By Cynthia West, VP, Project Insight PM Planet columnist Cynthia West of Project Insight defines the terms and why it’s important to keep communication lines open for maximum success.Most organizations work on multiple projects at one time, which is why reporting on projects, programs and portfolios is so critical. Strategic portfolio management is defined as the management of multiple projects in a program and multiple programs in a portfolio. In order to effectively oversee a portfolio, and report on its elements, it is important to have a system for gathering the information and assembling it into coherent, meaningful reports for executive management.First, let’s turn to a brief description of a portfolio, program and project. Then we will look at prioritizing projects using a scorecard (for a more complete article on prioritizing and scoring projects go to: project manager planet). Last, we will discuss reporting and provide some sample portfolio and resource reports.Portfolio - A portfolio is a collection of projects and/or programs that aid in achievement of the vision and strategy of an organization. For example, one of my customers is a large advertising agency that works with GlaxoSmithKline, Proctor & Gamble, Diet Coke, and Pizza Hut on their website and interactive campaigns. When GlaxoSmithKline launches a new pharmaceutical product, it needs to create brand awareness. So the overall portfolio of the campaign may include multiple programs for ads on radio, television, websites and other vehicles.The objective of a portfolio manager is to ensure that the collection of projects and programs move the organization forward toward the vision. Portfolio managers are responsible for analyzing a portfolio from a financial and strategic perspective to determine the mix of projects and programs that best achieve the corporate objectives.Programs - A program is a collection of related projects that have a single focused objective. One program may be the set of ads directed at the specific target market, for example, women from ages 25-40, to create revenue from the drug. Another program of ads might be directed at the physicians to create awareness of the pharmaceutical for prescribing it to patients. Both programs are included in the portfolio.Each program within the portfolio will contribute value to the success of the overall product launch. Some programs may be revenue producers, while others may be loss-leaders or awareness based only. Another example from the advertising agency might be a program objective for Pizza Hut consisting of Improving the Customer Experience. Projects that make up this program might include:
▫ Creating a new online ordering system on the website
▫ Generating a direct mail campaign to let customers know about the new ordering system.
▫ Surveying the customers after launch of the new ordering system.
These projects are related yet may be worked on by independent project teams. A program manager will want to monitor the control the entire program and will need a way to see the program health and the project status in one report.
Projects - Projects are not independent events within an organization. They are pieces of an overall strategic plan. The projects that an organization undertakes should facilitate the achievement of that strategic plan. They should be prioritized so that the most important projects are given every opportunity to succeed. They should regularly be re-assessed as to their effectiveness in terms of the overall corporate vision. As markets change and corporate strategies evolve, projects may need to be reviewed and re-assessed as to their value.
Cross Project Dependencies - Because projects are not independent events, but part of a larger organizational strategic plan, linking projects in the program is a good idea. A common challenge project managers have is dealing with interdependencies that exist between projects. Some projects may have a dependency upon the completion of another project or task. In this case, the project manager needs to know the progress of that project in order to effectively monitor and control his/her own project.
For example, one customer I work with is a toy manufacturer. They have both design projects and manufacturing projects. The design of a new toy must be finished before the manufacturing team can commence work. So, the last task on the design project is linked to the first task of the build project. If the predecessor project gets delayed, it will push out the successor project and the program and portfolio will remain updated.
Prioritizing Projects with Scorecards - Before launching any project, it is a best practice to develop a scoring system across the entire organization. This allows the projects to be scored and measured based on the values, goals and key criteria that are important to the organization. Scoring projects also helps minimize the politics when it comes to assigning and allocating resources.
In many companies, the most influential manager or the most contentious manager is the one that gets the resources assigned. In customer-facing organizations, the “600 pound gorilla” customer is the one that gets the resources assigned to his/her projects. This, however, is not the most effective way to allocate resources.
Scoring is usually comprised of goals, critical success factors, and key performance indicators. Some organizations may decide to use only goals, or goals and critical success factors. It just depends on how complex or simple the scoring system needs to be. One example of a goal might be Generates Revenue. Then a critical success factor might be Opens New Markets.
If a company uses a scoring system, then when it comes time to allocate resources, these scores may be used as independent, agreed upon standards that determine priority.
For example, if the team has more projects than resources available, then the score of the project can determine when it should be performed. In many enterprise project management software solutions, a view is available for resource managers, stakeholders and executives to see what projects and tasks are causing resources to be over allocated. The exposure of the score, will help the team decide what projects to shift and/or assign additional resources to. In an environment where resources are constrained, the top project would remain in place, while the last two would likely be shifted out. If a project cannot be shifted, a resource manager could make the case for requesting additional team members to cover the project load.
Reporting on Portfolios and Resources - Executives and management are responsible for overseeing the status of their portfolios. In my experience, many project teams continue to manage projects using Excel and Microsoft Project. These are great individual user applications, but woefully weak when it comes to rolling up a portfolio of projects. Executives need comprehensive reporting capabilities. A decent dashboard view facilitates viewing of multiple portfolios, programs and projects. Ideally, each executive can customize his or her view to show what is most important. For example, a CFO may choose to display financial information on the portfolio, while a Program Manager may want to see percentage complete and status indicators.
Summary
Because organizations perform multiple simultaneous projects, it is imperative to monitor and control all projects and programs in the portfolio. However, as an organization gathers and reports on information it is vital for executives and stakeholders to keep up to date on project health and status in as timely a manner as possible.
Scoring projects allows teams to independently evaluate projects and their priority. It also keeps the discussion around who gets certain resources and when on a logical plane, instead an emotional one. Having visibility into all projects, their scores, and what resources are working on is part and parcel of controlling the portfolio. Organizations that master these concepts will be leaders in their market spaces.
See article at:
ProjectManagerPlanet.com
About CynthiaWest
I consider myself a 'serial entrepreneur.' I was brought on board in 2002 to launch Project Insight's sales and marketing efforts. I spent the 1990s in Silicon Valley working at 3 different start ups. I was part of a management team that took one company public, and another start up was acquired by RR Donnelley & Sons. If it isn't fast paced, it isn't fun!
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