project portfolio management implementation

Another seemingly simple but frequently encountered illusion is that the project portfolio management process can somehow go ahead without the direct involvement of the executive management. Very frequently when teaching my public project portfolio management masterclass I am engaged in the following conversation with at least one of my "students":

 

S: Hi, my name is Pascal, and I am a newly-appointed Director of Portfolio Management at company X. My goals today are to learn as much as possible about practical PPM and implement it once I get back to our headquarters.

Me: Will your executive management participate in the process?

S: No, unfortunately not. They are very busy people, you know ... But they assured me I would have their full support in this undertaking!

Me: So, who is going to create the scoring matrix, balance and strategic alignment models?

S: Hopefully I will do that once I am done with the course.

Me: Understood. Let me paint the following picture for you, and you can tell me at the end whether this sounds as a plausible scenario. You create the scoring matrix, balance and strategic alignment models. At one point of time you are approached by your company's CEO or Senior VP who asks you to add this "very important project" to the organizational portfolio and initiate it as soon as possible. However upon analyzing the proposal, you come back to you boss and tell her that the project will not be going ahead because it scored only five out of the possible 50 points in the prioritization model. What do you think her response will be?

S: She will ask me who created the model!

Me: And once you reply that the model was your creation, what is the likely response?

S: She will probably say something to the effect of that the creation of such models wasn't really in my domain of responsibilities.

A question that I get asked fairly frequently during my consulting or training engagements sounds something like this:

We have heard about this "project portfolio management methodology" ... How valuable is it and how do we go about implementing it?

Considering the number of times I had to answer this inquiry in the last four or five years, I decided that it might be a good idea to sum up at least the high-level steps required to implement PPM at any given company. And here is what it looks like:

Step 1: Executive Commitment

There should be a serious commitment from the senior executives of the company to install a systematic, formal and rigorous portfolio management process. The senior management must believe that companies that use PPM outperformed those who don’t.  For more information about the value of project portfolio management, see my earlier article "What is the Value of Project Portfolio Management?"

Step 2: Mature Project Management In-place

Successful implementation of project portfolio management would be severely challenged for organizations lacking   the ability to scope, estimate and manage its projects. Therefore the introduction of project portfolio management should start with a company getting a good grasp on project scoping and estimating, followed by project monitoring and control.

Step 3: Establish Your Throughput Capacity

Once the scoping, estimation and other project management processes have been implemented, the efforts of the organization should focus on the determination of throughput capacity of the project pipeline.

One of the easiest ways to assess pipeline capacity is to measure it in dollars or some other currency. For example, the company executives may decide that the total budget allocated to projects in the next calendar year will be $100 million. The budget for each successful project is then estimated and, depending on the allocation method used the projects will be added to specific buckets until all of the buckets are full.