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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