Using Project Portfolio Management (PPM) to Select the Right Project Investments - By Bassam Samman...

7/29/2019 Using Project Portfolio Management (PPM) to Select the Right Project Investments - By Bassam Samman - iCompetences PPM2013

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AboutthePresenter

BassamSamman,PMP,PSP,EVP,GPMholdsaBachelor’sDegreeinCivilEngineeringfrom

KuwaitUniversityandaMastersDegreeinEngineeringandAdministraonfromGeorge

WashingtonUniversity.Heiscurrently

pursuingaPhDattheUniversityofSalford,

UK.HeisacerfiedProjectManagement

Professional(PMP),acerfiedPlanningand

SchedulingProfessional(PSP),EarnedValue

Professional(EVP)andGreenProject

Management(GPM).HeisthoroughlyexperiencedincompleteProjectManagement

includingprojectmanagementcontrol

systems,computerizedPCSSoOware,riskanalysis,sitemanagement,claimsanalysisand

prevenonandalternavedisputeresoluon.

Bassamhas30yearsexperienceinProject

ManagementConsultancy.

© 2009 CMCS FZCO



UsingProjectPorolioManagement(PPM)ToSelectTheRight

ProjectInvestments

§ Howtoalignprojectinvestmentswiththeirstrategicobjecves§ Howorganizaonscanidenfy,analyze,assess,select,priorizeandauthorizeproject

investments

§ MonitorandcontroltheexecuonofthoseInvestments

© 2009 CMCS FZCO



Howtoalignprojectinvestmentswiththeirstrategicobjecves

© 2009 CMCS FZCO



PungItAllTogether:

Vision,StrategicResult,StrategyTheme,bjecveandIniaves

Ini$a$vesWeWillTake

SMARTResultsThatWeNeed

WhatAreTheDesiredOutcomes

WhatAreTheDesiredEnd-state

WhereWeWantToBe

Vision

StrategicResult

StrategyTheme

Objec$ve Ini$a$ve

Objec$ve Ini$a$ve

StrategyTheme

Objec$ve Ini$a$ve

StrategicResult

StrategyTheme

Objec$ve Ini$a$ve

© 2009 CMCS FZCO



ProjectsNeedToBeAlignedWiththerganizaon’sStrategicNeeds

SpeedtomarketQuality

Cost

Service

MarketShare

GeographicalExpansion

TechnologyAdvances

ProductInnovaon

CustomerInmacyVercalExperze

RevenueGrowth

Profits

Shareprice

© 2009 CMCS FZCO



AbuDhabi2030

© 2009 CMCS FZCO

AbuDhabi2030

2013:1.8Residents&1.8Annualtouristsperannum

Officespace2.5MSF

Retailspace1.5MSF

Industryspace6.5MSF

Hotelrooms21,000

Golfcourses10 Schools330

Ter$ary

ins$tu$ons25

Hospitalbeds

4,500

Residen$alunits180,000


Officespace3.5MSF

Retailspace2.5MSF

Industryspace10MSF

Hotelrooms49,500


Ter$ary

ins$tu$ons30

Hospitalbeds

6,500



Officespace7.5MSF

Retailspace4.0MSF

Industryspace15MSF

Hotelrooms74,500


Ter$ary

ins$tu$ons40

Hospitalbeds

10,000




Example:Hotelperator

© 2009 CMCS FZCO

Theno.1four-starhoteloperatorintheMiddleEast5,900rooms

KSA

2,000rooms

UAE

1,150rooms

AbuDhabi

500rooms

Dubai

450rooms

BurDubai

200rooms

Deira

250rooms

Sharjah

200rooms

Kuwait

250rooms

Others

2,500rooms



Example:MinistryofElectricityAndWater

© 2009 CMCS FZCO

Meettheincreaseddemandby10%

Increasecumula$vegeneratedpowerto

9,000MW

Newpowerplants

Newsubsta$ons

Newtransmissionnetwork

Increasedis$lledwatercapacityto

450MIG

Newplants

Newdistribu$onnetwork

Increasestrategicwaterstorageto

7,000MIG

Newwatertanks

Newpumping

sta$ons

ConnecttoRENG

HVtransmissionnetwork

Newcontrolcentre

U$lisenewsourcesofenergy

R&Dofavailablesources

Encouragepriva$sa$on

Developnewrulesandcontracts

Promotepriva$sa$on

Reduceelectricity&waterconsump$on

Newawarenesscampaigns

Maintainexis$ngassets



Qatar2022:MorethanUS$60BillionInProjects

Qatar2022

Infrastructure

Roads Railway Housing Stadiums

AlDaayen

LusailIconicStadium

Doha

KhalifaInternaonalStadium

SportsCityStadium

DohaPortStadium

QatarUniversityStadium

AlKhor

Al-KhorStadium

Ash-Shamal

Ash-ShamalStadium

AlWakrah

AlWakrahStadium

UmmSalal

UmmSalalStadium

AlRayyan

EducaonCityStadium

Al-GharafaStadium

Al-RayyanStadium

Qatar-BahrainCauseway

IT thers

VisaRegulaons

© 2011 CMCS FZCO 9



Howorganizaonscanidenfy,analyze,assess,select,priorizeandauthorizeprojectinvestments

© 2009 CMCS FZCO



WhatIsProjectGovernance?

SelectTheRightProjectInvestments

Ensuringthattheorganizaonhasthe

frameworktocorrectlyidenfy,analyze,

evaluate,selectandauthorizetherightproject

investmentsthatarealignedwiththe

organizaon’sstrategicgoalstoachievethedesiredvision.

Wrongseleconofprojectinvestmentsnot

onlywillwastethosefundsbutprevented

otherprojectinvestmentsfromusingthose

fundsandwastedtheopportuniesthatcould

haveresultedfromthoseprojects.

DeliverProjectInvestmentsRightFromTheFirstTime

Ensuringthattheorganizaonhasthe

frameworktocorrectlyiniate,plan,execute,

monitorandcontrolandcloseoutselected

projectinvestmentsrightfromthefirstmeas

wellasdocumentlessonslearnedtoavoidsimilarmistakesandenhanceprojectdelivery.

Wrongprojectdeliverymeansthatthecostof

thisprojectwouldincreasewithincreasingthe

valueofthisproject.Inotherwords,theRI

thatthisprojectwasselectedon,willnotbecomevalidanymoreandasiftheorganizaonhasselectedthewrongproject.

© 2009 CMCS FZCO



ProjectandPorolioProjectManagementIntegraon

© 2009 CMCS FZCO

Aligning

Identification

Categorization

Evaluation

Selection

Prioritization

Identify Portfolio Risks

Authorization

Monitoring &Controlling

Review and Report Portfolio

Performance

Monitor and Control

Portfolio Risks

Benefit Realization

Strategic

Planning

Analyze Portfolio Risks

Develop Portfolio Risk Responses

Portfolio Balancing

Communicate Portfolio Adjustments

Monitor

Business Strategy Changes



Projectsinventorylist

© 2009 CMCS FZCO

Aligning

Identification

Categorization

Evaluation

Selection

Prioritization


Authorization

Monitoring &

Controlling


Performance

Monitor and Control

Portfolio Risks

Benefit Realization

Strategic

Planning



Portfolio Balancing


Monitor

Business Strategy Changes



ExamplesofCauseofWorkRequest

Complywithanewlegislaon

NeedtoreduceC2emission

Creangnewjobsforlocals

Improvingtheimageoftheorganizaon

Reducepowerconsumpon

ReducefatalcaraccidentReducetrafficjam

Providebeerservicetothepublic

© 2009 CMCS FZCO



WhatAreTheInvisibleProjects?

HumanResourcesHiring,Development,etc.

LegalandCompliance

Finance

Sales

BusinessDevelopment

MarkengSupport

Services

© 2009 CMCS FZCO



ProjectAributes

Aribute PossibleAributeValue

Strategicobjecve Increaserevenue;improvecustomerservice;reducecost;improveproduc$vity,RegulatoryCompliance,

Reducedcycle$me,Improvecustomerreten$on,improvecustomersa$sfac$on

Businessunit Enterprise;Humanresources(HR);legal;marke$ng;explora$on;engineering;opera$ons;maintenance;

logis$cs;sales

Geography Byregionorcountry,etc.

Funconalarea Network;telecom;customerservice;clientcontact

Projecttype Newdevelopment;enhancement;infrastructure;processimprovement;packageimplementa$on;

produc$onsupport

Businessprocess Aractcustomer;managecustomerrela$ons;plancapacity;developandtestproduct;launchproduct

Budgetaryunit Humanresources;accoun$ng;opera$ons;development;disabledbudgetary;budgetaryunit1;

budgetaryunit2,etc.

Applicaontype Clientrela$onmanagement(CRM);businessintelligence;E-business;financials;helpdesk;

procurement;supplychain;projectmanagement;businesscon$nuity,etc.

Contribuonto

strategy

Foreachstrategicimpera$ve:Direct,indirectorabsent

Healthstatus Overallhealth;budgethealth;schedulehealth;deliverableshealth,etc.

Projectstate Candidate;planned;in-process;onhold;cancelled;rejected;completed

© 2009 CMCS FZCO



ProjectInvestmentsListWithAributes

© 2011 CMCS FZCO 17



Projectsevaluaonandselecon

© 2009 CMCS FZCO

Aligning

Identification

Categorization

Evaluation

Selection

Prioritization


Authorization


Review and Report PortfolioPerformance

Monitor and ControlPortfolio Risks

Benefit Realization

Strategic

Planning



Portfolio Balancing


Monitor Business Strategy Changes



ProjectsSeleconMethod

Murderboard:TheHeadofState,CEofanorganisaonorsteeringcommieecanadvisewhichprojectsshouldmaketheselectedprojectslistandwhichshouldnot.

Peerreview:Theheadofotherfunconaldepartmentsorministersofotherministriescan

advisewhichprojectsshouldmaketheselectedprojectslistandwhichshouldnot.

Scoringmodels:Differentcategoriesshouldbeidenfiedthateachprojectshouldbescored

against.Thesecategorieswillhavevaryingdegreesofimportanceandeachshouldbeaributed

ascorevalueforeachproject.Seleconwillbethenbasedonprojectsthathavereachedacertainscore.Economicmodelsisoneofthosescoringmodels.

© 2009 CMCS FZCO



Economicmodels

PayBackPeriod:Thepointofaprojectwhentherevenueequalsthecost.Bycomparingthemeperioditwilltaketorecovertheinvestmentwillshowwhichprojectsaremorefinancially

viable.

ReturnonInvestment(RI):Averageprofitsaredividedbytheaveragecostsexpectedoverthe

project’slife.

InternalRateofReturn(IRR):Therateatwhichaproject’sinflowsandoulowsareequal,

thereforewhenitwillstopmakingalossandstartbreakingevenormakingaprofit.DiscountedCashFlow(NetPresentValue):Thedifferencebetweenthepresentvalueofthe

projectrevenueanditscosts.

BenefitCostRao(BCR):Thiscomparesthecostofthedifferentprojectswherebenefitsarethe

sameasrevenue.BCRGreaterthan1meansthebenefitsaregreaterthanthecost.

© 2009 CMCS FZCO



Example:WorldBankProjectFinancialAnalysisSpreadsheet

Label UNITS

Construc>onPhase YRCON 2011 2012

SURCESFFUNDSDrawdownofEquity EQ USD 0.00 0.00

DrawdownofLoans USD

USESFFUNDS

Engineering,ProcurementandConstruc$on EPC USD 0.00 0.00

Ofwhich:Importdu$esandothertaxes IMPD USD 0.00 0.00

OtherExpenses OTEC USD 0.00 0.00

FinancialFees FFC USD 0.00 0.00

InterestPaid USD -- --

KEYFINANCIALPARAMETERS

Benchmark(LIBOR,etc.) BMC % 0.00% 0.00%

ExchangeRate EXC USD/USD

Opera>onPhase YROPER 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

PRJECTEDPERATINGDATA

Opera$ngRevenues OR USD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

OtherIncome OTHI USD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Opera$ons&Maintenance OM USD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Opera$ngInputExpenses OINPT USD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

FinancialFees FFO USD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

OtherExpenses OTEO USD 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

InterestPaid USD -- -- -- -- -- -- -- -- -- --

KEYFINANCIALPARAMETERS

Benchmark(LIBOR,etc.) BMO % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

ExchangeRate EXO USD/USD

TaxRate TAXRATE % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

Deprecia$onSchedule DEPSCH % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

LANAMRTIZATINSCHEDULES

© 2009 CMCS FZCO



ProjectsNonTangibleBenefits

ComplywithnewLegislaon

Reducethenumberoffatalaccidentsby%

ReduceC2emissionby%

CreateXXXXnewjobsforlocals

ReducethenumberofaccidentsattheHajSeasonby%

ReducethetravelmefrompointAtopointBby%Reducepowerconsumponby%

Reducechildrenundertheageof2mortalityby%

Reducethelatebreastcanceridenficaonby%

Reduceprojectfraudby%

Changemanagerstoleadersby%

Reducethemetocompleteapublicserviceby%

© 2009 CMCS FZCO



ProjectScoringModel

TotalProject

Score

ValueToTheOrganiza$on

Financial

ROI

PaybackPeriod

NPV

Strategic

Compe$$veIssues

NewBusinessIssues

CapabilityImprovement

RiskExposure

Schedule

Budget

Technical

ValueToOthers

Socio-

Economic

JobsCrea$on

ReducePoverty

Environment

Pollu$on

CO2Emission

© 2009 CMCS FZCO



Sample:ProjectSeleconScorecardTemplate

Scorecard Criteria 0 Points 10 Points Rating Weight Average

Financial Risk v Return High risk, low return High return, low risk10 20% 2

Long payback period Short payback period

Strategic Fit Not important to Critical to business10 20% 2

business strategy strategy

Product Not a significant product, Major new product,10 10% 1

same as competition better than competition

Market Attractiveness Small market, Large growing market10 20% 2

hard to serve business can serve it

Technology Adoption Life Cycle Late to market, Early to market,10 10% 1

many substitution choices no rivals present

Synergies Lacking required skill Can leverage10 10% 1

to perform project current skills

Technical Feasibility Unknown technology, Known technology, 10 10% 1

expected difficulties few difficulties

Totals70 100% 10

© 2009 CMCS FZCO



PresenngTheProjectScoringValues



CapacityPlanningAnalysis

Execuves,managers,andplannerstaskedwithmanagingaporolioofexisngprojectsandnewopportuniesinthepipelineneedawaytoevaluatebothacveandproposedprojectsto

answeroneessenalqueson:Dowehavetheresourcecapacitytosuccessfullycompleteallthework?

TheCapacityPlanningprocesshelpsanswerthisqueson.Itrevealswhenanorganizaonisover

orunderallocated.Decisionstoproceed,delay,freeze,orterminateprojectscanthenbemade.

CapacityPlanninganalysisisaprocessthatwillensurethatorganizaonhasthecapacitytodelivertheselectedprojects.Ithelpstobalancetheprojectloadontheorganizaon.

§ Scarehumanresourcecapacityanalysis

§ Capitalandfinancialcapacityanalysis

§ Assetscapacityanalysis

© 2009 CMCS FZCO

Stacked Histogram Chart Displaying Units Usage as per role assigned



StackedHistogramChartDisplayingUnitsUsageasperroleassigned

foraprojectinaPorolio


Waterline Report Planned Budget Limit value is < than US$



WaterlineReport–PlannedBudgetLimitvalueis<thanUS$

1,000,000,000




PorolioRiskAnalysis

© 2009 CMCS FZCO

Aligning

Identification

Categorization

Evaluation

Selection

Prioritization


Authorization



Performance

Monitor and ControlPortfolio Risks

Benefit Realization

Strategic

Planning



Portfolio Balancing


Monitor Business Strategy Changes



ProjectRiskCategories

© 2009 CMCS FZCO

Risk

Technical

Higherperformance

goals

Technologyshis

PlaormchangesNewindustrystandards

Complextechnology

Unproventechnology

ProjectManagement

Schedule Budget

Quality Scope

Resources Projectteam

Communica$on

Organiza$onal

Weakinfrastructure

Unclearorganiza$onalobjec$ves

Intra-organiza$onal

resourceconflicts

Shiingfundingavailability

External

Legalchallenges

Shiingcustomergoals

Naturaldisasters

Legalshis



RiskRegisterWithResponsePlans



ThePopularRisk-RewardGrouping

Oysters:HighRisk,HighNPV

WhiteElephant:HighRisk,LowNPV

Pearls:LowRisk,HighNPV

BreadandBuer:LowRisk,

LowNPV

© 2009 CMCS FZCO

InvestorMap;ComparesProposedVs.riginalBudget,GroupedBy



p; p p g g , p y

InvestmentVehicleasperthesectors


BubbleChart-PlannedBudgetProjectsgroupedbyRegion&basedon



g j g p y g

IRRVsRiskScoreValues




ProjectsSeleconCategorizaon

© 2009 CMCS FZCO

Maybeconsideredprojects

Mustselectprojects

Mustbeignored

projects

Mustbeconsidered

projects

RISK LOW

NPV LOW NPV HIGH

RISK HIGH



therBalancingPorolioCriteria

Projectsthatwillbuildnewcapitalassetsneedtobebalancedagainstthosethatwillbeusedto

maintainandrecapitaliseexisngassets.

Involvingtheprivatesectoralongwiththepublicsectorinfundingprojectsforthegovernment

sector.

Thebalancebetweenprojectsthatwillbeimplementedindifferentpartsofthecountryiscrucial

forachievingasocio-economicbalance.

Balancingbetweenstrategythemes.rganisaonsmighthavestrategiesto‘growthebusiness,’or‘strengthenthebusiness’amongothers,soagainthechallengeistodecidewhichprojectsto

fundagainststrategy.

© 2009 CMCS FZCO



TheBalancedScorecard

FinancialPerspecve

§ IncreaseInRevenue(%)

§ ReduconinCostPerSale(%)

§ IncreaseinNetProfit(%)

§ CashFlowFollowingTheProject

Implementaon

InternalProcesses

§ Budgetallocatedtoactualcostrao(%)

§ Timeallocatedtomespentrao(%)

§ Qualityofprojectresultsasseenbythestakeholderstotheproject(0-100%)

CustomerPerspecve

§ NumberofcomplaintsaOertheexecuon

oftheprojecttopreviousnumberof

complaintsrao(%)

§ Growthinnumberofinquiriesfollowing

theproject(%)

§ Complaintsthatrefertoqualitytogeneralnumberofcomplaintsrao(%)

GrowthandDevelopmentPerspecve

§ Numberofconflictsarisenduringthe

project

§ Posiveresoluonofconflictstogeneral

numberofconflictsrao(%)

§ Projectemployeeturnover(%)

© 2009 CMCS FZCO



EarnedValuePerformanceHistogram

©2009CMCSFZCO

Planned

Actual

I n $ 1 , 0

0 0 ’

s

BudgetatCompleon(BAC)

1 2 3 4 5 6 7 8 9 10

Months

T a r g e t C o m p l e o n

D a t e

C u r r e n t C o m p l e o n

D a t e

200

400

600

800

1000

1200

11

1300

Planned=$500K:DataDate

Actual=$400K

200

400

600

800

1000

12001300

ProbableScheduleDelay=4weeks

Probable

Cost

verrun

=$300K

EsmateatCompleon(EAC)

CostVariance-$100K

Schedule

Variance(Time)

-4wks

ScheduleVariance($)

-$200K

Earned

Earned=$300K



InvestmentsScorecard:ByKB

B bbl Ch / I M

Using Project Portfolio Management (PPM) to Select the Right Project Investments - By Bassam Samman...

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