PPM Transparency Hall of mirrors or the emperor’s clothing ?

AGENDA • Understanding PPM

• Aligning Projects with strategy

• Driving operational transparency & project governance

• Challenges, lessons, impacts

Critical Issues in Portfolio Transparency

“Spend the money on the right projects at the right time.”

“Justify the allocation of resources and budget.”

“Require visibility or control over running projects, resources and budget consumption.”

“Know where money is being spent & on what.”

“A single or common data source – everyone sees the same picture.”

Visibility & Transparency – Key enables for alignment.

Understanding PPM

Is it a bird, is it a plane???

Some say it’s all just a process…

Others think you just need a software system…

Or is it just about the dollars and cents…

Then again, the world would be so simple if there weren’t any people in it.

Project Management The discipline of organizing and managing resources in such a way that the project is completed within defined scope, quality, time and cost constraints. (PMI 2004)

Program Management The management of a set of projects that are related by sharing a common objective or client, or that are related through interdependencies or common resources. (PMI 2004)

Project Portfolio Management A group of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives. (PMI 2004)

Project management focuses on “Doing Project Right” Portfolio Management focuses on “Doing the Right Projects”

• Maximize value by appropriate project selection based on the value contribution & the effective allocation of resources to these projects

• Balance the risk exposure with the appropriate mix of

projects. This will include high and low risk projects as well as long-term and short-term projects.

• Ensure strategic alignment of projects so that they

contribute to the overall business strategy.

PPM Objectives

EVALUATE INITIATIVES

PPM is a business decision making process enabling the prioritization & management of initiatives

IDENTIFY & DEFINE INITIATIVES

PRIORITIZE & BALANCE

APPROVE RESOURCES

DELIVER PORTFOLIO

Process

Gather data about each initiative using a uniform format - Uniform data required so that competing initiatives can be compared Use a combination of financial and non-financial measures to evaluate initiatives objectively EXAMPLES: Business Value Financial Return Strategic Fit Technical Fit Implementation Risk

Identify, Define & Evaluate Initiatives

Use investment categories to group initiatives and align with corporate strategy EXAMPLE Strategic Reliability Environmental Profit Generating Use a scoring model that reflects Management objectives

Evaluation Criteria Score Weight Weighted Score

Return on Investment 8 50 40

Strategic Fit 7 30 21

Implementation Risk 5 20 10

Project Score 71

Prioritize Investments

Categorize by risk and reward

Balance portfolio to optimize overall for an acceptable risk level

Balance Investments

Match initiatives to resources

Initiative Name Weighted Score Estimated Cost ($M) Cumulative Cost ($M)

Initiative A 80 35 35

Initiative B 70 18 53

Initiative C 69 40 93

Initiative D 65 7 100

Initiative E 50 12 112

Initiative F 49 20 132

New Initiative Budget: $100m

Deferred Initiatives

Allocate Resources

Aligning Project with Strategy

Aligning Projects

Tracking strategy execution

Driving operational transparency

Triple Constraints – Baselines of Projects

Time

Cost Quality

Triple Constraints – Baselines of Projects

Time

Cost

Quality

Project start date

Project end date

Phase start & end dates

Gat

e

Gat

e

Decision point dates

Gat

e

Gat

e

Gat

e

Gat

e

3% - 12% total cost of project

97% - 88% total cost of project

Gat

e

Gat

e

Gat

e

Project data Types

Type Components Elements

Project Info

• Description • Justification • Classification • Screening • Implementation Risk • Risks

Project Description, Reason, Goals & Benefits

Directorate, Department, Responsible Person, Project Manager

Strategy Alignment, Technical Readiness, Financial Readiness, Implementation Readiness.

Complexity (Risk) of project – Type, Scope, Schedule, Dependencies, Resourcing, Procurement & Stakeholders

Unique Identified risks and risk management strategy

Time • Dates • High-level Milestones

Start and end dates

Project lifecycle start and end dates by phases

Tender planning

Cost • Financial Planning • Operational Planning

Spend plans by month over multi years by fund source

Operational impact by Salaries, Wages, Repairs, Maintenance etc.

Quality • Phases • Checklist Items • Decision Points

Project lifecycle – Scoping, feasibility, conceptual etc.

Deliverables per phase.

Confirmation points by phase.

Project data Types

Project

Strategy Types

Classes

Targets

Allocations

Depts

Locales ROI’s Quality

Plan

Design

Assure

Gates

Budget Control

Cash flow Availability

Recon

Time

Plan

Actual

Forecast

Milestones

Phases

Deliverables

Resources

Labour

Materials

Infrastructure Plant

BOM

Skills Capacity

Cost

Plan

Actuals Committed

PO’s

Forecast

CBS

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Enables: • Linking business plan - projects – execution and actuals • Alignment of projects with strategy and real time monitoring of execution • One version of the truth with multiple dimensions

Challenges, lessons, impacts

Challenges

Middle earth epic battles! • Not everyone wants to be aligned; • Broken telephone; • Don’t make me look bad.

Parlez-Vous Anglais? • Bean counters, rain makers, captains, soothsayers; • Universal translator please. Who turned the lights on! • Where’s my shirt; • Emperors clothing or hall of mirrors.

• Be careful what you wish for, you just might get it. • PPM gives senior leadership an effective means to direct the spending of

the organisation, aligned with their strategy…..they will use it.

• Critical to ensure that you have executive sponsorship with management buy-in across the organisations.

Key Lessons?

• Avoid creating islands its difficult to join continents later. • Ensure cross-functional team involvement and integration, create one common

language; • Structure the debate don’t avoid it;

• Become a translator.

Key Lessons?

• Know who is who in the ……. • Understand organisational reporting lines and clearly decided to either build

the portfolio accordingly or change it based on a clear strategy.

• If you build it they may not come! • Expect resistance – not everyone wants transparency;

• Manage carefully for effective implementation.

Key Lessons?

• There is more to it than just technology, but an integrated solution based on your financial system, HR system, procurement system etc. is critical.

• It is a game changer, if designed and implemented correctly taking into account the following:

• Clear organisation vision and purpose of the portfolio; • Organisational Culture; • Cross functional business team involvement in process design; • Industry specific requirements; • Breadth of PPM process and depth of PPM maturity required.

• Know where to start and the business value being targeted.

Conclusion

Questions? Thank you.

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