about the subject. So I decided to write this. Corporate governance is a system that defines how the organization should be directed and controlled. It has to be understood that corporate governance is not simply an internal-looking regulatory function; rather that it involves consideration for external stakeholders, such as the market, as well as the industry standards.

In Program Management Standard from PMI following definitions are found

Governance Management is defined as the program management function that provides a robust, repeatable, decision making framework to control capital investments within an agency, organization, or corporation.

Program Governance is defined as Systems and methods by which a program is monitored, managed, and supported by its sponsoring organization.

Program Governance Plan. A document that describes the systems and methods to be used to monitor, manage, and support a given program, and the responsibilities of specific individuals for ensuring the timely and effective use of those systems and methods.

I would like to take this discussion beyond with help of few good reference books towards the corporate governance beyond the boundaries of program governance.

Corporate governance is also about allowing managers to drive the company forward; however, this freedom is under a framework of control mechanisms and accountability, decision-making process, and clear dis­tribution of power.

Corporate governance at the organization level is thus concerned with:

1.         Setting up policies, controls, and procedures for provisioning and the management of organizational assets (including employees) and services in order to maximize organizational benefits.

2.          Creating a decision-making mechanism and assigning decision rights to the correct level.

3.         Establishing practices to meet internal and external requirements related to effectiveness, efficiency, confidentiality, integrity, availabil­ity, compliance, and reliability for its information and information-based services.

Chau (2011) summarizes corporate gover­nance framework by mentioning that “The heart of all instruments and mechanisms should be directed to proper stewardship, integrity, open­ness, transparency and accountability without excessive surveillance and bureaucracy” (p. 10).

I guess he is talking about the balance in transparency and surveillance which only comes when an experienced expert in corporate governance lays the fundamental framework of Governance of an organization or enterprise so that it is absorbed in the culture of the organization.

Within the conformance, performance, and relating responsibility (CPR) framework, Pultorak (2005) focuses on the board ownership of corporate governance and mentions that “corporate governance must be ordered within a framework established by the board that aligns and informs day-to-day decision-making, objective setting, achievement monitoring and, communication”.

Corporate governance and organizational well-being is the responsibil­ity of the board. Good governance is not just about compliance and trans­parency; rather, it benefits organizations by increasing the confidence level of the market on the organization, which eventually results in higher profitability. Thus, corporate governance should be seen as a strategic tool instead of an audit mechanism.

FUNCTIONS OF CORPORATE GOVERNANCE

Reporting and Disclosure

Efficient, effective, and comprehensive reporting is at the core of corpo­rate governance. A governance mechanism can have its strategic value in the reporting system, and the information contained within the reports. The objectives of transparency and full disclosure, which are important to stakeholders, can truly be achieved through timely, comprehensive, clear, and accurate reporting.

Resource Management

Resource management as an activity is a management level responsibility; however, corporate governance should set up the framework under which management makes the investment decisions. Also in certain cases, such as executive level hiring, the corporate governance institutions, such as the board of directors, act as an approving authority.

Risk Management

Risk management is a key attribute of corporate governance. Effective risk management helps organizations to mitigate potential risks to an accept­able level. Without an effective risk management framework, corporate governance is viewed by the market as risky. Therefore good governance, which includes risk management as a practice, results in instilling a sense of belief in the creditors and investors.

Performance Management

Performance of the organization should be a key function of the gover­nance framework. Performance is measured in terms of effectiveness and efficiency in maximizing the value for all stakeholders with a special focus on shareholders. Governance should be carried out beyond the financial indicators. Thus, performance is not just about financial performance, even though it matters the most. It is also related to nonfinancial mat­ters such as effective human resource management and organizational process efficiency.

Relationship Management

Managing the relationships with all stakeholders is a governance respon­sibility. Pultorak (2005) calls this relating responsibility and states that the governance function should be there to work with the stakeholders, pay attention to their needs, manage expectations, and balance their require­ments from the corporation.

Corporate social and ethical responsibility to society should also be considered. This function of governance is related to all the other func­tions, as one of the major reasons for the other governance focus is to sus­tain and build a clear and transparent relationship with the shareholders, in particular, and all stakeholders, in general.

Strategic Oversight

Strategic oversight is a major function of corporate governance. The devel­opment and implementation of strategic plans is a management respon­sibility; however, corporate governance institutions, such as corporate boards, have a major role to play in terms of reviewing, approving, and overseeing the implementation of strategic plans.

Compliance

Compliance is a concept that deals with how organizations work under a framework of principles, values, policies, and codes. Regulations, such as SOX, focus on accountability of the executive management and the board of directors. Such regulations also focus on the independence of auditors and disclosure of financial and nonfinancial reports to all stakeholders. Compliance with such standards helps in reducing the probability of issues related to fraudulent and opportunistic behavior of the executives. Compliance with these standards is no longer a matter of choice, and organizations have to adapt if they want to operate, espe­cially in progressing markets. Pultorak (2005) refers to this dimension as conformance to legislative requirements. Legal compliance, which is related to complying with standards and codes, should go hand in hand with ethical compliance, which is concerned with the values and norms of people.

Dear Followers and those who are interested, In my Next upcoming articles I would define the reverse KISS model from Martin Hilb. Stay Tuned.

Reference book: Program Governance (by Dr. Mohammad Ehsan Khan)Governance

Change & Transformation – My version of the story

10 years ago Harvard Business Review published Kotter’s classic article, “Why.” And although his suggestions for how to improve the odds have been widely accepted, the success rate of major corporate change programs remains essentially unchanged.

For quite some time since I am involved in large corporations and various Government organizations   in my corporate career as a Project Manager, Program Manager and transformation leader I was managing CHANGE or TRANSFORMATION Projects and  Programs. Although obviously there are similarities between the two, there are also some major distinctions that I have tried to differentiate as per my experience and discussion with my colleagues and experts. Knowing the difference is really vital as it gives you clarity that now you are in change or you are in transformation. To me it gives clear different approach to manage each one. I will try to write few in my upcoming articles however I will define the difference between the two based on my professional experience.

“Change management” means implementing limited initiatives, which may or may not cut across the organization. The focus is on executing a well-defined shift in the way things work. It’s not easy, but we do know a lot more today about what to do.

CHANGE requires becoming familiar with the current situation, and working to make things better, faster, cheaper etc. The past is the fundamental reference point and actions are intended to alter what already happened. The success of a CHANGE initiative is judged by efficiencies and economies that are realized at the end of our effort, compared with when you started. When you choose CHANGE, your future is really a reconditioned or improved version of the past.

Transformation is slightly different. Unlike change management, it doesn’t focus on a few discrete, well-defined shifts, but rather on a portfolio of initiatives, which are interdependent or intersecting. More importantly, the overall goal of transformation is not just to execute a defined change — but to reinvent the organization and discover a new or revised business model based on a vision for the future. It’s much more unpredictable, iterative, and experimental. It entails much higher risk. And even if successful change management leads to the execution of certain initiatives within the transformation portfolio, the overall transformation could still fail.

TRANSFORMATION is an assertion that our actions today create our future tomorrow. The future can be described and realized when you free yourself from constraints of the past. In transformation, you design your future and invent ways to bring it about. Transformation doesn’t describe the future by referencing the past (better, faster, or cheaper); it births a future that is entirely new. Like CHANGE, TRANSFORMATION also begins with firmly grasping the current state of affairs — the As Is of the organization. Without understanding of our As Is, we’re delusional about the future from the outset. When you choose the path of TRANSFORMATION, it becomes easier to leave the past behind after thoroughly considering the As Is. You permit yourselves to envision the To be state ; you make specific changes and adopt continuously, to ensure the desired future state. However it keeps on changing until you reach the desired state.

There are few indications that you are doing change or you are involved in transformation.

Change is by circumstances & Transformation is by choice.

The circumstances play a vital role for change. It could be a regulator who may apply a new policy on an insurance company or a bank in this case it becomes inevitable for the organization to comply and follow the directions.

The other example could be when the environment is changed, for example the construction industry in GCC is effected in general and in Saudi Arabia in particular due to oil prices and government spending shift.

So the organizations have to change in order to move towards different areas or streams in order to survive.

Transformation on the other hand is by choice. Once a visionary leader or board decides that now the organization has to change. He puts forth a compelling vision and makes a decision to transform.  The Example would be transforming of General electric by Jack Welsh.

In Saudi Arabia many of the organizations in private sector and of course many departments are changing due to Vision 2030 announced by the Government.

Past is a reference point in change while transformation is a new beginning

For change there is always a reference point that we have improved a process from this %age of efficiency to the next level, we have changed this many systems or we have upgraded from this version to this version. This is the change as it will always have a reference to past.

In transformation you do not have a reference point and you define a vision and this vision becomes something that you pursue.  This is a new beginning and you carry on and improve on it. You adjust this as you are on the move. So it is a moving target until you hit.

Change is incremental while Transformation is a redefine

CHANGE can be incremental and it can be subtle or it can be huge, but it must be consciously sustained. The set point for change is before the change occurred. Change is maintained with thought, effort and persistence.

TRANSFORMATION on the other hand, is always big because it requires a shift so drastic that a new set point is created. Transformation is a shift in consciousness. Transformation creates a new set point. In fact, transformation creates a new reality.

Change is incremental & Transformation is redefining the organization.

Change is incremental and builds on existing knowledge, practice and ideas. Continuing research in an academic discipline or R&D usually fall into this category.  Some examples of change would be the usual continuous improvement methods tried in business, introducing a faster model of a particular car by changing specifications, introducing new features in a phone etc.

Transformation is change that invents or redefines a whole field, paradigm, process or industry and is a ‘quantum leap’ beyond what currently exists. To be truly transformation, it must gain traction and become an accepted practice in the area (which can take time). Sometimes a transformational change alters the whole way an industry/discipline operates, otherwise in itself it may create a whole new industry/discipline.  Some examples of transformation would include the development of steam engine, electricity generation/distribution/utilization, invention of IPhone that redefine the phone concept.

Change is controlled & Transformation controls the organization.

Change in any organization is controlled and the pace of change is usually decided by the organization. The organization willingly can have impact on the change and its pace.

On the other hand transformation is usually controlling the organization. It decides the flow and actions that will be taken by the organization.

Change can be reversed & Transformation is irreversible easily.

Change is something that can be purposefully or randomly reversed. Moving an office is change. Transformation is doing something that cannot be randomly or purposefully reversed. It can be modified moving forward in time though. Example is Cooking food. Imagine the ingredients on a table. You leave the room and someone moves them around. You walk back in a put them back to where they were. We have just experienced change.  On the other hand you leave the room and someone bakes the cake. You walk back in and no matter how you treat the food, you cannot get the ingredients back. That’s transformation.

In transformation the shift is significant, usually organizational wide, and will usually have several change programs within it and usually irreversible. Takes a long time to embed and a long time to undo.

So all Transformational programs are change programs but not all change programs are transformational.

 

Scale is the difference

Change is about altering a thing from a previous version … more, better, different. It is way inferior compared to Transformation.  You may improve the recruitment process and now the recruitment is being done on much improved and rapid pace with better and efficient way. This is the scale of change.

Transformation is a breakthrough at another level. Transformation would be that you set up new concepts of shared service center or customer service and complete restructuring of the HR itself. You change the functions, you change the operating models, you change the processes and even you change the people in HR so now this is transformation. It’s a new possibility than cannot be reached thru Change. It’s a brand new Realm. Change is when something is ‘New, better or improved’. Transformation is operating at a level above this.

For implementing a new process, its important to remove the structures that support the old process. Identify checks to see if new process is followed. Transformation cannot happen suddenly. It undergoes a long process for which anybody would need support and require conscious effort towards it.

 

Change is by Force Transformation is by Choice.

Change usually is forced and companies are compelled to make the change. As in the previous example if a regulator decides to implement certain policies or an organization decides to change the IT system or ERP it is a change that everyone has to follow.

On the other hand it’s the choice of the organization and its senior management that make a decision that they want to go through the transformation to become different, bigger or diversified. Even if they don’t make the decision to change organization still works properly but the transformation decision is made to take the organization to the next level.

Transformation is at all level & is rigorous, change is rapid and specific

Transformation must take place at all levels in order to be achieved. It isn’t enough to transform only one specific area, function or system of the organization.

The change can be at any specific level. It could be just the change of a system,  a process or any subset of organization.

Transformation often takes place at such a slow rate and on such a subterranean level, it is nearly invisible until you’re on the other side of it. But further investigation reveals a consistency and rigor to the process that is undeniable.

Change usually is fast , rapid and more often is visible and people of the organization are aware of it most of the time as they know that where they are heading.

Level 5 Leadership

My Lecture on Level 5 leadership

Thank everyone you meet

10 July

Life gives us chance to meet a lot of people. some are really inspiring and have positive impact on our life, some are toxic and have negative impact on our life . The pole who are inspiring give us really good feel. they raise our motivation and make us persue new things that really change our life.

On the other we will also meet some people who will criticize us even for doing things right but this is the real test. Everyone can walk on the smooth road but perfect dirvers are produced by bumpy roads. so we need to thank both type of person positive for their kind thoughts and negative for making us strong.

Good Morning & have a nice day…..

Passion is important

20 june

In life who ever does something for the sake of doing is called a mediocre . All the people who have achieved greatness in anything , they worked with passion. When Steve job use to work he usually slept in office as he would not care about office hours. When Muhammad Ali used to train,  he never stopped until he got what he wanted.

It is really important. Dream is what gets you started and passion is what keeps you going. you need need to select what you need to do and then give it all you have, you will be amazed by the result.

Good Morning & Have a nice day….

Make your Day Count

 

Jun 13

Each day is important day in your life. we have to try and make our day count. The most important thing that we can give to anyone is time. we have to make this time count,we have to make everyday count. what we do today  is like sowing something for the future. Of we do something good it will have impact on our future. If we waste a day it is out of our life and cannot be returned.

 

we have to look how we spend our time, who we are spending it with. Try to make 3-5 small wins each day. Avoid negative people and avoid unnecessary meetings.

Good Morning & Have a nice day….

Harwork Beats Talent

3 Jun

we all have heard the story of Hare and the tortoise . At the end of the story the tortoise wins the race due to his hard work although the Hare has God gifted talent but laziness takes the talent to become useless.

whenever we see our surroundings we will see many people who are successful due to hard work. If you have the talent and also work hard then you are perfect but if you don’t have talent you can beat the talent by your handwork.

I have never seen a successful person with the easy past. all the things that occur in our life make us ready , whoever stands tall and works hard without complains will be successful at the end.

 

Good Morning & Have Nice day…

You run the day else the day runs you :)

5th June

The most important thing what we can give to anyone is Time but unfortunately most of us waste most of it. The point is the clock is ticking,  most of us waste half of our life by sleeping and the rest half  just waiting when the work will end.

All the successful people wake up 5 AM in the morning and they are ahead of the world two hours at least, same happens when they sleep late and make each hour count towards the success.

we need to realize either we run the day or the day runs us. The choice is ours at least mark 5 small things completed before you sleep in order to succeed. read few pages of a book and improve your self from yesterday.

Good Morning and have a nice day…..

Surround yourself with positive people

1st June

You are unique, you have gifted powers from God. Once you make a plan and watch it everyday, your mind starts thinking about making it a reality. In this charged mode if the people around you are negative or have never achieved anything big, the only support they can do is to push you in the negative mode.this will affect your mind and your goal ultimately.

So the idea is to surround yourself who have achieved big goals than yours or they are at least positive and support you, encourage you to get what you are after. If you can find a mentor or coach who can help you its the ultimate but if you cannot find some positive friends and be with them so they feed your mind with the wealth of positive ideas.

Good Morning & Have Nice Day…