Strategic project oriented management – portfolio

managementRoadmap

Yury Moiseenko, Project manager, AwaraGert Hellevig, Partner, Awara

Project and Process oriented business• Process – company repeat the same activities with attending to do next

time a little bit better

• Project – project is always some unique combination of people, tools and technology with respective unique parameters: cost, time, scope, value.

Wave (process)-particular (project) duality in nature:

DifferencesFunction Process business Project business Resume

Finance – cost

Stable product with same parameter that mean need to control cost by product

Unique product each time with own parameters

Project is unique:• structure of cost always is

news

Finance – revenue

Stable product, not difficult for competitive comparable: so market price or cost+ pricing (if product is market leader)

Difficult to make competitive comparable from one side, another side client always have budget. You can not apply neither market price nor cost +.

Project has uncertainty:• difficult pricing and cash flow

management.

Sales There is intelligible market, company has share, and normal process of living in this share

Each case is own story unique combination of: tools, technology, subjective preferences, and standards

Project is cross discipline (function, technology):• Sales have multi decision

makers

Production Same operation each time with stable technology.

Technology and process should be adopted each time

Project is always about changes:• firefighting with architecture

issue rather then technology

HR Same team do the same job Each project has own team Project is temporary: • HR concentrate on forming

rather then on to keep norming

Conclusion of differences comparison

Project oriented business dictate to manage them with project oriented

approach

FUNCTION DEVELOMPENT AND CONSULTING (own Business case resolution) = People + Tools + Technics + Process

FUNCTION HR (own Business case resolution = People + Tools + Technics +

Process)

FUNCTION FINANCE (own Business case resolution) = People + Tools + Technics + Process

FUNCTION SALES (own Business case resolution) = People + Tools + Technics + Process

Project (Business case resolution) = Targets

(Time + Cost + Scope + Quality + Value + Risk)

Picture of project in functional oriented

environment.

Project (Business case resolution) = Targets (Time +

Cost + Scope + Quality + Value + Risk) / Resources (People +

Tools + Technics + Process and Functions:

DEVELOMPENT

HRFINANCE

SALES

Picture of project in project oriented

environment.

Project (Business case resolution) = Targets /

Resources (People + Tools + Technics + Process and

Functions:

DEVELOMPENT

HRFINANCE

SALES

Project (Business case resolution) = Targets /

Resources (People + Tools + Technics + Process and

Functions:

DEVELOMPENT

HRFINANCE

SALES

Program (business case) = Synergy of combined (Project 1 + Project 2) management

Target (value)

Program management

approach

Program (business case) = Project 1 + 2

Program (business case) = Project 1 + 2

Project (business case)

Project (business case)

FINANCE

SALES

HR

DEVELOMPENT

Portfolio management

approach

Portfolio (Strategic business case) = Synergy of Combination value (program and project levels)

and all functions

Source of Portfolio management

Operational level of project oriented

business

Program, project management

Strategic level of project oriented

business

Process approach

Traditional approach with project oriented business can cause empty areas management activities:

• Top to down relationship between business case on company level or product level to programs/project business case

• Bottom to up: how to secure that program and project value in-line with company value

Source of Portfolio management

Operational level of project oriented

business

Program, project management

Strategic level of project oriented

business Portfolio management as strategic approach to manage project oriented business

Portfolio management

Strategy as realistic and pragmatic tool in-line with value, principles and goals

Story:

• Some Frogs came to owl and complained – “we are so fed up that everybody try to eat us, can you suggest something”

• The Owl replied after thinking – “you should be as hedgehogs, they can roll up and defend themselves by their spears…”.

• The Frogs was very appreciated with the pice of advice…

• On the next day the Frogs again appeared to the Owl and asked – “Hello might Owl, you have so much wisdom, please tell us how can we turn to hedgehogs..”.

• The Owl then replied: “Hey - I am strategist! … now your question is about tactics...”

Portfolio management as strategic tool

Project oriented business

Project oriented approach for securing result case by case

Portfolio management for securing achievement of

strategic goals

ExampleLevel Content Example

Project Scope of work agreed under a contract if 3rd part, and particular delivery if own (1st part)

Phase/stage/sub-project/particular delivery of 3rd part of super project

Program All projects united by single customer

Depending on maximisation of synergy effect:• All projects for same Client,• All projects related to same site with

same start- and end dates• All 3rd part projects that binding drives by

1st part projectPortfolio Accentuated strategic

competence Depending on main competence:• If worksite: Helsinki, Espoo,• If type of delivery: Design, Development,

Building.• If sector then: Government, Commercial,

Internal

Portfolio management implementation roadmap - definition

3) Business case building for each portfolio and feasibility analysis - portfolio definition

1) Audit main value for client: current and desirable

1) Audit competences in technology: current and desirable

1) Audit competences in Industry and Business practices: Current and desirable

2) Building portfolios: current and desirables

PfM implementation – standardsPfM process: value,

resource, risk, communication

management

Business case validation rules

Criteria for project initiation and allocation to

portfolio

Criteria for resource allocation to portfolio

Determination

PfM implementation – go-live

Forming project and program related to criterias

Resource allocation to portfolios

Manager allocation to portfolios

PfM Go-live

Projects and program allocation to portfolios

Practical advantages of Portfolio management (PfM)

Project management / Operative routine (field, first line management) – PfM as continues business case validation and integrated resource management

Program management / Tactic operative routine (middle management) – PfM as integrated value management

Strategic implementation routine (top management) - PfM as Strategic business case management and run polices

Strategic definition (strategic management) – PfM as segmentation and diversification objects

Boston matrix application: Continues Portfolio and Project/Program business case validation

Minimization of unappropriated resource matching

Maximisation of synergy effect on client level

Benefits of PfM Ability to see strategic forest behind project trees

Project Program Portfolio0

1

2

3

4

5

Organisation project maturity level

Forming

Standartize

Measure

Control

Improve

PfM and OPM3