PROJECT MANAGEMENT BLACKSTONE GROUP4

ContentsList of Abbreviations41.1History51.2Objectives of Project Portfolio Management (PPM)91.3Problem Statement101.4Purpose of Study111.5Significance121.6Research Questions131.7Definition of Terms131.7.1Distinction between PM and PPM131.8Limitations of Project Portfolio Management14CHAPTER 2: LITERATURE REVIEW152.1 Introduction152.2 ROLE OF PROJECT MANAGERS IN PROJECT ORGANIZATION162.2.1 THE PROJECT MANAGER162.2.2 PROJECT MANAGER & FUNCTIONAL ORGANIZATION172.2.3 PROJECT MANAGER & PURE PROJECT ORGANIZATION182.2.4 PROJECT MANAGER & THE MATRIX ORGANIZATION182.2.5 CHOOSING AN ORGANIZATIONAL FORM202.2.6 ROLE OF PROJECT MANAGER202.2.7 GOAL TRADE-OFFS212.3. Background of the Company (Blackstone Group)232.2 Contextual Review272.2.1 Heuristic model.272.2.2 Scoring technique282.2.3 Visual or Mapping techniques282.3 Project Success Criterias292.3.1 Define Business Objectives292.3.2 Identify Stakeholders and Their Interests302.3.3 Identify Project Constraints302.3.4 Derive Project Success Criteria31CHAPTER 3: RESEARCH METHODOLOGY313.1 Introduction313.2 Research Design and Process323.3 Appropriateness of Design323.4 Sampling Design333.4.1 Sample size333.4.2 Sampling Techniques333.4.3 Collection of Data:343.5 Scope of the Study343.6 LIMITATION OF THE STUDY35CHAPTER 4: DATA INTERPRETATION & ANALYSIS35Private Equity35Real Estate38Hedge Fund Solutions39Restructuring and Reorganization39Blackstone's assets under Mangement since 2008:404.1 HEURISTIC PROCESS AT BLACKSTONE404.2 Method of Analysis41Pre-Screening and Screening soliciting of Project proposals41Determining Project Feasibility42A diverse Culture at Play at Blackstone42Project Management Capability44Potential Evaluative Models Used By Blackstone PPM Teams454.3 DEVELOPING BUSINESS CASES464.4 ALIGNING PROJECT OBJECTIVES ALIGNMENT MATRIX464.5 PRIORITIZING CANDIDATE PROJECTS474.6 PROJECT DEPENDENCIES & ENABLERS474.8 IMPLEMENTATION OF PPM484.9 IMPORTANCE OF CORPORATE GOVERANANCE494.10 EVALUATING PROJECT PERFORMANCE514.10.1 Schedule and Cost performance indices524.3 FINDINGS525.1 Research Question Conclusion535.2 Scaling up realizations535.3 General Conclusions545.4 Implications of changing dynamics in the market545.5 Recommendations555.6 Further Study56

List of Abbreviations

AUMAssets Under ManagementCAPMCapital Asset Pricing Model PProject PMBoKProject Management Body of KnowledgePMOProject Management OrganizationPMPProject Management ProfessionalPPMProject Portfolio Management RPResearch Project

CHAPTER 1: INTRODUCTION 1.1 History The Blackstone Group L.P. is an American based multinational private equity, investment banking, alternative asset management, and financial services corporation. It has achieved high regards in its industry and is the largest investment firm in the world. Among specializations in the firm are private equity, credit and hedge fund investment strategies as well as financial advisory services. Blackstones real estate business stands out in particular for its dynamic and successful portfolio of real estate acquisitions. In 2007, Blackstone accomplished a $4 billion initial public offering to become one of the first private equity firms on a public exchange. The company must focus on not only aligning projects that will return high profits but also will create value and strategically appease future objectives. In strategizing project selection in accordance to these goals management must create a project portfolio. Blackstones Chairman Chief Executive Officer and Co-Founder, Stephen A. Schwarzman, states company objective in the following in the 2014 Annual Chairmans Letter, Practicing the art of the long view has enabled us to outperform across the broad spectrum of alternative asset classes for three decades. We are sharply focused on delivering excellent investment performance, being responsible stewards of our investors capital, managing risk, seeking out new opportunities, and innovating.Along, with evidence from projected undertaken by the firm, this shows Blackstones commitment to investments and projects over the long-term. To engage in this type of investment Blackstone must continue a legacy of success and appease the shareholders and investors that finance these projects. Aligning projects that can be sustained over an extended duration of time requires skilled management, funding, resources, and alignment that will create value for the firm. Project portfolio management is defined as the simultaneous management of a collection of individual projects by treating it as a large entity. According to (Archer, 1999), a project portfolio is a set of projects that share and compete for the scarce resources and are carried out under the sponsorship and management of a particular organization. "Portfolio Management is a collection of projects to be managed concurrently under a single management umbrella (the corporate strategy) where each project can be related or independent of the others" (Meskendahl, 2010).Project portfolio management has a long history, but it was not until the 1950's that it became structures and scientific in nature. Portfolio management is still a challenge for even the most mature firms today especially since resources are often scarce. In a Standish Report conducted in the year 2009, researchers found that failure in projects is pretty common and often too expensive. Of all the projects that were undertaken by millions of organizations across the world only 32% are successful. 44% of the projects face problems related to cost overruns and timely completions problems. Moreover, 24% of the all the projects become outright failures (Kale, 2000).Modern portfolio management shaped the field and implemented tools and resources such as the Institute for project management, resource books, portfolio guides, and Gantt charts. These now readily available resources changed the way projects were organized and implemented forever. However, before modern day technology and benchmark practices were implemented projects often were time-consuming, tracking progress was almost impossible, and expense tracking had a lack of structure. Projects throughout history offer several examples of enormous projects completed even with these problematic occurrences. The ancient Pyramids of Egypt, The Great Wall of China, and The Roman Coliseums are examples of enormous projects that had to be strategized, developed and implemented within a time frame and tight budgets. Project Management in those eras were examples of an environment where people worked together to achieve a mutual objective and deliver successful projects on time and within budget. Despite all of the monumental projects created throughout history, little is known or documented by the methods and techniques ancient civilizations have used to deploy them. Y. C. Chiu in his book "A History of Ancient Project: From Mesopotamia to the Roman Empire." states that professions such as architecture, medicine, economics, mathematics, and theoretical sciences are all better documented than project management. "Because the term project is not prevalent in ancient texts, the field of the project has been more elusive than these other professions." (Chiu, 2011). It is not until the 1950's that organizations have started using systematic tools and strategies for complex projects. One of the largest contributors to implement systematic tools and techniques was the United States Navy, which began to document modern principles of project management, its methodologies, and practices. Over the years, people have worked on improving and refining the practices of project management.As the concept of project management makes advancements and organizations became bigger, the need for success and fought for scarce resources increases. Projects become more complex and demanding. Managers now have to plan and initiate multiple projects simultaneously. Project portfolio management was birthed and with it came new requirements for success, management, and risk. To gain a better understanding of this concept we define Project portfolio management as a set of business practices, and a process that allows organizations to manage projects as a strategic portfolio. The logical starting point proposed for PPM is to create an operational or service strategy - markets, customers, products, strategy approach, and competitive emphasis. The second step after initiation is to understand the budget or resources available to the enterprise to balance the portfolio. Lastly, each project must be assessed for compatibility and economic viability, investment requirements (resources), risks, and other appropriate factors to ensure success and alignment with company strategies. By selecting projects that that fit into a portfolio and aligns with an organization's objective a better strategy is created. (Muller, 2008). In the 1970's, major technological advancements were made which it made possible to develop software's that could track and manage projects in a systematic manner. Software companies, such as Oracle, created cutting edge software for the first time and helped to propel project management further into the future. After personal computers became more affordable in the 1980's, smaller companies also had a chance to use computers for project management of their deliverables. In the 1990's, project management tools such as PRINCE2 and CCPM was developed and implemented. Soon after, Project Management Academia followed suit offering certificates, degrees, and courses to keep up with the demand and trends of project management. Project Portfolio Management has since become more formal in definition and practice. It is important to know the components of a portfolio and what determines the difference between them. To obtain a balanced portfolio, executives must look at individual projects, create a strategy for which to implement, and allocate resources (Petr Fiala, 2014). The ability to execute this transformation successfully depends on the maturity of the organization and the strategies applied by PPM personnel. Some of the organizations are just starting whereas others might be having well-oiled and well organized Project Management structures that guide the overall portfolios into building and completion modes. PPM is nothing but a framework that lets the organization manage the portfolio effectively. Achieving success without a tactical approach is doomed to fail but some organizations may attempt to build a portfolio without actually having structured the backbone of a PMO framework. This realization necessitates the establishment of a proper PPM framework, and that would fulfill the maturity of the organization's hierarchy.1.2 Objectives of Project Portfolio Management (PPM)When an organization has simultaneous projects to manage that must be completed under time restraints, and with scarce resources it is important to manage the portfolio in a manner that ultimately aligns with the mission of the organization. For a firm such as Blackstone, asset management portfolios require constant management of projects for success. The firm has a dedicated Portfolio Operations Groups, which was created to provide hands-on support to aid their portfolio companies to become more productive, efficient and valuable. The operations group handles over 86 Billion in aggregate revenues of portfolio companies. In this environment project success greatly impacts the success of the overall portfolio and revenues generated will have an effect on new projects undertaken. Project Portfolio Management (PPM) might be defined as the process is undertaken by management that would help the organization to engage in projects in accordance with the criterion selected. After the organization has identified the objectives, it must share this focus, so the entire project team understands it. If this fundamental rule is not achieved then aligning the projects objectives with the long-term organizational goal would be lost, and project portfolio will not bring any value to the organization (Archer, 1999).

A misaligned PPM would include the following:1. Surplus projects.2. Inconsistent realized benefits with goals.3. Conflicting or mutually exclusive projects.4. Underperforming projects.5. An unacceptable amount of high-risk projects in the portfolio.However, well-articulated goals and strategy (Meredith, 2009, 7th edition) would let the PPM serve the organization in the following ways: 1. Beneficial projects are scaled through multiple methodology approaches.2. Well thought out list of prioritized projects.3. Resources are efficiently used to maximize a limited number of projects.4. Organization attains projects perfectly aligned with organizational goals and objectives.5. Elimination of excessively risky projects.6. To refrain from overloading the organizations available resource.7. The organization can balance needs while aligning short, middle and long-term goals.The PPM models would link the projects to the goals and mission of the firm. This is not just an initial occurrence but throughout the life cycle of projects. Therefore, PPM can be defined as a means of monitoring and controlling an organization's strategic undertakings.1.3 Problem Statement The purpose of this master thesis will be to gain a better understanding between value strategy of project portfolio management (PPM), and projects that were chosen to align with company objectives. Often companies attempt to balance a portfolio by focusing on projects with the highest rate of return or valuation. However, projects that will benefit the company's non-financial objectives (operational or strategic projects) can be equally valuable to maintaining balance. This paper will look at The Blackstone group, its current PPM structure, benchmarks and identify success factors for a competitive project portfolio management that aligns with company objectives (Artto, 2004). The available literature regarding PPM is primarily related to the external multi-project environment in which projects are commenced for an end-customer in a market. With this limitation, there is a lack of literature assessing PPM for internal multi-project environments within alternative asset management companies. 1.4 Purpose of Study This thesis identifies the value approach a firm like Blackstone will use in the decision to invest in a project, theories that affect project selection, and factors that may affect a project. The major focus will be to identify commonalities and differences in the organizations' practices with respect to portfolio management, and to obtain a better understanding of how the process works. Investments and real estate transactions represent some of the most complex and demanding projects of the portfolio. Considerations made have to take into account the fact that the outcome will be highly influential on the company, and may have irreversible effects. Projects are usually divided into a few parts before a decision is made to invest, and each portion of a project is analyzed separately. Depending upon the result of the feasibility analysis and Economic interpretation, the firm makes a decision whether it would be prudent to undergo a detailed financial analysis (Brearly, Myers & Allen, 2012).Before the financial analysis is initiated, managers must satisfy that the project is worth investing from a feasibility perspective. For this purpose, corporations undertake either a numeric or non-numeric model. A company like Blackstone will often undertake a Comparative Benefit Model. This thesis will try to understand the Comparative Benefit Model adopted by many project organizations including Blackstone, and compare to various other models.1.5 Significance Although portfolio management is an important and vital topic in the literature of Project Management, there are fewer investigations regarding alternative asset management that link specifically with this field. As investors are becoming more and more skeptical of the stock market, investments into alternative management companies are increasing. Blackstone group is a prime example of alternate investing around the world, and its strategy has shown that this can succeed if followed. It has become clear that organizations rely heavily on projects as a means to deliver results. Organizations arrange projects in portfolios in accordance with goals, future projections, and strategies. Moreover, it is important that most of the alternate investment strategies are not decided on a hunch but planned and analyzed. As projects continue over time, requirements, opportunities, and best practices become clearer, and precedent is set for many others willing to take the same route (Bivins, 2011). The ultimate objective of the PPM benchmark is to make an effective evaluation of the projects being considered and thus align it with the overall goal of the firm so that it contribute to the company's value. The next step is to monitor the progress and mitigate risk to finish it on time and within the scope. The project managers will need to find the critical success factors for projects and ensure its alignment with the goals of the firm or organization. If a project does not align and fit into the organization's plans, then it shall be discarded, and no longer pursued. For example, if the project is perfectly balanced and has the potential to succeed but it does not bring value to the firm's long-term needs then it may not be pursued.1.6 Research Questions This particular research tries to find the answers to the following questions:1.How Blackstone uses value to compare projects to fit the overall strategy of the firm?2 How Blackstone performs the portfolio management process?3 What are the benchmark practices used in the selection of project portfolio management?Hypothesis My hypothesis is that Blackstone will take on highly diversified projects that are in alignment with the firms present and future objectives. I believe that by investing in projects that link the portfolio to these objectives success rates will be higher and result in greater chances of completion and return value to the company and shareholders. 1.7 Definition of Terms 1.7.1 Distinction between PM and PPM

Project Management Project Portfolio Management

Purpose Project management provides the deliverables by completing a defined set of tasks.Deliver the required objectives by completing a network of Projects.

Duration Temporary in nature. Has a finite start and end date.Longer time frames and might be infinite and new projects are added.

Aggregation A collection of related tasks and deliverables.A collection of projects

Alignment ObjectivesAccomplishing specific tasks and objectives.Accomplishing specific requirements and objectives on a larger scale and time frame.

Risk Management Risks are seen as threats.Risks are seen as opportunities but are never ignored.

Key competencies Require specific Management skills Require leadership competence and dynamism.

1.8 Limitations of Project Portfolio Management The very components that start out as strong points within a PPM Model can also turn out to be the weakness of the PPM structure. Implementing a PPM process requires a commitment from the whole leadership, a disciplined approach, and constant communication between the stakeholders. PPM should have sponsorship and be regarded as vital to senior managers, this would make it easier for completion. Without senior sponsorship, PPM will not be as successful. It would need constant monitoring of the work process to satisfy the changing demands of stakeholders and what they deem as important. The success of a project depends largely on a matrix structure of the organization. It is highly essential that PPM is seen and acted upon as the life blood of future success. Without wholehearted co-operation from the top managers and the board of directors, it will not succeed (Hillson, 2001).CHAPTER 2: LITERATURE REVIEW 2.1 Introduction (Levin, 2005) Defined PPM as a set of business practices that brings the world of projects into tight integration with other business operations. It brings projects into harmony with the strategies, resources and executive oversight of the enterprise and provides the structure and process for project portfolio governance. The PMI defines the PPM as the coordinated management of portfolio components to achieve specific organizational objectives. The PPM process is regarded as the actionable process that is necessary to achieve the organization's strategic objectives through project portfolio selection, implementation, monitoring and control and evaluation. A project portfolio is a group of projects selected and executed specifically because together they best help the organization achieve its desired objectives.PPM can, therefore, be included to combine the following three focus approaches:1. A Business Management Focus which would ensure all projects align with the group objectives.2. A General Management focus that would help the organization manage the available resources with risks associated with the projects.3. A Project Management Focus which focusses on review, assessment and management of projects and related programs to make sure they meet and exceed the desired outcomes and contribute positively to the group objective as a whole.2.2 ROLE OF PROJECT MANAGERS IN PROJECT ORGANIZATION 2.2.1 THE PROJECT MANAGER The most important objective for starting a project task is to accomplish all the necessary goals. However, sometimes a Project Manager does not have the power and authority to attain the objectives that fall under their responsibility. However, the Project Manager is still expected to finish the tasks by bringing everything together, coordinating all the activities and personnel to reach the ultimate goal. The Project organization allows the Project Manager to respond to clients in the project environment, make corrective actions, and mitigate risks. The PM must also ensure that individual components of the project task does not optimize individual tasks without optimizing the group task for consistency. (Heerkens, 2006) The project manager is entrusted with the duty of transferring a flow of information between the project team and the parent entity. This duty includes due diligence, feedback, and providing information as when it is necessary. They have a direct impact on the outcome of the project. Project Managers (PM) are usually solely responsible for all the critical factors that can affect the duration, scope, and costs associated. Among these management functions includes: change management, risk management, procurement, scope management, creep management, human resources, and procurement. Successful Project Managers ensure the responsibility of individual growth for team members and bring development opportunities as well. This can be achieved through proper and timely information and reactiveness on the part of the PM. If there is a lack of cohesiveness and is not solved, employees, subject matter experts, or stakeholder can miss relevant information and critical input. One of the first actions of the PM is to create the project plan. This plan should encompass all relevant information to organize staff, assign job functions, creates timelines, baselines, and milestones. 2.2.2 PROJECT MANAGER & FUNCTIONAL ORGANIZATIONProject managers face various advantages and disadvantages to a given work environment depending upon the type of organization they are working for. Projects that are identified to have been directly organized by a functional department is assigned to a functional unit that has the most interest in the project. The department that shows the most interest in the ensuing success of a project can be the most successful in its implementation. Instead of giving the project a new home, we assign such a project to a function and a department.A functional department would allow flexibility in the use of its staff. Experts from the department are assigned to the project, and the department acts as the base administration in such a case. The primary benefit is these experts can work on many projects at the same time enabling the organization to easier access of resources. With a base of experts and skilled people available within the department, they can freely move back and forth between separate projects with ease. This allows the knowledge base to be shared and distributed without any hindrance.However, the problem with such a project structure is that the client is not the focus of activity, the functional organization takes precedence over everything. Thus, there is a major omission in the sense that functional project organizations tend to sub-optimize the project activity. Projects that are within the purview of the organization, and aligns with objectives should be considered a top priority. Projects that also have a lower financial or nonfinancial value to the firm should be sub-optimized. In this type of organization self-preservation can be paramount as the PM has to contend for resources.This arrangement will facilitate a holistic approach to project management. Cross Department communication and knowledge sharing become an issue in functional projects that are very complex in nature and thus required to be seen from different perspectives. (MANTEL, 2009)2.2.3 PROJECT MANAGER & PURE PROJECT ORGANIZATIONA pure project organization functions separately from the parent organization giving rise to unique advantages and disadvantages. It acts as a self-contained unit with separate personnel, and administration only tied to the parent through periodic reports. Many organizations allow complete freedom with accountability firmly attached.In such an organization, the Project Manager has full authority over the project. Even if the PM has to report to the Senior Manager, there is still a separate team, and would be considered CEO in a constrained manner. Every PM has a unique manner of completing work with autonomous freedom. In this hierarchal structure each worker and member of the project team is answerable to the PM. There is any number of personnel who is required to be consulted for decisions. Because the project is cut off from the principal organization and is treated as a separate entity, the Project Manager communicates with corporate management directly. This will result in shortened communication and faster decision making. (Gogal, 1982)However, the pure project organization is risky. If a project manager is given complete maneuverability, then the PM may deviate from objectives. Also, this can be an issue when the organization has many simultaneous many projects with little assistance. Staff constraints exerts immense pressure in this situation and the project timeline could be at risk. Despite its shortcomings, a pure project organization is the best environment to work within due to limited management constraints on the PM.2.2.4 PROJECT MANAGER & THE MATRIX ORGANIZATIONMatrix organization was developed as an alternative to the functional and pure project organizations to combine the benefits of both atmospheres. The matrix organization can have characteristics of both organizations depending on what the firm prefers. A strong matrix would resemble a pure organization whereas a weak matrix would resemble the Functional organization.In real life, there is more than one executive to whom the Project Manager reports. The project manager reports to a various program managers. Otherwise the PM may report to a particular program manager.The matrix organization is characterized by the project point of emphasis. The project manager handles its execution, and there is no outside interference. However, the project organization is interrelated with various functional departments and thus drawing talent from different departments. Even though there is usual movement within the project organization, people working in a matrix structure are more or less likely to remain attached to their functional departmental home.However, it is the disadvantages that sets it apart from a pure project organization. If a particular project is functionally organized, then the power lies with the departments, and the project manager is sidelined from the beginning. The need for the movement of resources from one project to another project, and from one department to another can become chaotic. Resources are essential to meet schedules, inconsistancy in this area would give rise to opposition among the project managers. Success in this field is paramount and PMs want to ensure success of their own projects and may disregard other projects they are not involved with. (Robb, 1996)If this is the case, the Matrix organizations are more suited to small organizations and a smaller number of projects. Because a larger matrix structure would tend to overlap project resources, managers would often fight leading to compromise the achievement of organization-wide goals and projects.

2.2.5 CHOOSING AN ORGANIZATIONAL FORMThe Project Manager does not have the ability to choose the type of organization they will have. The senior managers will weigh options and address this issue. Very rarely would the PM be asked for input before deciding the project organization by the management. The selection of a particular type or form of organization is difficult and partially intuitive. The form of organization depends upon the design of the projects. Project organizations can change from initial estimates to actual happenings. The real form of the organization has to be decided keeping in mind the cost structure, schedule and achieving a speedy response. If a company has a few projects that constitute the same nature, then a pure project organization is preferred choice. (Ford & Randolph, 1992)However, once the form of organization is chosen, the project manager gets absolute control of the project that has been aligned with the overall strategy. The PM would choose a democratic way to manage, but would have absolute control over matters related to how implementation and project completion will be managed in the time frame stated in the Project charter. 2.2.6 ROLE OF PROJECT MANAGER A Project Manager can start as a specialist in a particular department and then he is assigned a project on his own. From a specialist, he becomes a generalist. The resources provided is often grossly inadequate to complete the task at hand. Many times the lack of resources is attributed to the fact that the uncertainty of project requirements. Procurement may have a variance until a known certainty is realized. The Project Manager does have resource trade-offs for human resources and other resources as well. For example, the PM has to trust a seasoned asset manager to work with someone who is new in the industry. There would be a crisis that requires special personnel and resources to put off, but a project manager is a not provided to it. (Kotter, 1982)

A particular problem that occurs for a Project Manager is the need to borrow people from other functional departments. It is the duty of the PM to negotiate with other functional departments to borrow personnel. Upon their successful infusion they must be made aware of the work they are assigned in the project structure. These assignments are challenging, and they must be given the impetus to accept and made to work intelligently to fulfill the objectives. (Paul C & Jeannette, 2010)Hubris, and differences in personalities can be difficult in the assembly of a project team. This can be challenging as often times staff have never worked together and there can be a variety of attitudes, and perceptions. People may feel threatened by a change of work styles or different work environments, such as, telecommuting can often be stressful. They remain skeptical about their future as the functional manager keeps the control over their work evaluation, salary increase and promotions to say the least. The environment can become far more challenging and daunting. 2.2.7 GOAL TRADE-OFFSThe Project manager has to make a few adjustments to his plans and settle for trade-offs to adhere to cost, time limitations, and excellent performance. The PM also has to make subtle changes to processes and progress of the work. Change requests may be made by the staff or stakeholder which then must be compared to the project plan for any variances. The nature of these trade-offs is decided by the nature of project life cycles. In the beginning of a project performance is taken to be the most important goals of the current project, however as the project goes into an advanced stage that might change and cost conservation would take precedence over other objectives. Similarly when the Project nears completion stage, the schedule is given as much importance, and other targets are sacrificed for its adherence. (Kloppenborg, 1990)Even when the PM has all the resources at their disposal, they are expected to face problems. No project is supposed to finish the same way it was envisioned in the beginning. The project manager has to battle uncertainties in many things, for example starting from land acquisition to shifting to utilities. The Project plan shall be flexible enough to accommodate all the changes that come and mitigate risk. Project teams are made up from different departments cutting across the organizational boundary and naturally include people who are skilled and unskilled from several departments. The success of a particular project would require the cooperation of all the members of the team. Gaining the co-operation of all these people is challenging. The Project Manager or leader must be able to bring all of them together and extract the best work from them even if he does not have direct control over all of them. The objectives of a Project team are diverse. Project managers must integrate outsiders like suppliers of materials, subcontractors, etc to bring them on par with his organization. Project Portfolio Management is an important business process in many organizations throughout the world. However, formal best practices and successful implementation aligned with enterprise goals are not always successful. Identification of best benchmark approaches that will embody corporate strategies and ensure the successful progress of that firm in a competitive environment is difficult to target. Leaders dealing with simultaneous demands of multiple projects with compelling potential business outcomes have a tough job in determining which projects to select and how to implement them into the overall corporate strategy. This thesis will explore how present approaches address the issue of project selection and alignment to organizational demands, and then discuss best benchmarks and practices of the Blackstone Group. This will be done using financial and non-financial examples.

2.3. Background of the Company (Blackstone Group) Blackstone is a valuable player in the entire spectrum. Blackstone group is a highly renowned multinational private equity firm that specializes in investment banking and many forms of alternative asset management. The company manages billions of dollars in pension funds, advises fund managers and even many governments regarding investment destinations. They also invest primarily in emerging new economies and help first generation entrepreneurs in building a new start-ups.The group has billions of dollars in assets including significant investments in Freescale Semiconductor, The Weather Channel, and also significant assets invested in the Hilton Group. The firm also manages various equity, hedge, and real estate funds. Its expertise advice is also available in the field of mergers and acquisitions, restructuring of assets and advisory in the financial services sector. Revenue from the real estate industry nearly makes up half of the total group revenue (Kumar, 2013).Blackstone group identifies great companies suitable for investment and enhances their performance by inducing both capital and providing managing inputs. As the largest alternative asset owner and manager in the global market and whose real estate assets recently crossed well over $80bn mark has partnered with well-renown finance firms. Examples of these companies include Wells Fargo in which the company bought most of the real estate assets. The GE Capital transaction was valued around $23 billion. It has previously purchased GE property's entire assets in Japan in a deal worth $1.6 billion and which was spread all over cities like Tokyo and Osaka. March 2015, it also acquired Will Tower the iconic Chicago-based office space in a deal, worth $1.3 billion with aiming to upgrade and restructure the building it for its capacity as the second-tallest office building in the United States. Its invested interest ranges from new start-ups in China and India and Sweden, and it also has a considerable investment in India's prime real estate market. It investments in India are currently valued at over $3 billion and has emerged as the third largest holding company in the field, just behind DLF group and K Raheja Group of Realty firms.The group follows an efficient implementation approach to improving the customer satisfaction by bringing a better return to the table. The group manages to reduce the amount of risk and increase the probability of success of a project. At the PPM level, the same benefits can be realized provided the firm undertaking them apply a structured approach from top to bottom. The following diagram can make us understand how Blackstone uses the PPM approach consistently over time:

This illustrated through the following project life cycle diagram: Source: http://www.ibm.com/

Figure: Project life cycle 1. The first step in the life of a successful PPM is to identify, quantify and fund projects that aligns with capacity and capability of the organization and works with the business strategy of the company.2. The firm measures the performance of all the projects on a continual basis to make sure they meet the portfolio Estimates. 3. Identify the loopholes and take necessary corrective actions when the projects are in deviation from portfolio objectives. 4. All of the above would require the establishment of an efficient communication mechanism and reporting structure to make a continual evaluation of project being worked upon.5. Implement a Process to improve the overall portfolio program.Key Drivers for Blackstone Group:1. Dow Jones Industrial AverageThe assets under management in alternative investment funds typically rise when the market operates strongly. In this case the level of the assets under management for the firm which increases management and performance fees generated by the firm. The companys performance fees increased by 172% in 2014 compared to the previous year. Blackstone continues its focus on operations of its portfolio companies.2. Demand from Retirement and Pension PlansThe larger the level of assets that are held by the pension and other institutional investors, the greater the level of capital is made available to Blackstones Alternative Asset Management funds. Numerous institutional investors are below target allocation projections to alternative assets.3. Yield on 10 year Treasury bond The current interest rate will impact the amount of leverage buyouts, stock market performance, and can also affect cost of leveraged activities. 4. Legislative Requirements imposedAfter the financial crisis, regulation is expected to increase in complexity in the industry. Institutions, firms, and management companies are still trying to pay for costs incurred from Sarbanes Oxley. Companies like Blackstone have been forced to become more transparent in statements as to their holdings. 5. Dry PowderThis is the unused financial capital retained in a reserve for use in executing transactions. Dry Powder is essential to capitalize on new investments and to generate additional revenue. According to Blackstones Second Quarter 2015 Earnings Call, the company has dry powder at $82 billion, and a fully integrated network built around the world positioning them well to take advantage of new opportunities and projects. 2.2 Contextual Review The main objective of this thesis to make an analysis of the Project Portfolio Management structure undertaken by the Blackstone group and compare it to industry trends to suggest a future innovative change in approach. Several types of techniques have been applied to support the portfolio management process. Businesses must tailor their needs and goals to their particular environment. However, organizations must balance these objectives to obtain an optimal portfolio. Companies are often torn between risk and profitability options, new processes versus improvement in product quality. The strategic shift in focus versus reward in the short run, and short term vs. long-run objectives.There are three types of techniques applied in project portfolio management that are used to measure or support the process over time:1.Heuristic model.2.Scoring technique.3.Visual or Mapping techniques.2.2.1 Heuristic model.The Heuristic model was the earliest Portfolio Management technique used to optimize projects' profitability or financial returns. It is an approach which makes use of experiences when under some circumstances a detailed solution is hard to achieve, and comprehensive research is also number feasible. It uses common sense, and makes an educated guess depending upon the circumstances and abundant intuitive guesses. However, this approach can be less efficient because of the lack of attention to balance or aligning the portfolio with the organization's strategy. One of the most common limitations of a heuristic model is the failure of the engineering department to guess or comprehend the present data gathered may not be able to work in the future time frame.2.2.2 Scoring techniqueThis is used to determine the level of value each investment project can bring and strategically numerically ranking it in accordance to contending projects. Scoring techniques are used to weigh and score criteria. This technique takes into account: capital requirements, profitability, risk and strategic alignment with company objectives. However, his method is not the best option to optimize the portfolio when projects are mixed, or many projects are overlapped. (Peter, Anja, & Taras, 2014).Steps during a scoring process is as follows:1. Identify the applicable non-monetary aspects 2. Assign weights to the attributes chosen which would reflect their importance. 3. Score the alternatives to reflect how each action performs against the defined attributes.4. Calculate the scores based on the weights.5. Interpret the results to find the best projects.The limitation of this approach can be an over-emphasis on financial measures and an inability to optimize the mix of projects. This failure can overlook projects that may bring future value to the firm.2.2.3 Visual or Mapping techniquesVisual Mapping techniques use a graphical presentation to visualize a portfolio's balance. These are typically presented in the form of a two-dimensional graph that show the trade-offs or balance between two factors. For example, risks vs. profitability, marketplace fit vs. product line coverage, financial return vs. the probability of success, etc. many graphing and charting techniques are available for use, but the most used are the diagrams that are capable of listing and displaying project risks along with the rewards. The probability of success is listed on y-axis whereas the rewards are listed on the x-axis (Clements & Gido, 2006).2.3 Project Success CriteriasProject success criteria can be deducted to refer to a group of principles or standards used to determine or interpret project success. Unless the inherent criteria are met with sufficiency, the projects would be considered to have failed. The project would then be portrayed as unsuccessful in achieving the desired results. Under the circumstances of PPM, critical success factors are often referred to as conditions, events, and circumstances that contribute to favorable project outcomes. In the context of PPM a study undertaken by (Hyvari, 2006) found different variables such project mission, top management support and attitude, project schedule/plans, client consultation, personnel; technical task, client acceptance, monitoring and feedback, communication and troubleshooting to be critical success factors in the life of most projects.Business firms realize only 63% of their potentials (Killen, 2008) while 66% of corporate strategies are never implemented. This has been the case because it is harder to apply strategies than to formulate them (Artto, 2004). To plug this gap between formulation and implementation of strategies, the concept of project portfolio management is gaining more importance. The following variables are believed to influence the results of Project portfolio management:2.3.1 Define Business ObjectivesThe business objective answers questions such as why would we undertake such a project? Each of the goals can be transformed into verifiable and attainable objectives. Each business objective can be expressed in terms of measurable value, and then only it can be undertaken as a project. When a business objective is well crafted, it can deliver on its promise to both the internal and external stakeholders (Finnerty, 2011).2.3.2 Identify Stakeholders and Their InterestsThe next step is to identify the major stakeholder, their underlying interest, and objective. Any project can only be termed as successful only when it delivers suitable value return to the stakeholders. Value can be defined as a gain of market share. Return on capital invested and completed in time. Thus, different stakeholders would define value by various terms (Chandra P. , 2013). Stakeholders can either be internal or external depending upon their involvement in a project or portfolio. INTERNAL STAKEHOLDERSEXTERNAL STAKEHOLDERS

PROJECT MANAGER REGULATING AUTHORITIES

PRODUCT MANAGERAUDITORS

SPONSOR GOVERNMENT AGENCIES

SHAREHOLDERSCONTRACTORS

PROGRAM MANAGERSBUSINESS PARTNERS

QUALITY ASSURANCESUPPLIERS etc.

2.3.3 Identify Project ConstraintsTo achieve the objectives the team should be sure of the hurdles between project completion. Hurdles or constraints impose boundaries that must be overcome to reach the goal .A degree of freedom shall also be identified so that managers can assimilate to the environment to overcome challenges. To identify the range or limits is required to make effective changes and be flexible.2.3.4 Derive Project Success CriteriaProject success criteria are varied in nature and depend on the stakeholders to identify them. This criterion cannot be identified until a project is completed and then analyzed. Success criteria shape many aspects of your project, beginning with the functional and non-functional requirements specifications. If the stakeholders understand the companys principal business objectives and can determine success criteria, it is easier to make decisions about which proposed product features and characteristics within alignment and which are not. The following are some of the identifiable project success criteria's:a. Project was completed within the budget or project cost overruns did number exceed 5-7% of the budgeted amount.b. The project was completed within the allotted period.c. A market share of 15-20% was achieved within 18-24% of the product launch.d. An operational functionality that was highly susceptible to failure initially was achieved without many problems.e. The estimated residue did number exceed targeted percentage of the production.There can be many more success criteria, and each project would lead to the criteria.CHAPTER 3: RESEARCH METHODOLOGY3.1 Introduction Research methodology is defined as a way to systematically solve a research problem (KOTHARI, 2010). It may be understood as a science of studying how research is done scientifically. Research methodology includes the research methods and considers the logic behind the methods we use. The context of this research study, and an explanation of why I have used a particular method or technique will be provided so that research results are capable of being evaluated either by the researcher himself or by others.This thesis will first present a background on the research process, as well as the theoretical background it has taken. Then the background on the nature of quantitative and qualitative research would be presented. Qualitative methods were used in this research to gain a full understanding of relationship between Blackstones objectives in relation to projects chosen for a portfolio. 3.2 Research Design and Process(Rossman, 2011) Defined research as a series of systematic strategies where the researcher gathers information about actions and interactions, reflects on their meaning, arrives at and evaluates conclusions, and eventually puts forward interpretation, most frequently in written form. The objective of carrying out research is to gain formalized understanding of the problem faced by the researcher and potentially act according to this understanding. First, a problem (research questions) are formulated. Research planning is the initial stage, followed by execution or data collection before the final data analysis and interpretation of the results are presented. Research is considered a process and can digress back to the problem for further evaluation if necessary. However, rather than a straight line, the process should be regarded as continuous. It is expected that the results and conclusions of the research will serve as a base for future studies, giving way to a new problem definition or action (Chandra P. , 2012). 3.3 Appropriateness of Design A research design is an arrangement to collect and analyze data and which can be combined to find relevance and purpose that aligns itself with the research objective. It is a conceptual structure on the basis of which the current or intended; this provides the fine print to collect data, measure it and finally analyze. The design of the research includes everything from the formulation of the hypothesis and the operational procedure. It also includes all the data that might be included and rather required to be included in the study of the concept to reach conclusive evidence to prove the hypothesis formulated.The intended method was to use exploratory research to find the desired result of a correlation between the successes achieved by Blackstones PPM in an otherwise difficult environment to investigate. Exploratory research is best suited to gain insights and get new ideas. Often researchers are in the dark about what they are researching until they get to a very startling fact. Flexibility is the keyword in the exploratory research studies as it is defined to include exploratory facts often small and startling things are discovered which might number at all be related to the study itself. Thus, it is right when we say that research often adds to the existing knowledge by gaining new insights into the same old things and often the same old data.3.4 Sampling Design 3.4.1 Sample size The sample size for this study would be centered on projects undertaken by the Blackstone Group during the last decade. Blackstones portfolios includes of almost every type of project from real estate to operational management.3.4.2 Sampling TechniquesFor the data analysis, a method called section convenience sampling is used. Convenience Sampling can be defined as the involvement of deliberate selection of samples from the universal set of the dataset. This methodology selects and includes data in the sample because the data points are easily accessible. We will be looking at data from Blackstones real estate portfolio in particular as there is an abundance of information regarding the new initiatives being taken in this sector, such as, sustainable energy projects.3.4.3 Collection of Data:The data for this research is collected through secondary means only. This data is already available in the form of articles, book sections, press releases, research done by others in the field and published books and journals, New York Stock Exchange, lastly Blackstones website. Published data are in the form of publications made by firms and companies, international research bodies like KPMG and McKinsey, as well as Reuters.The current research is primarily going to be a qualitative research as it hinges on qualitative aspects of research and does not heavily consider quantitative data. Internal data is hard to obtain on the subject and highly confidential. The evidence would be in the form of research done by various scholars in the field. 3.5 Scope of the Study The extent of the study is limited to the projects undertaken by the Blackstone Group in the last few years in the international arena. External data is used as long as it fits into the scope and is correlates projects potentially undertaken by the Group. Due to limitations of sources only a few cases can be discussed in this thesis. However, Blackstone Group aims for highly uncorrelated alternative assets which increases the diversity of projects that can be discussed. In particular Blackstone has shown substantial interest through its commitment to sustainable energy. This as a rapidly growing inclusion into its portfolio.

3.6 LIMITATION OF THE STUDYThis study entails the following constraints: 1. Data used may not be exactly dependable as they are sourced from various published articles, however, references are peer reviewed. 2. Published and secondary source of the data may be biased depending upon the author and their preferences.3. Data collection has been conducted through secondary peer reviewed sources.CHAPTER 4: DATA INTERPRETATION & ANALYSISBlackstone group is one of the major investment and Advisory firms with a global presence in Private Equity, Real Estate Funds and Hedge Fund Solutions, Credit funds and counseling and restructuring activities. It was established in 1986, and it raised its first Energy fund in 2012, Blackstone Energy Partners with an initial fund of $2.5 billion. It issued its IPO in 2007 in the NYSE. It was quite astonishing that the global financial crisis during the same period did not hinder its IPO, and it successfully maneuvered through the difficult circumstances. Blackstone had a new take on projects it selected, bringing in assets that had low correlation to be stock market. Private Equity Blackstone is the World's largest Asset Manager with more than $300bn Assets Under Management (AUM). Its strategy is so beneficial to the investors that 84% of the investors have successfully reinvested in Blackstone funds. The company's priority has been fast-growing BRICS Economy in North America, and European markets. Its investment strategy includes a broad range of industries. The firm also provides private equity to portfolio companies to launch business initiatives, make acquisitions and upgrade technology and systems. Revenue Exceeds $100bn and employs more than 700,000 people in portfolio companies.Major debt based investments of this group are planted in bridge financing, convertible preference debts and distressed debt securities. Equity based investment includes, equity- control, joint control, minority equity, and growth equity in potential start-up firms. Industrial investments are made by the firm in joint ventures with minority interests, preferred equity with a minority interest, secured loans, and senior debts (Bodie, 2012). The portfolio operations group of the Private Equity Arm provides strategic advice on six major areas of revenue realization, operations, service, infrastructure, purchasing and cross-selling, leadership development, and health care. Between 2010 and 2014, the Private Equity arm of the Blackstone group has invested in more than 46 companies with a total investment of approx $67bn. Significant investments include firms like US Radio, UCAR International, LIFFE, etc.

Source: http://seekingalpha.com/The groups net income and Distributable earnings have registered a 40% Compound Annual Growth Rate (CAGR) in the last 6years between the years 2009-2014. This shows Blackstones continuous and sustained growth in the successful approach towards a diversity of projects. Economic Net Income includes the unrealized gains and the cash earnings whereas the Distributable earnings include the net realized fees and the management fees received. During the period 2011-2013, Blackstone followed a gainful strategy of selling investments that reached their peaks and distributed more than $45bn to the investors. Blackstones Economic net income rose by 24% between the years 2012-2014, and the distributable earnings increased by an enormous 64%. It reached a high of $3.1bn in 2014 from $1.9bn in 2013. In 2014 also Blackstone raised $57bn from its investors which is a record high for any firm (Kumar, 2013)Real EstateBlackstone is also the largest real estate player with an estimated net investment in excess of $90bn and it has invested in properties internationally. While the firm invested an excess of $30bn in the last three years, it sold assets of more than 60bn in the last five years. It has invested heavily in Londons Broadgate Estate, Waldorf Astoria as part of Hilton Group, acquired prime properties in Australia, and in 2014 it acquired Willis Towers in Chicago which is an 110 storied building and the second tallest overall. Its strategy is to improve properties by renovation and increase the rentals and the property value. When it peaks, it would decide to sell and make huge profits. More than half of the unrealized investments of the group is in real estate, and it continues to grow faster than other firms (Hyvari, 2006). Blackstone Group has increasingly sought investments in sustainability. In 2012, Blackstone hired Smart Energy Capital to operate a renewable energy project that would change the way investors thought about sustainability. Blackstone revealed the solar program had the expectation to reduce energy costs by 10%. This was projected to improve environmental performance throughout the portfolio of companies as well as real estate assets it operates on behalf of its investors. Clean Energy Capital is a finance, investment and development company specialized in commercial and utility divisions of solar power in North America. The corporation delivers value to its customers through the consumption of solar-generated electricity in absence of invested capital. This results in a reduction of electricity costs and allows investors to realize appealing, risk adjusted returns. This corporation has developed a reputation for delivering successful projects. Amongst its achievements the company has completed over 70 megawatts of projects and implemented more than $250 million of projects. Their experience in projects operational strategies expands over almost every business genre including, public and private schools and universities, municipalities, commercial entities, investor-owned utilities, municipal utilities and electric cooperatives.

Hedge Fund Solutions Blackstone's Alternative Asset Management has under this administration more than $70bn of funds as of 2014. Approximately 70% deals outside of United Sates of America.Restructuring and Reorganization Blackstone's restricting, and reorganization division is a major player in the field. It deals in specifically debtor's advisory and creditor's advisory, out of court settlement and distressed mergers and acquisition space. Its restructuring business has overseen a total of liabilities in excess of $1.6 trillion till 2014. It has advised major firms like Allied Capital in dealing with a $10bn liability restructuring. It has helped Delta Airlines in its chapter 11 bankruptcy settlement dealing with a net debt of $9bn, and it advises Ford Motors and Xerox Corporation constantly.

Blackstone's assets under Mangement since 2008:US $ billion

200895

200998

2010128

2011166

2011210

2012235

2013270

2014300

Overall it finances firms with various types of capital but unlike banks it takes control of the firms and improves their performance and sells them to gain profits and thus can give sizable returns to its investors. Deciding which projects to take on in the environment of scarce resources is risky. 4.1 HEURISTIC PROCESS AT BLACKSTONE The initial step in a project portfolio decision is to develop a top-down hierarchical evaluation structure that is characterized by a particular goal and followed by a set of objectives. When the need arises, these objectives can be further segregated into sub-objectives. For an organization like Blackstone, these goals and objectives are a part of strategic planning process. Once a division like BCP establishes a goal like this and segregates into smaller parts, then an objective hierarchy is created. This sets the fact that objectives are more meaningful and thus pursued by the team members more often (Bivins, 2011). For the heuristic process and subsequent analysis Blackstone's divisions undertake a comparative benefits model or paired comparison models that are done by using numeric and graphical methods. This allows the team to obtain ratio scale priorities and evaluate projects to make error-free structural decisions when confronted with even limited data. These comparisons are made to find and enlist priorities of each objective with respect to goals and the importance of inherent sub-objectives with respect to each other. Finally, information is obtained and further synthesized for an overall best choice indicated with a benefit calculated for each alternative.Pairwise comparisons are basic to the heuristic methodology. When comparing a pair of different factors, a ratio of the relative importance, preference or likelihood of the factors can be established. The factor can then be any two elements at the same level of hierarchy including objectives and sub-objectives or alternatives. Interestingly the ratio does number need to be found on a absolute standard scale such as hours or millions of USD etc. but can be used effectively through subjective judgments.4.2 Method of Analysis Pre-Screening and Screening soliciting of Project proposalsThis is ably demonstrated by Blackstones project finder approach. Blackstone has been widely successful in identifying and targeting the best firms, best stocks, and the best market to put its money. The screening team of Blackstone has always been for the most part correct and more than 99% of the times it has been able to solicit proposals when the need for the other party is also ripe for it.Determining Project Feasibility This is the most significant stage of a project consideration. Feasibility is the process of determination by the concerned division at Blackstone, whether the project proposal can be undertaken and is practical to continue keeping in mind the circumstantial environment. It is kept in mind that each and every proposal undertaken for this evaluation aligns with the organization's objectives and will not be mutually exclusive in any way on a project already undertaken. Feasibility studies can be done from a pure administrative purpose, economic and financial feasibility can be checked, marketing and valuation studies can also be conducted. Blackstone does number undertake any project if all the studies are number conclusive. Risky projects are taken up if there is enough indication that they would certainly benefit and align with the firm's mission (Levin, 2005).A diverse Culture at Play at Blackstone Culture is something that helps to shape the behavior of individuals grown in a particular environment and also impacts their perception of the whole world around them. Smaller groups namely a family would go on to create a norm and rituals that would significantly alter individual beliefs and symbolism. In a large society as diverse as a nation like India, it becomes a prerogative to know the difference of language, beliefs, and diversity. India as a nation primarily divided into five different and diverse regions. Eastern, western, northern, southern and central. Although differences are found in the same regions, still they can be similar. Cultural differences in the same country are very difficult to observe and understand since it encompasses the same values amongst a diverse stream of people and their lineage. Failure to appreciate the difference and learn and understand them would lead to embarrassment for managers and would result in the breakdown of business relations with customers. If these issues are not addressed properly, there would be a reduction in customer appreciation and would eventually lead to a marginalization of trade. (R.Shanthakumari, 2013,Volume II). This is especially important in the PPM field. People telecommute, travel and conduct business internationally. Eminent sociologist Hofstede (G, 1980) defines culture as the sum of beliefs in the social context in the form of rules and techniques and which often gets characterized by collective mindset. However, most of the scholars are of the opinion that cultural elements include language and customs, values and attitudes, religious beliefs and group norms. Thus culture can be defined as something that is a shared belief and common value system. Generations continue to pass the same norms from generation to generation, and these values and beliefs strongly influence one's attitude towards the world. (D. A. Light, 2003)Before Globalization became apparently the need for multinational corporations to survive and grow, marketing and product managers often have to concentrate on the local markets and products. The challenge to adjust to the changing markets came in the aftermath of increasing globalization process and increased global acceptance. Today every manager has to face the global customer and produce a product to suit the world market. It is just not a marketing trend it is more cultural. An understanding of the thinking of the global consumer is needed to prepare to introduce the product to them. Understanding the need of these diverse consumers is an inherent approach to understanding their culture (Friday, 2003)For the purpose of successful international integration, culture also has to be integrated too into the intermediate plans at minimal. It is the learned behavior of the system that becomes important for the plans to be executed. Culture is normally conservative and resists attempts to any change. Problems often arise if a person who has learned customs all craft in a given environment and beliefs has to change suddenly. This is known as acculturation and involves adapting to and adjusting to the specific need and this is required to be successful in one of the international operations (Triandis, 2004).Blackstones project culture is multilingual and multicultural. It has undertaken projects on a variety of subjects that has spread across five continents. It employs people from diverse backgrounds as well as having diverse nationalities and languages. The Work ethics of Blackstone is so cohesive; they have worked hard, so that doesn't interfere with its work environment negatively. The Blackstone group has such a linearly defined work breakdown structure that it allows every kind of new employee to be soaked in the environment (Cohen, 1997).Project Management CapabilityWith time, the organization has been able to undertake increasingly complex projects outside its domain. This has necessitated an absolute change in the strength of the project organization as well. The organization's principal project team consists of 50 dedicated individuals to oversee if the firm has the possibility of seeing the project through and if the firm at the time of considering a particular project can see the project implementation in a professional and thorough manner. This team is a matrix structure and oversees all the investment screenings. As pointed out by the PMI, (Handbook, 2010), it may be tempting to undertake a new project considered profitable but if the organization's capacity to complete the project is not sufficient, then the project is doomed to fail. It goes on to quantify that 39% of the projects undertaken by millions of organization fail as they do not consider the capacity of theirs to implement it effectively (Hillson, 2001).

Potential Evaluative Models Used By Blackstone PPM TeamsThe Blackstone PPM organization uses two different styles of Evaluative Models Qualitative models known as nonnumeric and Quantitative Models known as Numeric or financial Models to evaluate the suitability of projects being screened for approval.Non-Numeric ModelsSacred cow considerationOperating necessity Competitive necessityProduct line extension criteriaTrue InnovationsNumeric Models 1. Discounted cash flow approach (NPV criteria)2. Benefit cost ratio.3. Internal rate return4. Modified IRR5. Profitability IndexThe Blackstone PPM organization does number use a strictly binary approach as it can exclude a great project arbitrarily. Instead, Blackstone PPM uses a spreadsheet rating and uses Analytical hierarchy process to enable compensatory decision making during the screening process. Compensatory decisions allow to trade off good and bad characteristics and thus will allow a project that fails to meet one of the selection criteria to continue to be considered of outstanding expected outcomes on the other criteria. 4.3 DEVELOPING BUSINESS CASES To be approved by the Blackstone PPM, each and every project needs to be converted into a business case. The team in charge needs to create a justifiable plan to undertake the project, and it must include the following parameters:1. Feasibility Report2. Financial and economic viability.3. Details of funding requirement and Project Sponsor4. Marketing Plan.5. A PERT-CPM Diagram.Once a project is finalized, then a detailed project report (DPR) is needed to be prepared by the PPM team and presented for approval. 4.4 ALIGNING PROJECT OBJECTIVES ALIGNMENT MATRIX During the screening process, business cases are developed, and objectives of the firm are identified. Documentation is explicitly stated answering how the project satisfies these needs. According to the alignment need, some projects are modified, even split or combined to make sense.The screening process will initially eliminate projects. However, projects can also lose credibility when the business case is developed. For example, a project makes it past the screening process as it seems it would contribute towards the objective of the Blackstone PPM. Next, the business case development team decides to exclude it as more detailed analysis shows the project's inability to contribute to the overall goals.So this makes sense to build an alignment matrix to make it clear which project is aligning with which objective. The alignment matrix can be constructed to demonstrate continued positioning of projects with the strategic plan. The matrix would further be used to modify projects or scrap them altogether. 4.5 PRIORITIZING CANDIDATE PROJECTS Once the business case is presented to the Project organization for approval, the proposal can then be selected from the group. It now becomes vital that the candidate proposals be initiated immediately to the PPM. Holding projects back might involve cost overruns and wont be for the financial benefit of the organization. Once the candidate projects are identified, participants evaluate the projects against other projects in terms of its effectiveness in supporting the overall objective of the firm. The combined evaluators judgment produces a local priority and global priority. With all judgments provided, evaluators and facilitators determine whether the results will make sense and whether the most detailed information is required. Sensitivity analysis might be undertaken to find answers to what if questions give the projects environment is the subject possibility of changes. The final output of this process is the priority for this project representing the projects totals anticipated benefit or relative contribution to the goal as well as its anticipated relative contribution to each objective.4.6 PROJECT DEPENDENCIES & ENABLERS Projects within a project portfolio might be dependent on each other for various reasons. Sometimes organizations like Blackstone undertake small and non-profitable projects in a particular sphere to test the market preparedness and gauge the reaction of investors and others concerned. In such cases each project is not selected outright, rather they were chosen because other projects were dependent upon them for the relationship they share. Project relationships within a pool of candidate projects might affect portfolio selection outcomes because any relationship can also create constraints. Some relationships can justify the choice of a project that otherwise goes on to provide little benefit to the organization except the fact that it facilitates the perfect execution of other projects in a group. Such projects are known as enablers to the PPM organization.For such projects, the Blackstone PPM group classifies the projects as mutually dependent, dependent or mutually exclusive projects. When projects are mutually dependent, there might be multiple projects that are dependent upon each other. Such a situation calls for either inclusion of all such projects in a portfolio or rejection of all. In a dependent relationship project, Project A might be dependent on Project B but the opposite might number be true. Thus, this type of a relation calls for careful selection of projects. It might be possible under such circumstances that Project A gets selected if Project B is selected. Moreover, if Project B gets into the Portfolio, then Project A has a chance of being included.In the case of mutually exclusive projects, each project will then be screened and gets selected on their merit without any interference as each project is entirely independent of the other project.4.8 IMPLEMENTATION OF PPM When a project portfolio is approved, the organization achieves a significant milestone in decision making. As the entire portfolio moves into the implementation phase, the project portfolio management system must shift its focus to monitoring and control the overall project performance. This calls for collection and analysis of relevant information by the PPM hierarchy, and they are now dealing with project governance. To be able to monitor effectively the project performances, performance metrics are required to be put in place. Metrics shall be identified, performance targets should be established, and any variance be determined and reported so that evaluating teams can deal with them.To be able to monitor effectively performance and make appropriate controlling decisions resulting in corrective actions, periodic measurements based on accurate and timely information is required. Corrective actions include linking the project and portfolio performance back to the desired baseline. For example, a project manager can use techniques like crashing to bring the schedule back on track or even a program manager can reallocate resources from a project performing ahead of the plan to one which is falling behind the schedule. However, it shall be kept in mind that a technique like crashing increase the cost (probably) even if it can reduce the project durations. Using this method, the PM should be careful during implementation if a choice between budget and timeline should arise. Decisions made in the application and evaluation stage are determined by a reporting structure with well-defined roles, responsibilities and authority limitations. The policy makers are supported by an infrastructure that gathers and reports consistent information about the progress of the projects in the current portfolio. In addition to this the organizations must have a PPM plan that defines the measurement cycles and specify the performance deviations requiring corrective actions. The process must deliver the right information to the right people at the right time so as to enable them to make accurate decisions.4.9 IMPORTANCE OF CORPORATE GOVERANANCE According to (Huilin & Xin, 2008), corporate governance is an essential part of project management at each large firm. Governance is defined as a set of the relationship between a companys management, the board, its shareholders and the stakeholders. It is the policy framework through which the objectives of the organization are defined and set into motion. Effective governance of project management would ensure that an organizations project portfolio is aligned to the stated goals and is delivered efficiently and in the long run. Corporate governance is also tasked with providing stakeholders with timely and relevant information. The analysis in the past has also suggested that portfolio management and its effective governance shall be integrated with existing senior management disciplines such as risk management, capital investment, and performance management. Appropriate processes are in place to support decision making starting from the level in the portfolio.During implementation all, management levels within the PPM process perform monitoring and controlling activities and are empowered to make decisions. However, each manager is bound by decision-making limitations. It becomes important to understanding who handles which decisions when interpreting results from monitoring, and evaluation of activities. At the project level, the project manager is traditionally empowered to make decisions necessary to maintain project performance to established baselines as long as these decisions do not negatively impact other projects baselines. This empowerment would come in the form of guidance from the portfolio management plan, and the project charter that assigns the project, manager. Common decisions by the project manager may include reallocation of resources within the project. However, other important decisions, like terminating a project, acquiring resources or funding otherwise assigned or changing the baseline cost or schedule, are number usually within the authority of the Project Manager.Similarly, at the portfolio level the portfolio manager is empowered to make decisions to maintain the portfolios baseline objectives and thus can take appropriate decisions to achieve the baseline performance. Corrective actions taken by the portfolio manager or supervisor are made in the best interest of the PPM without changing too much the relative benefits expected from the projects and the entire portfolio. While the project manager losing resources might not fully endorse such decisions, it might be necessary to attain project portfolio success (Harold, 2006). Although the project manager accommodates directed adjustments to the portfolio, the PM does not have the authority to determine whether a project shall be terminated or taken up. The PM has further restrictions in authorizing adjustments to the anticipated benefits of the portfolio, or any of the member projects. Expected benefits of candidate projects are intertwined with various projects in the portfolio and are established by the prioritization of the organizations PPM process.4.10 EVALUATING PROJECT PERFORMANCE Evaluating the project performance is an area where the PM of Blackstone excels all the time. This is one of the most critical components of the entire process. Management during the portfolio implementation and evaluation phase, measuring of performance, and also the analysis of metrics to disseminate meaningful information to the decision makers in the PPM process. The major emphasis is on the monitoring process. Monitoring can be defined as the collection, recording, and reporting information related to projects in the portfolio (Meredith, 2009, 7th edition). Evaluation is defined as the process of analyzing measurements recorded during monitoring activities to identify deviations from acceptable performance tolerances against planned performances. Controlling is defined by (Paul C & Jeannette, 2010) as the actions which are required to be taken by the project organization to correct an unfavorable trends and is typically governed by pre-established criterias by the decision making body of Blackstones PPM.

4.10.1 Schedule and Cost performance indicesTo provide a context for the Blackstone PPM as to how they use Earned Value metrics to analyze cost behaviors and make necessary control measures take for example the scheduled performance index and the cost performance index. Cost performance is calculated, as EV/AC and a value of less than 1 is indicative of cost overages, whereas the value of more than 1 indicates cost underruns. Scheduled performance indicators are calculated by the formula, EV/PV and a value of less than 1 is indicative of project behind schedule, and a value of more than 1 indicates project ahead of schedule. Blackstone has SPI of +1 or more in 80% of the projects were undertaken, and CPI of 1 or less in 87% of the projects undertaken or advised (Kumar, 2013).4.3 FINDINGS During the analysis, it came to light that Blackstones Private Equity business is growing fast, and its net margin has grown even more quickly. In the last decade, the firm has built six different general purpose private equity funds, and two specialized equity funds to handle energy and communication-related business sectors. Together they are known as Blackstone Capital partners funds. Moreover, the fund size ranges from $5-$15bn. The private equity funds contribute a large section of profits and make growth possible apart from providing liquidity to the business. Blackstones BCP funds are in excess of $76bn and contributes an average 16% margin since the funds were constituted. Assets under these funds represent roughly a quarter of the total funds of the firm, but they contribute more than 36% of the revenues to the firms total revenue (Kumar, 2013). Blackstones focus on leveraged buyouts of US businesses and startups have paid up quite nicely.CHAPTER 5: CONCLUSION 5.1 Research Question Conclusion One of the concerns related to the performance of Blackstone and the consequent future growth of its Private equity fund BCP is linked to the cost associated with the new assets, acquisitions and the related leverage that it brings with it. When the Price-Earnings ratios rise, and higher EBITDA allows Blackstone to exit many businesses when it is considered to have peaked. One of the major factors to consider when reviewing the performance and expected future growth of private equity firms is the cost of acquiring new assets or companies and the leverage this deploys on the balance sheet. However, the cost of acquisition of new underpriced assets rises in time. These assets are transferred through acquisitions mainly through funding of debts which brings higher leverage. The method used has been faithful to BCPs new assets for the last few years but, it has so far managed them with new strategies. It is a critical issue despite all the evaluative techniques adopted by the firm including the cost of capital, and firm valuation based on improved earnings and capital budgeting skills. For further success, innovations would be required. It is to be seen yet if Blackstone can stand up to bigger challenges (Reily, 2006). 5.2 Scaling up realizationsScaling up realizations is one of the most important factors in the success of Blackstones Portfolio strategy. The percentage of total realized net performance fees for a year has been historically positive for the firm. Realized profits are achieved through perfect alignment to business objectives and by the use of a heuristic model. The realization rate of Blackstone has been historically impressive at 45-55% range that is considered higher than industry rates.In the next few years the realization rates are expected to increase further as the firm has large exposure to public assets which they would dispose of as their alignment with the business has peaked and holding them for too long would diminish the realizable value and the equity assets in liquidation process. For the next three years, Blackstone expects to realize 60% or higher. This means the firm would be able to return more investments to partners and in turn they would pull back in BCP or other investments (Meredith, 2009, 7th edition).5.3 General Conclusions As seen through the 2007 global financial crisis, challenging market conditions can have a negative impact for Blackstone despite its impressive portfolio and management strategy. The slow growth of emerging markets, when combined with non-liquid markets, would lead to a decline in completed transactions. In this economic environment, investor confidence is at a level that would severely impact Blackstone's capacity to raise new funds and invest in new assets. This scenario can potentially affect counter recessionary conditions (Nevin, 2013). 5.4 Implications of changing dynamics in the market Blackstone creates high leverage in the firms where assets are held to derive large returns for the equity portfolio. After the global financial crisis the overall market rates have remained low as central banks followed overall expansionary strategies, but if in the near future the rates increase sharply in a short span of time would lead to spike in the cost of capital of firms in which portfolios are held. This would increase the associated risk by several notches, and Blackstone would be under pressure to perform the same way. Increasing interest rates would highly deplete the available investing opportunity as it would increase the valuations of possible investible assets or firms. The firm can also face a deteriorating bond market and would face liquidity problems if those issues would persist (Pandya, 2013).5.5 Recommendations As of today, Blackstones revenue generation model is perfectly balanced. The projects the firm has taken on and invested in is well diversified which mitigates risk and aligns with the firms objectives. Blackstone group is firmly committed to long term projects that embody the goals of the firm and adds value to investors, shareholders and future rewards. By diversifying the portfolio potential risk is minimized. As partners hold more than 50% of the groups voting power they should be looking at the firms portfolio for any inconsistencies towards goals. The group gains revenue from 1300 limited partners by managing their portfolios. Unless there is a drastic change, there is no immediate need to change this arrangement. It also receives a performance bonus of 20% of any fund it manages over the capital appreciation on a yearly basis that is subject to a cap set. It is calculated through some net loss carry-forward provisions. So the model of earning revenue through this is solid.Blackstone Groups SeaWorld and Hilton restructuring projects underline the fact when the private equity concept works, the returns can be staggering. Blackstone earned a minimum of 178% on this project during 2009-2012 (Guarino, 2013). The return can be higher but exact details were not available because Blackstone was a private firm at that time. This projects created a large value for the firm as Blackstones Operations team was looking to balance the portfolio with partnering companies that would contribute overall value. The Hilton Group acquisition by Blackstone was in contrast to the results it achieved by being the largest and the most successful leveraged buyout in the history of mergers and acquisitions. Blackstones approach towards the Hilton groups assets was refreshing. Hilton was acquired with an estimated $26bn with Blackstone using $5.6 billion of its funds. However, the odds were staggering. In the mid of the restructuring Blackstones Partners like Lehman Brothers and Bear Sterns were declared bankrupt amidst the severe Global crisis of 2007-08. However, when revenue of the group lost over 20% by 2009-10, Blackstone persuaded the creditors and lenders to stay and show forbearance. Then they restructured the debt and used strategic management techniques to make Hilton profitable again. What is interesting in this deal was the decision not to reduce costs or implement layoffs as a technique to restructure. Globally, there are not many firms that had the ability or liquidity to pay out $26bn, and maintain management of the project over 6 years. After Hilton was sold for a profit of $8.5bn, it was the second-largest payout in the private equity industry. Moreover, Blackstone still owns 75% in the company.What perhaps is lacking in the CV of Blackstones PPM in the lack of exposure in upcoming markets like China and India. However, as things are turning out, it is not far from engaging in projects in these markets very soon. It would be a challenge even for Blackstone to enter projects in a new territory and adapt to new landscapes.5.6 Further Study Blackstone has traditionally received most of the investments from high net worth individuals, small partner firms and investors. However, in 2013, for the first time the Blackstone group has started a mutual fund in the retail space (Ross and Westerfiel