Project Portfolio Project Portfolio ManagementManagement

The new strategic role of Project Managers

Roberto Toledo, MBA, PMPMéxico

rtoledo@alpha-consultoria.com

What is a Project Portfolio?What is a Project Portfolio?

A collection of projects and/or programs and other related work, grouped to facilitate effective management of that work to meet strategic business objectives.

The “Portfolio components” (projects and programs) may not necessarily be interdependent or directly related (PMI’s Portfolio Management Standard).

©2006 Project Management Institute

Organizational ContextOrganizational Context

©2006 Project Management Institute

Vision

Mission

Organizational Strategyand Objectives

High-LevelOperationsPlanning andManagement

ProjectPortfolio

ManagementPPM

Management of On-Going Operations

(recurring activities)Value Generation

Management of Authorized Programs and Projects (projectized activities)Increasing value and production capability

Organizational ResourcesOrganizational Resources

Goals and Objectives Definition

Rule every organizational

effort

Processes to establish proper actions to accomplish goals and objectives Component

s that guarantee

an efficient

and effective

execution

Projects vs. PortfolioProjects vs. Portfolio

Project ManagementProject Management Portfolio ManagementPortfolio Management

Tactic task Strategic Task

Usually performed by Middle Management

Usually performed by Senior Management

Preceded by the Definition of the Project Portfolio of the organization

Preceded by the Strategic Planning of the Organization

Are we doing the project right?

Are we doing the right projects?

Main Goal: Contribute to the fulfillment of the Organization’s Goals and Objectives

The PMI Standard for PPMThe PMI Standard for PPM

Strategic Plan:•Goals•KPI’s•Capacity

Identification

Evaluation

Selection

Categorization

Strategic

Change

Prioritization

Portfolio Balancing

Authorization

Component Execution

and Reporting

Strategic Aligning Controlling Components

No

Yes

Portfolio Reporting

and Review

©2006 Project Management Institute

Strategic Planning: The BasicsStrategic Planning: The Basics

Mission• Gives meaning to the work of the organization’s

members

Vision• Desired position and Strategic Intent

SWOT Analysis• Internal: Strengths and Weaknesses (+,-)• External: Opportunities and Threats (+,-)

Values• Decision making support for the organization’s members

Resources• Budget linked to the strategy defined

People• Incentives linked to the strategy defined

Balances ScorecardBalances Scorecard

Kaplan & Norton

Selection and PrioritizationSelection and Prioritization

New ProductsFinancial

Canceled InitiativesCanceled InitiativesPostponed Postponed InitiativesInitiatives

Customer

Internal

Learning

SELECTSELECT

PRIORITIZEPRIORITIZESTRATEGYSTRATEGY

Resources and Resources and BudgetBudget

Authorized Authorized ProjectsProjects(Project Charter)(Project Charter)

Project PortfolioProject Portfolio

InitiativesInitiatives

The easiest way to create alignment between the Strategic Plan and the Project Portfolio

Provides an objective selection mechanism using both objective and subjective criteria

Deals with difficult to evaluate subjects such as:• Implementation complexity• Added value• Strategic consistency• Customer perspective,• Knowledge and growth

A Strategic QuestionnaireA Strategic Questionnaire

CustomerPerspective

FinancialPerspective

InternalProcesses

StrategicIntent

Possible SubjectsPossible Subjects

Learning andGrowth

Project Portfolio Balancing

International Market Research Company Project Portfolio for the Mexico, Central America

and Caribbean subsidiary• Approximately 4,000 employees in the subsidiary

Dominant player of the niche Main Strategic Objectives

• Consolidation of operations• Automation and optimization of internal processes for

cost reduction (IT)• Product portfolio growth (new services) • Increase in the the reported quality of client satisfaction

A Real CaseA Real Case

Prioritization MatrixPrioritization Matrix

Pre

vio

us

Pri

ori

tiza

ion

Imp

acto

Op

erat

ico

Ver

sus

com

pet

enci

a

Tec

no

log

ía

Co

mp

leji

dad

(-)

$$$

y R

ecu

rso

s (-

)

Pri

ori

dad

Dir

ecti

va

Po

nd

erac

ión

21 Implement New Processor RMS AA 3 4 4 4 4 4 3.83

1 Full SOT Implementation A 5 4 4 4 5 4 4.33

70 Sabritas redesign monthly service AA 3 2 4 2 3 3 2.83

19 Implement new Scantrack_DCES factory A 3 3 3.5 3 3 2.8 3.05

3 IMDB Unification A 5 3 2 4 5 5 4.00

38 CAM Implement New Factory AA 3 3 4 3.8 3 3.9 3.45

8 Implement a redesigned monthly service to closely track direct to store clients execution

A 3 2.4 3.5 4 4.2 3.6 3.45

37 CAM Plan Calidad & KPI’s to WB standards AA 3.4 2.6 2 1.4 3 2 2.40

46 PR Plan Calidad & KPI’s to WB standards AA 3.4 2.6 2 2.6 3 2 2.60

2 Optimize inventory collection procedure A 2.5 2.4 3 3.7 5 3 3.27

40 CAM Collect cash-slips in a household panel AA 3 2.6 3 3.6 4.6 4 3.47

14 Migrate top line reports production from CS to DSS

A 4.2 2.2 3.6 2.4 3.9 4 3.38

49 PR Collect cash-slips in a household panel AA 3 2.6 3 3.8 4.7 4 3.52

50 PR Launch Scantrack service A 2.8 3.1 3.9 3.8 4.7 4 3.72

44 CAM Bring operation into VPN network AA 0.2 0.1 0.1 0.1 2 0.1 0.43

Implementation Complexity

Added Value

Strategic Alignment Value Contribution• Government Regulations

• Organizational Interactions

• Processes• Technology • Alignment

• Orientation• Organization

• Operations• Technology• Financial

Efficiency• Processes

Other CriteriaOther Criteria

Evaluation Criteria (example)Evaluation Criteria (example)

Strategic Alignment 40% Project Contribution 60%

Alignment/Orientation 75% Operations 45%

Alignment with Strategic Objectives 30%

Contributes to beteer managment and service level for internal and external customers 20%

Culture focused on definition, design, implementation, evaluation and supervision 10%

Increases efficiency in control and safety points in operating processes 20%

Management improvement 15%Increases efficiency in financial resources use (income/costs) 20%

Improving user's knowledge 15%

Improves avalability and quality of information through department-department inter-relationship 20%

Social Security and Operational Simplification 15%

Improves key processes in the organization 20%

Smart use of Information 15%

Technology 20%

Organization 25% Fosters technology standarization 50%

Helps developing personnel skills (Professionalization) 30%

Foster information integration throughout differente areas (Data Base) 50%

Fosters Organizational Structures focused on process rather than functions 30%Fosters re-use of knowledge (Knowledge management) 20%Helps personnel behavior improvement and value growth 20% Financial Efficency 10%

Cost reduction 60%

Economical benefits 20%

Return over investment 10%

Return perido 10%

Processes 25%Impact on actual processes 30%

Multifuctionality of new processes 40%Un-used capabilities 30%

ADDED VALUE

Difficulty to Implement 100%

Government Regulations 20%Requires changes in laws or reglamentation 50%Requires modification to actual normativity/internal policies 50%

Organization 30%Personnel involvement 40%Skill improvement through continuing education 20%External suppliers requirements 40%

Processes 40%Changes in processes 40%

Impact on other areas 20%

Conutry-wide impact 20%

Need for a preceeding project 20%

Technology 10%Technology maturity 35%

Technology accesibility 25%

Technology cost 30%

Technology compatibility 10%

DIFFICULTY TO IMPLEMENT

Evaluation ResultsEvaluation Results

No. INITIATIVE DIFFICULTYADDED VALUE

1 Implementation of a logistics system 42.3 39.22 Storehouse area increase 33.0 39.23 Implementation of an ERP 31.3 43.34 Promotional cmapaing lauch aimed at skin care and health 60.7 50.85 Implementation and development of a R&D Department 53.7 53.36 Sales force continuing education 43.3 57.57 Network distribution alliances 42.3 63.38 Sales force increase strategy 34.3 33.89 Multinational merge 34.3 33.8

10 Implementation of a Just-in-time inventory system 40.7 40.0

11Implementation of supply management system aimed at helping customers manage their inventories 42.3 55.0

12 Organization re-structure aimed at company's growth 26.7 31.3

Investment MapInvestment Map

Complexity

Ad

ded

Val

ue

Low

Lo

w

High

Hig

h

Note: Bubble size represents investment in the project.

New Portfolio IntegrationNew Portfolio Integration

Make a list of all official company projects Make an organization-wide information sharing

campaign• Be aware that there may be confidential projects though

Seek balance between goal accomplishment and available resources (more with less)

In organizations where resources are limited, always focus most resources on main strategic objectives• Pareto Rule!!

This new Portfolio is by no means static! Use always the same process for reviewing the

portfolio

Other IssuesOther Issues

Risk Management can be included in the analysis Portfolio Monitoring and Control processes must be

established once it’s authorized and execution begins• Periodic analysis of the Project Portfolio composition (which

Projects are included?) - Anual Quarterly- Senior Management responsible of making adjustments- Based on benefit realization and changes to the Strategic Plan

• Also a Periodic Analysis of the Components (Projects and Programs)

- Quarterly Weekly- Basically: Scope, Time and Cost- PMO and Project Managers responsible of making adjustments

ConclusionsConclusions

Strategic Planning (SP) is of paramount importance nowadays

Establishing simple mechanisms for SP and PPM processes is more efficient

Organizations must know at all times where their resources are being invested

It does not necessarily mean having a new department, but it does mean assigning this responsibility to someone!

OBRIGADO!!OBRIGADO!!THANK YOU!!THANK YOU!!

GRACIAS!!GRACIAS!!

QUESTIONS????QUESTIONS????Roberto Toledo, MBA, PMPSocio Director de Alpha Consultoríartoledo@alpha-hardin.com(52-55) 5211.6828