portfolio value

 

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.