Mastering Portfolio Management with Project

Online

Jakub MarciniakDeltaBahn, LLC

Part 3/5: Create Portfolio Analysis

Define Business Drivers

Create Driver Prioritizations

Create Portfolio Analysis

Perform Scenario Portfolio Analysis

Adjust Project Portfolio

Mastering Portfolio Management with Project Online: Create Driver Prioritizations

Identify new and ongoing projects that are strategically relevant, cost efficient and resourceful.

Creates a common understanding of quantitative data of comparable projects

Gives insights on portfolio performance in real-time

Helps to answer questions if the projects should be done (strategic), can be done (cost) and if yes, when (resources)

Supports decision-making, especially for difficult cases (terminating a project; overfunding; setting on hold…)

Purpose and goals of Portfolio Analysis

Terminate projects that are not performing well (too many sunk cost, resource shortage, mismanagement, …)

Adjust funding and resources for well performing projects

Drive discussions to optimize individual project performance by increasing/decreasing expectations on scope, skills needed, etc.

Advantages of Portfolio Analysis

COO Prioritization

CIO Prioritization

COO Annual

Cost Baseline

Driver Prioritizations

Process hierarchy of driver prioritizations and portfolio analysisCMO

PrioritizationExecutive Consensus

HR, Sales, Marketing Talent

Innovation Prioritization

CIO Annual CMO AnnualExecutive Consensus

AnnualHR, Sales,

Marketing Talent Innovation Annual

Cost Baseline Cost Baseline Cost Baseline Cost Baseline

20m 18m

Portfolio Analysis Definition

Scenarios(Cost)

15m 12m

Scenarios (Resources)

Resources Baseline

Resources Baseline

Resources Baseline

Resources Baseline

Resources Baseline

30 FTEs

40 FTEs

20 FTEs

50 FTEs

250m

230m

200m

180m

80 FTEs

90 FTEs

70 FTEs

100 FTEs

250m

230m

200m

180m

250m

230m

200m

180m

250m

230m

200m

180m

80 FTEs

90 FTEs

70 FTEs

100 FTEs

80 FTEs

90 FTEs

70 FTEs

100 FTEs

80 FTEs

90 FTEs

70 FTEs

100 FTEs

Define portfolio analysis parameters

Identify driver prioritization set• HR, Finance, IT,

Executive Consensus, …

• Determine analysis frequency

Select projects• Projects A, D, G, H,

J, M, P, S, T, X, Z

Select primary cost constraint• ROI• Cost• NPV• IRR

Select planning horizon for resource analysis• Fiscal year (2017,

2018, …)• Budget cycle

Validate business driver rankings• Extreme• Strong• Moderate• Low• None

Questions to support identifying portfolio analysis parametersPrioritization set

From which perspective are we looking at? What is the most important goal that this perspective

emphasizes?Frequency of Analysis

How long are our projects on average? How often do we want to decide (corrective or

preventive) actions?Projects for analysis

Planned vs unplanned Started vs not started By stage, e.g. Initiate, Plan, Execute, Close Special states, e.g. canceled, deferred, on hold By organizational entity, e.g.Finance, HR, Marketing, IT,

Product Development By project type, e.g. <$250,000, >$1,000,000; 500+

work hours, 1000+ work hours; impacts <500 people, 501-1000 people

Questions to support identifying portfolio analysis parameters (continued)

Primary cost constraint: What is the primary performance metric for the

given set projects? (ROI, Cost, NPV, IRR, …)Planning horizon for resource allocation

Which cycle are we looking at? (specific budget cycle, fiscal year, …)

Are the projects sharing resources?Validity of rankings of projects impact on business drivers

Relative to other selected projects, is the current impact on the business drivers still valid?

Is the impact still valid under the current perspective (aka the chosen prioritization set)?

How to create portfolio analysis in Project Online

Navigate to the Portfolio Analysis

Portfolio Analysis Overview

Portfolio Analysis Properties

Portfolio Analysis Properties (continued)

Prioritize Projects

Review Priorities

Key Takeaways

The goal of portfolio analysis is to identify new and ongoing projects that are strategically relevant, cost efficient and resourceful.

Drives discussions qualitative discussions of senior management by providing a quantitative, comparable overview.

Parameters can be logically derived from the goal of the prioritization set chosen.

Q & A

Reasoning

Plant

Building Operating

Building and operating a

plant

Plant A

Building

Site Grading and Utilities Foundations

Steel Erection Form and Pour Concrete

Plumbing Electrical

Operating

Quality ControlStandard Operating

Procedures

Employee Training Maintenance

Single Project Master Project with 2 Sub Projects

Portfolio APlant B

Building

Site Grading and Utilities Foundations

Steel Erection Form and Pour Concrete

Plumbing Electrical

Operating

Quality ControlStandard Operating

Procedures

Employee Training Maintenance

Portfolio B

Program

Q: My organization manages only a few large projects. Does a portfolio analysis make sense?

Q: My projects have different performance metrics. How can I compare them in a portfolio analysis?

Refer to Step 2- Select projects: Try to find a subset of projects that share performance indicators and define those for the other projects that should be analyzed based on an estimate.

Create an “index of success” on a scale 1-10 or based on percentage. Define and communicate those well. Experiment with the analysis and review the definitions to reflect reality. Continuously improve and refine the definitions over the next cycles of analyses.

TimeGoals

ResourcesDimensions to consider adding to precisely prioritize importance and sequence

By stage: e.g. Demand, Initiate, Plan, Execute

By organizational entity: e.g. Finance, Product Development, IT, HR

By project type: e.g. Length (3, 6, 9, 12 months), Cost (<250k, <500k, <1m), Impact (high, medium, low)

Q: I have too many projects that are all equally important. Should I exclude them from the portfolio analysis?

Q & A

Technical

Q: Resources are not centralized. How can I perform a proper resource portfolio analysis on my projects?

Add resources manually to the resource pool

Assign standard cost to the resources

Assign resources to the most crucial

tasks on each project

Add resources manually to the resource pool

Assign standard cost to the resources

Create new, arbitrary tasks*

for these resources

Option B

Option A (recommended)

* New tasks affect the project plan. Interpret with care.

Q: I don’t see the “Portfolio Analyses” on the left side. What can I do?A: Edit Links in the Quick Launch navigation

A: Set up departments Assign user to departments Assign portfolio analysis to one Department

Q: How do I analyze the portfolio for a specific department?

A: Set up departments Assign user to departments Assign portfolio analysis to one Department

Q: How do I analyze the portfolio for a specific department?

A: Set up departments Assign user to departments Assign portfolio analysis to one Department

Q: How do I analyze the portfolio for a specific department?

A: Set up departments Assign user to departments Assign portfolio analysis to one Department

Q: How do I analyze the portfolio for a specific department?

A: Set up departments Assign user to departments Assign portfolio analysis to one Department

Q: How do I analyze the portfolio for a specific department?

A: Set up departments Assign user to departments Assign portfolio analysis to one Department

Q: How do I analyze the portfolio for a specific department?

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