Certified OPM3® Professional - PMI Northern Utah...

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Are You Selecting the Right Projects or

Are You Just Fishing?

Dr. Ginger Levin, PMP, PgMP

Certified OPM3® Professional A Member of PMI®’s Registered Consultant

Program

linkedin.com/in/gingerlevin

©Ginger Levin, 2014

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Here Is What We Will Cover

Why Portfolio

Management? The need for a portfolio

process

Guidelines for success

Parting thoughts


Learning from the Past

©Ginger Levin, 2014 3

The POGY Submarine

Key Questions

Are we executing the right

programs, projects and

operational work?

Are they yielding value and

ROI to the organization?

Are we steering ideas for

programs, projects, and

operational work to

successful implementation?

Are we terminating ones that

are not contributing? OR

Are we just

fishing??


PMI’s Pulse of the Profession –

2014 and Portfolio Management

57% of high-performing organizations align

projects to organizational strategy

42% of all organizations

76% of high-performing organizations have

twice as many successful strategic initiatives

31% have high maturity in portfolio management

BUT – The results of failed projects:

For every US $1 billion spent on a failed project,

$109 million is lost and cannot be recovered


Why Do It At All??

©Ginger Levin, 2014 6 Source: PMI® Pulse of the Profession, 2012

Why Do It At All??

©Ginger Levin, 2014 7 Source: PMI® Pulse of the Profession, 2012

But, What Are The Problems?

Difficulty aligning projects

No one wants to say NO

Budget availability issues

Benefits not defined

Business case not defined

Lack of selection and prioritization process

Lack of a common process as mixed

approaches are used 8 ©Ginger Levin, 2014

However, Remember . . .

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“The Future Is Not for the

Faint Hearted.”

Ronald Reagan


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Why Portfolio Management?

The need for a

portfolio process Guidelines for success

Parting thoughts


Key Definitions

Adapted from PMI® PMBOK® Guide Fifth Edition and Portfolio Standard Third Edition

Portfolio

Program

Project


Portfolio Relationships

12 PMI Portfolio Management Standard Third Edition, p.3

Portfolio

Portfolio Projects Programs

Programs Projects Programs Projects Other Work

Projects Projects Projects


PROJECTS PROGRAMS PORTFOLIOS

Scope Projects have defined objectives;

scope is progressively elaborated

throughout the project life cycle

Programs have a larger scope and

provide more significant benefits

Portfolios have an organizational

scope that changes with the

strategic goals of the

organization.

Change Project managers expect

change and implement

processes to keep change

managed and controlled

Program managers must expect

change from both inside and

outside of the program and be

prepared to manage it

Portfolio managers continually

monitor changes in the broader

internal and external

environment.

Planning Project managers progressively

elaborate high-level information

into detailed plans throughout the

project life cycle

Program managers develop the

overall program plan and create high-

level plans to guide detailed planning

at the component level

Portfolio managers create and

maintain necessary processes

and communication relative to

the aggregate portfolio

Management Project managers manage the

project team to meet the project

objectives

Program managers manage the

program staff and the project

managers; they provide vision and

overall leadership

Portfolio managers may manage

or coordinate portfolio

management staff or program or

project staff that may have

reporting relationships into the

aggregate portfolio

Success Success is measured by product

and project quality, timeliness,

budget compliance, and degree of

customer satisfaction

Success is measured by the degree to

which the program satisfies the needs

and benefits for which it was

undertaken

Success is measured in terms of

aggregate investment

performance and benefit

realization of the portfolio

Monitoring Project managers monitor and

control the work of producing the

products, services, or results the

project was undertaken to produce

Program managers monitor the

progress of program components to

ensure the overall goals, schedules,

and budget, and benefits of the

program will be met

Portfolio managers monitor

strategic changes aggregate

resource allocation, performance

results and portfolio risk

The Standard for Program Management, p. 8 ©Ginger Levin, 2014

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Managing a Portfolio

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Prioritize Programs,

Projects, and

Operations

Conduct Portfolio Management

Manage Programs,

Projects, and

Operations

Perform Program and Project Management

Conduct Operational Work

Re-evaluate Programs,

Projects, and

Operations

Conduct Portfolio Management

Immature organizations use inefficient tools and techniques

Mature organizations use sophisticated tools and techniques


Portfolio Components –

Common Features

Represent organizational investments

Are aligned with organizational goals and

objectives

Have some common features to group

them

Can be quantitative to be measured,

ranked, and prioritized

Compete and share for organizational

resources ©Ginger Levin, 2014 15

Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, p. 5

However – “Misalignment 101”

The “crime scene” – detectives in a “film noir” More projects under way than shown in the inventory

Inconsistent benefit quantification and benefit double counting

Competing programs and projects

“Interesting or pet” programs and projects – that do not support corporate objectives

Costs exceed benefits expected

Programs and projects with a higher risk ranked higher than others in the portfolio

Lack of tracking of benefits and lack of benefit ownership

PM Network, November 2006, “The Right Fit”, p. 34

16 ©Ginger Levin, 2014

Are You Practicing Mature Portfolio

Management or “Misalignment 101”?


Our Goal

18

Moving From Moving To

Programs, Projects,

and Operations in

Isolation

Programs, Projects,

and Operations in

Context

Tactical Strategic ©Ginger Levin, 2014

PPM is Essential

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Organizational Success and Survival

Strategy Formulation and Enhanced

Program and Project Management

and Operational Activities


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Portfolio Management

Organizational Context

Vision

Mission

Organizational Strategy and Objectives

Management of

Ongoing Operations

Management of Authorized

Programs and Projects


Portfolio Management

Strategic Planning and Managing

Programs, Projects, and Operations


Why an Emphasis on

Organizational Strategy??

It is a plan of goals, policies, and actions

It provides the organization’s overall direction and focus

It describes how the organization’s strengths and

competencies are used to:

Manage resources effectively

Manage stakeholder value

Capitalize on opportunities

Minimize the impact of threats

Respond to changes in the market

Reinforce a focus on critical operational activities

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Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, pp.7-8


Why Link Portfolio Management

with Organizational Strategy?

1. Maintain portfolio alignment

2. Allocate financial resources

3. Allocate human resources

4. Allocate other resources – materials,

equipment, etc.

5. Measure performance of the components

in the portfolio

6. Manage risks

©Ginger Levin, 2014 22 Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, p. 9

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The need for a portfolio

process

Guidelines for

success Parting thoughts


Implementing Portfolio Management

Assess the Current State

Develop the Vision and

Plan

Implement the Process

Improve the Process



How Much Complexity Does the

Process Require?

Consider:

Interdependencies between programs and

projects

The rate of potential changes that may occur

The quality of the information available

The willingness to make difficult decisions

Therefore:

The culture change from “fishing” to

“structured”


Set Up Portfolio Categories

Increased probability of success [revenue

increase, generation, cost reduction,

avoidance]

Risks / Rewards

Improvements in efficiency, market share,

processes, sustainability

Business imperatives [upgrades,

regulatory, compliance, foundational]



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Select Programs,

Projects, and

Operations

Prioritize

Manage Programs,

Projects, and

Operations

Best Practices

Continue Programs,

Projects, and

Operations

Prioritize

Establish a

Portfolio Management Cycle

Deliver

Successful

Results

Adapted from Rad and Levin, 2006


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Initial Project and Program

Selection

Project and

Program

Categories

Business Indices

Vision Model

Project,

Program, and

Operations

Model

Project, Program

and Operational

Indices

Prioritized Project,

Program, and

Operations List



Does Your Organization Have a

Portfolio Management Process?

If yes, how does it prioritize the

components?


Prioritization Analysis

Alignment to strategic goals

Resource capabilities and capacities (people,

technology)

Legal/regulatory

Dependencies

Risks (internal and external)

Benefits – financial and non financial

Costs (lost opportunity costs)

Urgency

©Ginger Levin, 2014 30 Adapted from PMI’s Third Edition, Portfolio Management Standard, 2013, pp. 45, 67

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Criteria for Selecting a Portfolio Model

REALISM

CAPABILITY

FLEXIBILITY

EASE OF USE

COST

TIME

UNDERSTANDABLE

INTEGRATES WITH

OTHER TOOLS

BUSINESS

RELEVANCE


PPM Selection Techniques

Portfolio Selection Techniques

Maximize Value Balancing Alignment with

Strategy

Other Goals

Financial

IRR

NPV

Payback

Productivity

Index

Expected

Commercial

Value

Comparative

Approaches

AHP

Q-Sort

Scoring Models

Risk-Reward

Diagrams

Mapping

Charts

Scoring Models

Periodic Checks

Organizational

Metrics

Corporate

Necessity

“Pet Projects”

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Midstream Project or Program

Evaluation

Revised Project and

Program Categories

Updated Business Indices

Current Vision Model

Current Program, Project,

and Operations Model

Updated Program, Project and

Operational Indices

Prioritized Program, Project, and

Operations List

Decision to Continue the Program,

Project, or Operations Activity



Program, Project, and Operations

Termination Issues If the midstream evaluation has uncovered:

A change in the customer’s strategy

A lack of fit with current strategies

Outsourcing would be more cost effective

That a competitor enterprise or new technology has made this deliverable obsolete

That there are serious cost and schedule overruns

That there are high technical risks

Then, terminate the program, project, or operational activity and conduct a formal closeout

And, re-assign personnel Adapted from Cleland and Ireland


Is It Time for a

Portfolio Management Office?

Focused responsibility for management

and coordination of the portfolio

Aggregate and provide performance results

Define methodology, best practices, and

standards

Forecast supply and demand

Define the portfolio strategy

Identify, analyze, and respond to portfolio

risks

Provide oversight and manage portfolio value ©Ginger Levin, 2014

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A Project Portfolio Management Office

(PPMO)

Strategic Steering – Link to

Executives

Improves resource

use

(Re)Allocating Resources

Enforces resource

commitment

Facilitating Coordination – Across Projects

and Departments

Reduces conflicts

©Ginger Levin, 2014 36 Source: Unger, Germunden, and Aubry, International Journal of Project

Management, Volume 30, Issue 5, 2012, p. 616

Objectives in Implementing PPM

Conduct the implementation process

effectively and efficiency

Ensure that the PPM system meets its

own objectives successfully

Avoid an overly bureaucratic process



Nine Key Steps

1) Determine the organization’s vision for Portfolio Management

2) Determine Portfolio Management goals and the scope of its coverage

1) Assess maturity in portfolio management

2) Collect baseline data on portfolio components

3) Prepare a charter for the Portfolio Manager and PRB

4) Establish roles and responsibilities

5) Prepare a Portfolio Management Scope Statement

6) Prepare a Portfolio Management WBS

7) Prepare a Portfolio Management Plan

8) Establish a Portfolio Management Information System

9) Regularly hold PRB Meetings



And While It Is Fun

We need to avoid:


FISHING!!

Use Portfolio Management to Best

Prepare for the


Focus on long-term benefits and

opportunities

Use competencies and technologies to

outdistance the competition

Adapted from Heising, International Journal of Project

Management Volume 30, Issue 5, 2012, p. 586

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The need for a portfolio

process

Guidelines for success

Parting thoughts


Last But Certainly Not

Least –

Consider the Following


What was “wanted” What Was “Wanted”


What Was “Needed”


What was “specified”


What Was “Specified”

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What Was “Delivered”


Thanks a lot for

coming!!

…let’s continue the conversation


Dr. Ginger Levin, PMP, PgMP,

Certified OPM3 Professional

Portfolio, Program, and Project

Management Consultant and

Educator

954-783-9819 (office)

954-803-0887 (cell)

[email protected]

linkedin.com/in/gingerlevin

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