Chief Portfolio Officer 2015

Chief Portfolio Officer (CPO)May 27th 2015

© 2013 Grant Thornton International Ltd. All rights reserved.

May 27th 2015 PMI NL Chapter - Valid

John van RouwendaalGrant Thornton NL

Source: Wikipedia

Global Competence Center on Project Management


Fast Facts about me [John van Rouwendaal]

• MA in Law, Public Administration & Management

• Since 2006: Project Portfolio Management (Pfm)


• Focus on Health Care

Table of Contents

• Introduction of the Chief Portfolio Officer (CPO)

• Complete CPO profile (hard � soft)


Trigger for thinking about CPO

• At central Dutch governments Pfm is responsibility of the CIO

• At many other companies Pfm is the responsibility


• At many other companies Pfm is the responsibility of the CIO or CFO

Is that the most optimal solution?

A more optimal solution

• Chief Portfolio Officer– On the board of directors– Responsible for all projects & programs– ‘Super project portfolio manager’


– ‘Super project portfolio manager’

• Futuristic? Maybe, but remember C3PO?

Source: Wikipedia

Chief Portfolio Officer

• Like Pfm the CPO is not one solution:– No one size fits all– A set of methods and techniques


• Like Pfm the CPO is not the one solution to all of an organization’s problems

Chief Portfolio Officer

But a CPO might be (part of the answer) e.g.:• When portfolio failure is getting out of hand• When portfolio success is of strategic importance• If an organization over a longer period of time

spends twenty percent or more of their total budget


spends twenty percent or more of their total budget on projects.

Who else thought of the CPO solution?

• Organizations

• Practitioners


• Scientists

Organizations

For example:• State of New York• AAA of Northern California, Nevada and Utah• BNP Paribas Fortis• New Zealand’s Department Internal Affairs


• New Zealand’s Department Internal Affairs

Practitioners: 2003: PM Solutions

• ‘Ideally, organizations should strive to have a CPO sit at the director or vice-president level with other senior executives in the organization.’

• ‘This position provides:


• ‘This position provides:– project oversight in virtually all areas of the organization, – managing corporate level projects and– overseeing corporate-wide resource distribution and

allocation on all projects.’

Practitioners: 2004: IPMA

• ‘A CPO model is to ensure that: – the capital is invested usefully, – necessarily and efficiently, pays off and – from the

perspective of the increased risk – is adequately managed and,


managed and, – that the entire project community of the organization is

managed and developed (teambuilding).’

Practitioners: 2009: PMI (Gregory Balestrero)

• ‘There must be significant scrutiny to ensure that these projects [hundreds of initiatives that are critical to our nation's safety and security] will get done according to plan and, more importantly, yield the outcomes that are intended.’


intended.’

• ‘The president [Obama] needs what every CEO would need in this situation: a chief portfolio officer.’

The Standard for Portfolio Management (PMI, 2013)

‘The portfolio manager may be an individual*, a group, or a governing body, and is responsible for establishing, monitoring, and managing all assigned portfolios.’


* [Chief Portfolio Officer]

Management of Portfolios (OGC, 2011)

‘The business change or portfolio director* is the management board member who is responsible for the portfolio strategy and provides clear leadership and direction through its life’


* [Chief Portfolio Officer]

Scientists

• 2000: Harvey A. Levine:“We must add a Chief Project Officer (CPO) (…) to lead the organization in meeting its project portfolio objectives.”

• 2009: Paul Chapman:


“The recognition of the Chief Program Officer position is akin to the emergence in the 1960s/70s of the Chief Operating Officer, COO.”

• 2010: Pieter Steyn: “The Chief Portfolio Officer (…) will significantly support the CEO, CFO and COO with strategic appraisals and reviews at the executive leadership level.”

CPO Profile

• Goals & Targets

• Responsibilities, Roles, Tasks


• Positioning, Structure, Finance

• Knowledge, Style, Orientation

Goals

• Do improve value production:– More– For less– Of more quality


– At less risks– With higher returns

• Don’t let projects hinder value production

Example targets (inspired by Forrester & Gartner)

• 1-5 % reduction in annual project costs• 1-5 % reduction in annual resource costs• 15-30 % reduction in project cost overruns• 20-30 % reduction in project- and portfolio-related

operational costs


operational costs• 5-8 % reduction in lifecycle investment costs• 10-20 % reduction in application maintenance costs

Example targets (inspired by IDC)

• Reduce cost per project by 37%• Drop of redundant projects by 78%• Increase IT staff productivity by 14%• Drop project failure rate by 59%


• Drop project failure rate by 59%

Example targets (inspired by GenSight Group)

• Save 7.5 million dollars by eliminating poorly performing projects from their portfolio.

• Accelerate annual sales growth by 24 percent eliminating over 40 percent of non-value creating projects.


over 40 percent of non-value creating projects.

Responsibilities

Change projects:• Results of change projects• Changes of production capabilities (shared)• ≠ Benefits of changes (not even shared)


Customer projects:• Maybe for specials• Maybe for processes• Definitely not for what should be considered standard

operations

Roles

• Legislator

• Executive


• Judge

• Visionary?

Visionary: CPO vision or the ‘people’s’ vision?


Visionary: Who decides on the vision

• Depends on:– Culture (e.g. innovative)– Structure (e.g. hierarchical)– Type of projects


– Type of projects• Development direction:

– Towards leaders as well as towards the group– Depends ambition / self image of the

organization / its people & leaders.

Tasks

• Governance (Taking decisions)

• Management (Enforcing decisions)


• Administration (Registrating decisions and effects)

Why not other Chiefs?

• CEO? No, because focus on outside

• COO? No, because of focus on going concern.


• CFO? No, because of focus on finance & control.

• CIO? No, because IT is not the problem, or in other words: IT projects don’t exist.

Positioning – Marco Mud, 2004


Example positioning


Example structure

CPO

Portfolio Council

SupportStaf

Plan


PM Pool Pfm Fin.

Change

Portfolio X Portfolio Y Portfolio Z

Financing options

• 3-5% of total annual project budget

• % of individual project budgets


• % comparable to operational management

Knowledge

• Literature:– Little on… (directly)– Some by…

• Formal education:


– Negcleted subject at MBAs– e.g. Saïd Business School of the University of Oxford

• Certification:– PMI– OGC– IPMA

Experience

• In the company• In the sector• In the (exact) function• In the project domain


• In the project domain• With comparible types of projects• As a chief

Competencies (ICBv3 � ICBv4)


Attitude: Open & Proactive


Attitude: Humane

1. Getting a project of the ground is hard. 2. Ending projects (prematurely is hard). 3. Projects can be (bloody) personal. 4. Projects can be (bloody) politics.


4. Projects can be (bloody) politics. 5. Project are affected by (company) culture. 6. Primal fear is involved. 7. Nobody likes surprises.

Style: Transformational (predominantly)

• Laissez-Fair Leadership

• Transactional Leadership– Management by exception– Management by contracts


– Management by contracts

• Transformational Leadership (= most in line with project domain)– Building trust– Inspirational motivation– Intellectual stimulation– Individualized Consideration

Orientation


CPOs position themselves all over the range: - Pendulum - Personal

Introduce a CPO with the 5D method

Discover

DesignDefend


DedicateDo

In the 1980’s C3PO was futuristic


Source: Wikipedia

In 2012 Actroid-F Robot Nurse is realistic future


Is a CPO that futuristic?

• In 2000: Yes

• In 2015: No


• In 2030: Not at all

Questions & feedback


& feedback

Contact information for John van Rouwendaal

• nl.linkedin.com/in/projectportfoliogovernance

• @manofportfolio


• @manofportfolio

• www.flourish.nu � www.leanppm.org

Chief Portfolio Officer 2015

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