project portfolio management

Introduction

In my professional engagements I very frequently get to develop project portfolio management models together with the executives from various companies. Today I wanted to share yet another very interesting case study with my readers: the company we are going to examine is a very successful bearings manufacturer. As a matter of fact for a number of years they have focused all of their research and development efforts solely on the bearings production.

However, under a considerable pressure from their sales team, the executives of the company has at one point of time decided to review their strategy. The sales department has been for several years insisting that when they talk to their customers, they keep asking questions about other bearing-related products such as sealants, lubricants and electronic components which the company has not been producing at the time.

Strategy

As a result of the above-mentioned events the company management came up with the new strategy for the R&D department that consisted of the following  initiatives:

• Develop new (i.e. lubricants, sealants and electronic components) product families
• Develop attractive products (i.e. something that is really demanded by our customers)
• Increase revenues and profitability by developing new product families
• Increase market share in the new markets

The Scoring Model

The scoring model developed by the executives included the following variables (see Table 1):

• Strategic fit
• Possible synergies
• Financial value
  
  • Payback
• Technical complexity (skills in-house)
• Market attractiveness
• Competition and IP

Table 1

Introduction

In my previous blog posting "Seven Questions to Ask When Dealing with a Troubled Project" we examined the questions the project manager should ask when handed a troubled project. Let us now take a look at the possible actions one may initiate based on the answers received.

Answer #1 - This Project is Failing Due to a Poor Portfolio Management Decision

Actions you may consider:

• Cancel this project.
• Go back to the drawing board to change the project scope, timeline, budget, resources or timing to better fit company strategy, required project balance or to improve its value.

Answer #2 - We are Failing with the Project Scope

Actions you should probably take:

• Initiate proper requirements elicitation, analysis and documentation procedure. This action should be undertaken by the individuals specifically trained in requirements engineering.
• Ensure that the requirements document is written at a consistent and appropriate level of detail, provides an adequate basis for design and covers all possible  alternatives and exceptions.
• Get rid of all the TBDs and ambiguous words in the requirements specifications document.
• Conduct walkthroughs, inspections and peer reviews with customers, technical team and an experienced project manager.

Don't forget to ask the following questions in order to renegotiate the project scope:

Introduction

I am frequently being asked the following question in my consulting and training and training engagements:

We have a troubled project at our organization. What is the starting point when dealing with such ventures? What questions do we have to seek the answers for in order to rectify the situation?

Question #1: Why is this project failing?

In my opinion this is the most important question to ask. Before we move further in his analysis of the failed or troubled project we need to establish whether the failure should be attributed to the project portfolio management or project management root causes.

If we establish that - even if finished on-time and on-budget - the project would most likely not add any value to the organization (domain of portfolio management), why should we waste time and resources on putting it back on the rails? In other words, if determined that the project was a bad idea to begin with (e.g. construction of a new airport that no airline intended to use )we should probably either cancel it outright or go back to the drawing board and, if possible, change the design of the final product.

Question #2: Where did we fail on the project portfolio management side of things?

If we managed to establish that the failure was on the project portfolio management end of the spectrum, then the next step should be dedicated to find out where exactly our shortcomings were. Depending on the type of the organization the answers to this question could vary quite considerably.

Hi all,

Just wanted to let all of my followers in Asia know that I will be teaching my "Project and Portfolio Management Masterclass" in Bandar Seri Begawan, Brunei on 24-26-Aug-2015.

You can register for the remaining seats in the course by either:

• Filling out a registration form online or
• Emailing CONFEX directly at register@confex-mice.com or
• Calling +673 828 2217

Click here to download the full course brochure and the presenter's bio. 

About the Author

Jamal Moustafaev, MBA, PMP – president and founder of Thinktank Consulting is an internationally acclaimed expert and speaker in the areas of project/portfolio management, scope definition, process improvement and corporate training. Jamal Moustafaev has done work for private-sector companies and government organizations in Canada, US, Asia, Europe and Middle East.  Read Jamal’s Blog @ www.thinktankconsulting.ca

Introduction

In my consulting and training engagements I frequently get to have interesting discussions with executives and senior managers from around the world. Obviously, considering the nature of my professional domain, the conversations we have regularly revolve around the topic of project portfolio management. They ask me very interesting and difficult questions, and I have to provide them with clear and succinct answers.

After several years of doing this, I suddenly noticed that no matter what industry the company belongs to, of where (geographically) the conversation takes place, I always end up answering the same questions over and over again.

So I decided to come up with a series of articles "The CEO's Guide to Project Portfolio Management - Frequently Asked Questions Answered" that will span across several posts. Check out Part 1, Part 2 and Part 3 of the series.

Introduction

In my consulting and training engagements I frequently get to have interesting discussions with executives and senior managers from around the world. Obviously, considering the nature of my professional domain, the conversations we have regularly revolve around the topic of project portfolio management. They ask me very interesting and difficult questions, and I have to provide them with clear and succinct answers.

After several years of doing this, I suddenly noticed that no matter what industry the company belongs to, of where (geographically) the conversation takes place, I always end up answering the same questions over and over again.

So I decided to come up with a series of articles "The CEO's Guide to Project Portfolio Management - Frequently Asked Questions Answered" that will span across several posts. Check out Part 1 and Part 2 of the series.

P.S. If there are any people out there who want to submit their own PPM-related questions, do not hesitate contacting me by leaving a comment here or sending an e-mail to info@thinktankconsulting.ca

Question #5 - Will Project Portfolio Management Help Us Develop Exciting New Products and Services?

This a difficult question to answer with a simple "yes" or "no". In order for company to continuously come up with new and useful products it needs at least two ingredients:

Introduction

In my consulting and training engagements I frequently get to have interesting discussions with executives and senior managers from around the world. Obviously, considering the nature of my professional domain, the conversations we have regularly revolve around the topic of project portfolio management. They ask me very interesting and difficult questions, and I have to provide them with clear and succinct answers.

After several years of doing this, I suddenly noticed that no matter what industry the company belongs to, of where (geographically) the conversation takes place, I always end up answering the same questions over and over again.

So I decided to come up with a series of articles "The CEO's Guide to Project Portfolio Management - Frequently Asked Questions Answered" that will span across several posts. Check out Part 1 of the series.

P.S. If there are any people out there who want to submit their own PPM-related questions, do not hesitate contacting me by leaving a comment here or sending an e-mail to info@thinktankconsulting.ca.

Question #3 - What is the Value of Project Portfolio Management?

To develop or maintain a competitive advantage in the marketplace it is common practice to evaluate the actions of industry leaders if possible. Although we have discussed this thing called “project portfolio management” on this website numerous times, let us look at some historical data collected during an independent studycomparing the actions of industry leaders against the laggards*.

The first study that we will review attempted to answer the following question “Is there a systematic relationship between sound project portfolio management technique usage and the financial success of companies”.

Introduction

In my consulting and training engagements I frequently get to have interesting discussions with executives and senior managers from around the world. Obviously, considering the nature of my professional domain, the conversations we have regularly revolve around the topic of project portfolio management. They ask me very interesting and difficult questions, and I have to provide them with clear and succinct answers.

After several years of doing this, I suddenly noticed that no matter what industry the company belongs to, of where (geographically) the conversation takes place, I always end up answering the same questions over and over again.

So I decided to come up with a series of articles "The CEO's Guide to Project Portfolio Management - Frequently Asked Questions Answered" that will span across several posts.

P.S. If there are any people out there who want to submit their own PPM-related questions, do not hesitate contacting me by leaving a comment here or sending an e-mail to info@thinktankconsulting.ca

Question #1 - What is Project Portfolio Management?

One of my favorite definitions of project portfolio management states the following:

Project portfolio management is the management of the organization’s projects so as to maximize the contribution of projects to the overall welfare and success of the enterprise subject to internal and external constraints by maximizing the project value, balancing the portfolio and aligning it with overall company strategy.

Introduction

The company to be discussed in this article is one of the largest oil and gas producers in the world. In this particular case we will examine the portfolio management system designed by one of the organization's regional IT departments.

The situation at the company was such that all the major IT projects were undertaken by the company headquarters, while the local IT departments were responsible mainly for servicing the needs of the offshore platforms. The executives of the regional department felt under constant pressure as many of the projects proposed by them, were denied by the headquarters an, yet, they remained responsible for the safety, reliability and security of all the offshore operations.

As a result they felt that creation of a portfolio scoring model would help them with (a) prioritization of their project proposals and (b) demonstration of the importance of their initiatives to the executive managers at the headquarters.

Strategy

The overall company strategy has been developed at the organizational headquarters and consisted of approximately ten strategic initiatives. However the strategies directly related to the regional offices were:

• Safety and reliability of all the operations
• Fiscal responsibility
• Simpler and more standardized procedures

The Scoring Model

The scoring model created as a result of a one-day facilitated project portfolio management session is presented in Table 1.

Table 1

As can been seen it was a very unusual model when compared to other scoring matrices described in the book. One may call it a purely risk-based approach to project prioritization.

The model included the following variables:

Introduction

The energy company to be analyzed in this section of the chapter is an Eastern European electrical company that has until recently enjoyed a full monopoly, selling the electricity at one fixed rate irrelevant of whether it was dealing with private residences, small, medium or large businesses or government agencies. However the recent legislation by the country's government allowed for the deregulation of the electricity market. This implied that any energy company from the three or four neighbouring countries would be able to enter the market and compete with the former monopolist when it came to selling electricity to both private residences and businesses.

In addition the company management felt that the value of the projects they have been delivering so far was too low. Also, the executives mentioned that they seemed to have too many initiatives on the go while utterly lacking the resources (primarily human) to deliver all of them on-time and on-budget.

Strategy

The company strategy has been well-defined before the project portfolio workshop and, considering the recent deregulation, consisted of the following elements:

• Need to design attractive products. This implies:
  
  • Various size of electricity packages
  • Fixed and variable rate packages to suit different customer needs
  • Extend loans to the customers needing them, especially the start-up businesses
  • Create different packages for households and businesses
• Increase revenues and profitability
• Improve public relations damaged by the years of monopolistic presence in the market
• Social responsibility - initiate more green programs

The Scoring Model

The scoring model developed during the facilitated portfolio management session contained the following variables (see Table 1):

• Strategic Fit
• Competitive Advantage
• Market Share Increase
• Time to break-even
• Resources
• Technical Complexity

Table 1