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Project Portfolio Management:
James C. Brown
Sr. Manager, Research PMO
Pioneer Hi-Bred International
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Agenda
PPM Interest
What is Project Portfolio Management?
MythsBenefits
Implementation Steps
Portfolio Management Models
Types of Portfolio Metrics
Measurement Lessons
Dashboard Tips
Screenshots
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Project Portfolio Management:
PPM Interest
Definitions
Challenges
M ths
Benefits
Implementation Steps
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PPM Interest
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PPM Interest
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PPM Interest
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Project Portfolio Management
From PMBOK 4th edition:
The centralized management of one or more portfolios,which includes identifying, prioritizing, authorizing,managing, and controlling projects, programs, and otherrelated work, to achieve specific strategic business
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PPM Scope
PPM allows an organization to measure the impact of projectmanagement on procurement, human resources, cost, and productquality at a company-wide level.
Program level – cumulative management of projects contributing tocommon ro ram ob ectives.
Portfolio – allows programs or projects to be prioritized for completion, , .
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Who is your PPM audience?
Most senior executives are not interested in the measures of successused by project management:
– sco e
– time – cost
–
Their measures of success are: – profitability
– return on investment
– deliver of benefits
– taking advantage of windows of opportunity
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Who is your PPM audience?
Executives used to be interested in just two things about projects:
– when will they be finished
–
Executives are now more interested in:
– w a m x o po en a pro ec s w prov e e es u za on ohuman and cash resources to maximize long-range growth and
return on investment for the company? – ow o e pro ec s suppor s ra eg c n a ves
– how will the projects affect the value of corporate shares(stock)?
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Project Portfolio Management
From Project Portfolio Management: A Practical Guide toSelecting Projects, Managing Portfolios, and Maximizing
ene s arvey . ev ne
The bridge between traditional operations management.
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Past/Current State
Strategies Schedule/timeObjectives, goals Project costs
Business performance Project performance
Stockholder satisfaction Stakeholder satisfaction
Project selection and mix Scope/change control
Resource availability Resource utilization
Cash flow, income Cash usage
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PPM as the Hub
Budget Scope,Chan e,
Resource Availability
Flow Opportunity
Management(Projects)
Cost Control
Demand(Internal
Strategic andTactical
Project
Selection andPortfolio
Projects)ans
Management
ResourceResource
ProjectControl and
Performance
BusinessPerformance
Risk Assessment
Allocation AllocationanManagement
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PPM Enables Project Selection Project 5
• Aligns projects with organizationpriorities and capabilities• Top-down governance Project2
Project1
Project 4
approach to determine whichprojects to fund
• Uses a set of project selection
Project3
overnance • Creates a diversified projectportfolio by selecting a propermix of project work across Funded Projects
eren ec no og es an nesof business• Maps project work to individual
a lications within the ortfolio
14
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Challenges of PPM
Organization
milestones, schedules etc.• Consulting engagements
• In some industries project timescales reflect product lifecycles andcan be up to 40 years long.
• Defense Infrastructure Pharmaceutical
• The other end of the spectrum is a three to four month projecttimescale
• Mobile phones, computers, electronic games
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Challenges of PPM
Cultural
• .
• Management not buying into the process because they may getexpose . et pro ects ecome expose .
• Heard more failure stories than success.
• Brings a level of detail that may create a fear factor among some.
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Challenges of PPM
Knowledge
• There is a lack of knowledge from consultants in this space.
• Reliance on consultants to solve the problem. Implementation ofPPM is a change management process.
• Advocated by software consultants, but often they are not equipped
to address issues around change management.
• The consultancy market tends to use a ‘bus load’ of consultants forlar e software de lo ment and this is a dead end.
• Some design at a very high level of maturity (e.g. level four of five).
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PPM: Three Dangerous Myths
Myth 1: PPM resides with IT
Defining a PPM rollout involves strategic questions often outside IT's
purview.
What are all the company projects under way or in the queue?
Are they projects the company should be doing?
How are they prioritized? Budgeted? Resourced?
Which business lines are profiting by them, and which are not?
ow oes managemen o a n ns g s n o e r progress
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PPM: Three Dangerous Myths
Myth 2: The Right Tool Drives PPM Success
'
and its appetite and ability to advance. If it's at level 1now, realistically how feasible is level 4 or 5, and how rapidly can the
• Is there an executive commitment to the effort and expenseinvolved?
• What path will maturity take?
• What business benefits must PPM deliver?
The choice of tool is secondary to these considerations. The best toolis the one that most fully serves the very particular needs of thecompany, regardless of the judgment of the technology marketplace.
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PPM: Three Dangerous Myths
Myth 3: The Best Starting Place is PPM Best Practices
are y are compan es rea y o mp emen es prac ces ou o
the gate.
Start first with:
Standard definitions Measureable success criteriaos an ene s es ma es
Labor and non-laborestimates
Return on investmentExternal dependenciesStakeholder inputs
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Benefits of PPM (but not a Silver Bullet)
1. Getting products to market on time resulting in safeguarded orincreased revenue.
2. Driving delivery of quality products with increases clientsatisfaction and reduces warranty claims.
3. Reducing cost through supporting procurement in the effective
acquisition and use of material resources.
4. Increasing productivity by assigning human resources to prioritywork and ensuring that they are assigned according to their skill
sets.
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Benefits of PPM (but not a Silver Bullet)
5. Increasing profitability by emphasizing projects that providemaximum return on investment.
6. Planning/forecasting human resource and equipment demand andcomparing them to available resource and equipment in order tobetter understand enterprise capacity and meet present and futurehuman resource and equipment needs.
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Implementing PPM
1. Apply a PPM approach to the management of their projects.
2. Identifying what scope of programs/projects is to be managed withthe PPM system.
3. Determining what project performance information is measured forexample, duration vs. effort vs. costs.
4. Developing and employing a common methodology, includinginputs, processes, roles and outputs, to manage the completion of
.
5. Selecting the right technology tools to support their PPM system.
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Implementing PPM
6. Role training project and product management resources on theuse and application of the methodology.
7. Measuring compliance on the use of the methodology andconfiguring tools to gather and report performance information.
8. Acquiring and maintaining management’s support in the ongoing
use and im rovement of PPM.
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Project Portfolio Management:
Portfolio Management Tools
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Portfolio Value vs. Cost Launch Pipeline Calendar Market b Technolo
Non-Capital
Effort Hours and ROI
Newness Risk vs.Innovation
Strategic Impact Matrix
Risk vs. Return Chart
n mum equ remenChecklist
And more . . .
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Strategic Linkage
StrategyProject 1
Project x
Project 2
Goal
Goal
Strategy
Strategy
Project 5Project 4
MissionGoal
Strategy
Strategy
Project 7
Pro ect 9
Project 8
Goal
Strategy
Strategy
Project 10
Project 12
Project 11
StrategyProject y
Project 13
Desiredoutcomes Means:
Methods to achieve them
What: Actions we
will take
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Sample Strategy Elements
Acquisitions
Buy & integrate Y
Buy & integrate Z
Growth to$5Billion
Developing saleschannels in Asia
Research &
recommend 3channels
Mission
customersatisfaction
customerparticipation in ourdecisions
Establish 5 customer
involvement centersncrease
from newproducts
Buildingindustry-leadingcompetence in X
Fund universityCollaborative X
recurring program
EndsGoals
MeansStrategies
Project/ProgramCandidates for
Portfolio
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Project Scoring Model
Total Project Score
Project
Deliverable
Value to the
Organization
DurationTotal Cost StrategicFinancial
QualityScope ROICompetitive
Issues
PaybackPeriod
NewBusinessIssues
Benefit/CostRatio
CapabilityImprovement
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Project Scoring Model (Addition of Schema, Points)
Total Project Score
70 of 100 points
Value to theOrganization
40 of 60 points
ProjectDeliverable
30 of 40 points
Duration
5 of 8 points
Total Cost
5 of 10 points
Strategic
20 of 36 points
Financial
20 of 24 points
Quality
10 of 10 points
Scope
10 of 12 points
ROI6 of 8 points
Competitive Issues4 of 6 points
Payback Period4 of 4 points
New Business Issues10 of 12 points
Cost-Benefit Ratio10 of 12 points
CapabilityImprovement6 of 18 points
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Launch the Right ProgramsSelect hi h value – low risk ro rams
HighValue
100 50 0
0
High Value
High Risk
Postpone
High Value
Low Risk
Good toShift Right Go
e s s V a l u e
50
Low ValueHigh Risk
Low ValueLow Risk
B u s i n
Rethink Shift Up
100
LowValue
Ability to Execute SuccessfullyHighRisk
LowRisk
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NewProducts
CostReductions
TypesInstitutional
6%Medical
23%Target=40%
27%Target=10%
Target=10%
Industrial
Automotive20%
Target=10%
Extensions
Platforms9%
Target=15%
25%Target=20%
arge =
23%Fixes
18%Target=10% Residential
39%Target=40%
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o j e c t 1
o j e c t 2
o j e c t 3
o j e c t 4
o j e c t 5
o j e c t 6
o j e c t 7
o j e c t 8
o j e c t 9
o j e c t 1 0
o j e c t 1 1
o j e c t 1 2
o j e c t 1 3
o j e c t 1 4
o j e c t 1 5
Row
Projects
Objectives: P P P P P P P P P P P P P P P Scores
Establish Competitive Product Lines 1 2 2 2 7
Maintain Product Competitiveness 1 2 2 1 2 8
Reduce Operating Costs 1 1 1 2 1 1 1 2 10
Increase Ca acit /Headcount Ratio 1 1 2 1 2 7
Establish Infrastructure for Growth 1 1 2 2 6
Maintain Infrastructure 2 1 1 4
Growth Through Acquisition 2 2 4
Column Scores 5 2 3 5 4 0 3 5 1 3 0 3 6 2 4
= No Contribution (0)
1 = Supports (1)
2 = Fulfills (2)
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Project Portfolio Management:
5 Types of Portfolio Metrics
Measurement Lessons
Dashboard Tips
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5 Types of Portfolio Metrics
Category Key Questions Sample Metrics
strategic objectives?
“run the business”
% of Portfolio in “growe us ness
% of Portfolio in
“innovate the business”
% of Portfolio inShort/Medium/Long-term
% of portfolio in Largeand Extra Large Projects
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5 Types of Portfolio Metrics
Category Key Questions Sample Metrics
prioritization and
sequencing of projectsgiven current capacity?
intake
% of growth in initiatives
Resource utilization(human, material,
ca ital
Recruiting pipeline
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5 Types of Portfolio Metrics
Category Key Questions Sample Metrics
extent did we achieve
our objectives?
% on budget
or o o an su -portfolio IRR
$ saved for consolidationefforts
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5 Types of Portfolio Metrics
Category Key Questions Sample Metrics
in-flight, how is our
execution progressing?
programs and projects
# of issues by severity
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5 Types of Portfolio Metrics
Category Key Questions Sample Metrics
managing program and
project budgets andwhat are the financial
% funding in-flight
ren s comm e u nospent
P f li M L
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Portfolio Measurement Lessons
Introduce new metrics only when necessary
Quality versus Quantity
rototype ear y an o ten
Kee the visuals clear and messa es cris
10 D hb d Ti
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10 Dashboard Tips
1. Know the questions your dashboard is trying to answerbefore building it
2. Make sure you can actually collect the data you want to
3. Know our audience and understand how theconsume information
4. Begin by summarizing and analyzing data you alreadydeliver
D hb d Ti
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Dashboard Tips
5. Your first dashboard should never use a dashboardtool – That will come later
6. Dashboards should always have a printable version
7. Incorporate application instrumentation into system
desi n rocess
8. Make sure those responsible for creating the
dashboard understand who is reading it – it willincrease quality
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Sample Dashboards
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Sample Dashboards
Portfolio Mana ement Tem late
Future Cost Model 5 Year Plan (Excel based PPM)
Wrap Up
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Wrap Up
Find what works / is accepted, and use it consistently
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Thank You!
James Brown, PMP, PGMP, OPM3, PMI-SP
email: [email protected]
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Project Portfolio Management:
Appendix
Potential Enterprise Tools $$$$$
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Potential Enterprise Tools $$$$$
Gartner (June 2010)
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–
Human Resource and Organizational Competency – train on a
Technology Tools – through consistent, concise, relevant, reliable andme y n orma on
Performance Measurement
PPM Scope – decide which projects should be managed by its PPMs stem