project portfolio alignment & strategic objectives (sb)

32
Project Portfolio Alignment & Strategic Objectives Practical Tips In Aligning Project Portfolios With Strategic Objectives Jim Peters, PMP [email protected]

Upload: shawn-lee

Post on 21-Dec-2015

245 views

Category:

Documents


5 download

DESCRIPTION

fgsdf

TRANSCRIPT

Project Portfolio Alignment &

Strategic Objectives

Practical Tips In Aligning Project Portfolios With Strategic Objectives

Jim Peters, PMP

[email protected]

1/13/2012 2 © 2012 SoftwareMatters.com, Inc.

Presentation Abstract

Practical tips in Aligning Project Portfolios with Strategic Objectives

Practical techniques to help establish and maintain the alignment between projects and

organizational strategic objectives. The presentation focuses on the perspective of project

managers and PMOs in understanding and maintaining strategic alignment.

The issues addressed came from implementing PPM software for large organizations. PPM

solutions include assessment of customer requirements and the design of business processes

used to manage projects, project portfolios, and resources. Often during the requirements

process a gap is identified between the project and project portfolio data available in

the organization and the ability to link that data to the strategic objectives of an

organization. Many projects and programs begin with clear strategic alignment, but that

clarity often fades as work on the project begins. This limits the ability of an organization

to reassess and respond to changes in their industry. And it often results in decisions made

on perceived importance or priority. Effective project portfolio management processes

and metrics can help everyone keep the priorities in focus and allow resource managers

to make objective decisions in utilization of resources.

1/13/2012 3 © 2012 SoftwareMatters.com, Inc.

The Problem with Alignment

What are some of the issues with lack of alignment of projects to the strategic plan of an organization?

Symptoms of alignment problems that often exist include:

Strategy at high level not clearly linked to project and operational plans

Inability to link projects to strategic objectives in quantifiable ways

Gap in project and project portfolio data available versus balanced scorecard requirements

Initial clarity on strategic significance of a project diminishes over time (the world moves on)

Inability to assess the ongoing value of a project as it relates to the strategic objectives.

Decision making on the basis of perceived importance instead of the strategic importance.

Lack of visibility of the project portfolio in terms of strategic objectives (i.e., no clear link between the data shown in the balanced scorecard and the portfolio management data)

Evaluation criteria created with the preferred outcomes in mind

1/13/2012 4 © 2012 SoftwareMatters.com, Inc.

Exploring the Problems

The symptoms of alignment issues fit into four problem types:

Differing Agendas – Alignment is a matter of perspective. Establishing a common framework keeps it

clear.

Change - It happens not just to projects but to strategies and strategic plans as well. Including assessment of

the impact on projects as part of the change management process allows for more objective and transparent

decision making.

Data – Availability of data necessary for controlling projects is a base requirement for PM/PPM systems.

Applying the same design process to the data required for strategic planning can result in close to real time

assessment of project portfolio alignment.

Decision Making – Failure to have a consistent method for identifying the relationship of projects to the

strategic plan often results in repeated negotiations for resources or other project commitments. Making

strategic priorities clear at every level provides an objective basis for approaching project trade-offs and

resource allocation.

1/13/2012 5 © 2012 SoftwareMatters.com, Inc.

Perspectives & Goals

Or …

Why do I care?

Why do PMs care?

Why do you care?

What can I do about it?

What can PMs do about it?

What can you do about it?

Support of strategic planning within the PPM

tools should not be an afterthought or a

periodic flurry of unplanned activity.

1/13/2012 6 © 2012 SoftwareMatters.com, Inc.

Overview

Foundational Terminology

Projects, Programs, & Project

Portfolios

Strategy & Strategic

Objectives

Tactics & Tactical Objectives

Operational Programs

Organizational Strategy & Objectives

Operational Planning

Initiatives

Strategic Planning

Project Portfolio

Strategic and Operational Programs & Projects

Comprehensive Portfolio View The Standard for Portfolio Management, Second Edition

(Project Management Institute ©2008)

1/13/2012 7 © 2012 SoftwareMatters.com, Inc.

Projects & Project Portfolios

For Definitions and standard practices see PMI

Standards, Max Wideman’s PM Glossary, and

numerous PM text books.

Project

Project Portfolio

Projects are at the core of most strategic plans. Numerous

terms are used to refer to the collective work of the

organization. For this discussion Project Portfolio

Management will be used as the common term.

Project Management (PM)

Project Portfolio Management

(PPM)

1/13/2012 8 © 2012 SoftwareMatters.com, Inc.

Jim’s Simplistic Overview of

Strategy & Alignment

“Strategic

Plan. All

projects should

support the

organization’s

strategic

goals.”

PMBOK® Guide, Fourth

Edition ©2008 Project

Management Institute

Strategy Mission/Vision & Goals summarize the strategy.

Organizational values & principles provide guidelines on how the Mission/Vision and Goals are

transformed into a clear strategy.

Strategic objectives express the method to be used to implement the Mission/Vision and/or the

goals. The objectives may have multiple levels or variations based on department or product

area.

Strategic Plan Strategic Plan captures the strategy in a form that can be used in managing how the organization

can implement the strategic objectives and evaluate the results.

Balanced Scorecards, KPIs, and dashboards are used to visualize and monitor the Strategic Plan

during implementation.

Alignment Alignment is the process of ensuring that the work performed and the products or services created

by the organization match the work, products, or services specified in the Strategic Plan.

Alignment is ongoing, requiring that project and operational initiatives are monitored to determine

if the strategy as defined in the strategic plan will be achieved.

1/13/2012 9 © 2012 SoftwareMatters.com, Inc.

Five Attributes of Strategic Objectives

Tip #1…

Identify the specific, measureable, attainable, responsible person, and time specific attributes of your organization’s strategic objectives.

Strategic objectives should be SMART:

1. Specific

2. Measureable

3. Attainable

4. Responsible Person (Accountability)

5. Time Specific This version of the SMART mnemonic from Strategic Planning for Dummies (Wiley Publishing ©2007, page 240). Numerous other sources including citations referencing the original source. See Wikipedia article for some other variations on the words used to make up the mnemonic device.

1/13/2012 10 © 2012 SoftwareMatters.com, Inc.

Projects & The Strategic Plan

Tip #2…

Learn your organization’s strategic planning process, the cycle, and the methods used to select and monitor projects.

Projects and Programs interact with the Strategic Plan in many ways. Some specific uses include:

Projects/Programs are used to implement strategic plan objectives

Project Portfolios are created to manage major elements of the strategic plan

Project performance and status data feed balanced scorecards

Projects created to support measurement requirements

1/13/2012 11 © 2012 SoftwareMatters.com, Inc.

Alignment Made Practical

• Update/Create the Strategic Plan

• Identify the Strategic Drivers(objectives or

subcomponents of the objectives)

• Identify the Projects & Programs that are

included in the project portfolio

• Identify the standard metrics required to

support Balanced Scorecard, KPIs or

dashboards used in monitoring strategic

alignment.

• Map the strategy to the project

• Determine how that measurement data will be

collected Collect the measurement data

• Review / Verify data from other systems used for

metrics

• Distribute data for dashboards / Balanced

Scorecards

• Identify any follow-up or ongoing measurements

required after implementation

• Include alignment status in the final project status

report, stakeholder and sponsor closeout

Organizational Activities Project Manager Activities

1/13/2012 12 © 2012 SoftwareMatters.com, Inc. 1/13/2012 12 © 2012 SoftwareMatters.com, Inc.

Implementing Strategy:

A Project Perspective

Three Phases of Implementing Strategy (From a Project Perspective)

Strategic Plan – Defines strategy and determines criteria used

for decision making

Budgeting, Resource Forecasting & Project Selection – Maps the

strategy into a plan for implementing the strategy

Strategy Implementation – Executes the projects selected to

implement the strategy monitors the implementation of the

strategy

Three Roles of Implementing Strategy (From a Project Perspective)

Executive Management – Responsible for Strategy

PMO / Project Oversight Group – Responsible for Alignment

Project Management – Responsible for Project Execution

1/13/2012 13 © 2012 SoftwareMatters.com, Inc.

Strategic Planning & Execution Process: A Project Oriented Perspective

Exec

uti

ve M

anag

emen

tP

MO

Pro

ject

M

anag

emen

t

Strategy ImplementationStrategic Planning Budgeting, Resource Forecasting & Project SelectionPhase

Create Strategic Plan and Objectives

Create Evaluation Criteria

Assign weights to evaluation criteria

Transform Evaluation Criteria into measureable Selection Criteria with methods for

rating / raking projects.

Update Business cases with ratings/values for each of

the evaluation criteria

Set Budget Target (Cost and Labor

Projections)

Determine Resource Capacity

Create / Update / Review estimates for each project

Review Business Cases for

consistency / accuracy of estimates

Create Project Portfolio Alternatives (applying weights for evaluation

criteria to the proposed project list)

Review and Select Project Portfolio

Alternative

Create Project Portfolio

Execution Plan

Provide estimates (both cost and

schedule)

Update Evaluation Criteria ratings for

proejcts

Update Project Schedules /

Resource Commitments

Monitor Project Execution

Monitor Strategic Plan

Implementation

Review Projects with Sponsors/

Stakeholders

Initiate Projects / Monitor Status

Review Selection Criteria and rating/ranking approach

Add Selection Criteria as part of

Business Cases Development

Review Strategic Plan

Implementation Status

1/13/2012 14 © 2012 SoftwareMatters.com, Inc.

Project Selection Processes

A project

selection

process

bridges the

gap between

a strategy

and the

implementatio

n of the

strategy.

Effective project selection processes:

Help insure that projects are launched that are in alignment with

the strategic plan.

Provide a framework for project teams and project managers to

make decisions in alignment with the strategic plan.

Facilitate creation of objective measures for all projects,

avoiding reinventing KPIs and dashboards for each new

initiative.

Keep the strategic objectives visible and connected to the work

performed of project teams.

Provide a natural forum for realigning or balancing of the

project portfolio.

1/13/2012 15 © 2012 SoftwareMatters.com, Inc.

Project Selection Process Example

Objective project selection requires that the selection criteria be established independently from the development of the business cases.

A Quick Guide to Enterprise Project Management, J. Peters (MTA 2008)

1. Create selection criteria

2. Develop measures

4. Rate projects

7. Establish cut line

6. Rank projects

3. Weight the selection

sriteria

5. Set budget & resource

capacity

Strategic Plan

Prioritized Project

Portfolio

1/13/2012 16 © 2012 SoftwareMatters.com, Inc.

Project Selection Process

Cut Line Established The result of this process is a list of projects that can be sequenced from highest priority to lowest. Applying the available budget (or range) shows what’s included, what’s not included, and what may be included in the project portfolio.

Projected budget

$2.5-$3.5 Million

Changes in the weighting factors

for the selection criteria result in a

different prioritization.

Changes in selection criteria

ratings / values should only occur

if an error was made.

In

Maybe

Out

1/13/2012 17 © 2012 SoftwareMatters.com, Inc.

Alignment From the PM Perspective

Project Managers need to understand how their projects fit into the organizational Strategic Plan. This directly impacts communication planning and status reporting.

Things to keep in mind as a PM:

Strategic Planning is not a project management activity.

The PMBOK® Guide references the Strategic Plan as a reason for a project to exist –

“to support the organization’s strategic goals” (PMBOK® Guide page 75).

Project Managers rarely participate in the creation of the organizational strategic

plan.

Project Managers, in their role as PMs, are not responsible to achieve the strategic

goals of the organization. But it is critical that PMs in inform stakeholders when the

project will fail to achieve the goals the project was intended to satisfy, presumably

the project is a part of the strategic plan of the organizations.

Project Manager’s role Strategic Planning:

Manage Projects used to implement the strategy

Provide data to support balanced scorecards, KPIs, and Dashboards

Manage project resources committed for implementation of the strategy

Ensure alignment activities are planned for and performed during project initiation,

planning, execution/control, and closeout.

1/13/2012 18 © 2012 SoftwareMatters.com, Inc. 1/13/2012 18 © 2012 SoftwareMatters.com, Inc.

Stakeholder Mapping –

A starting point for Project Alignment

ABC Project X

ddkfasdkaissue

dadaseeaafde

ABC X

Sdafsdfasdfkl;sdlfkdkd

Project A

ddkfasdkaissue… dadaseeaafde

sdfasdfwa

Sdafsdfasdfkl;sdlfkdkd…

Project B

ddkfasdkaissue… dadaseeaafde

sdfasdfwa

Sdafsdfasdfkl;sdlfkdkd…

Project C

ddkfasdkaissue… dadaseeaafde

sdfasdfwa

Sdafsdfasdfkl;sdlfkdkd…

Project Y

ddkfasdkaissue… dadaseeaafde

sdfasdfwa

Sdafsdfasdfkl;sdlfkdkd…

Project Z

ddkfasdkaissue… dadaseeaafde

sdfasdfwa

Sdafsdfasdfkl;sdlfkdkd…

Projects Projects

Suppliers

Governance Boards/

Steering Committees

Users

Impacts

Impacted By

Tip #3…

Map the relationship of your project to the organization’s strategic objectives including the measurements necessary to ensure ongoing alignment.

1/13/2012 19 © 2012 SoftwareMatters.com, Inc. 1/13/2012 19 © 2012 SoftwareMatters.com, Inc.

Alignment Mapping

Strategy to Project Alignment Mapping is a visual approach for a project manager to understand the relationship of a project to the strategy.

It does not replace the a strategy map that may have been created as a part of the strategic planning process. In fact, if there is a strategy map that clearly ties to the projects then this alignment exercises may be unnecessary.

The result of the process should assist the project team in being effective in responding to project or environmental issues that may affect the strategy.

The intent is not to create a new project artifact. More than 30 minutes is probably too much.

Use flip charts, Post-Its, or napkins.

1/13/2012 20 © 2012 SoftwareMatters.com, Inc. 1/13/2012 20 © 2012 SoftwareMatters.com, Inc.

Strategy to Project Alignment Mapping Steps 1-3: Set the context

© 2010 SoftwareMatters.com, Inc. 20

Other

Systems &

Data

Organizational Strategy & Objectives

Operational Planning

Initiatives

Strategic Planning

Project Portfolio

Strategic and Operational Programs & Projects

Comprehensive Portfolio View The Standard for Portfolio Management, Second Edition

(Project Management Institute ©2008)

1. Create a Stakeholder Map for the project.

2. Review the Strategic plan and strategic objectives for your organization.

3. Identify systems and data utilized to support dashboards or balanced scorecards used to monitor execution of the strategy and/or the status of the project portfolio.

KPIs

Dashboard

Balanced

Scorecard

Strategic Plan

1/13/2012 21 © 2012 SoftwareMatters.com, Inc. 1/13/2012 21 © 2012 SoftwareMatters.com, Inc.

Strategy to Project Alignment Mapping Steps 4-5: Identify how the strategy drives your project

Strategic Drivers

© 2010 SoftwareMatters.com, Inc. 21

KPI

Dashboard

Balanced

Scorecard

Organizational Strategy & Objectives

Operational Planning

Initiatives

Strategic Planning

Project Portfolio

Strategic and Operational Programs & Projects

Comprehensive Portfolio View The Standard for Portfolio Management, Second Edition

(Project Management Institute ©2008)

4. Identify the strategic objectives driving your project.

5. Identify the components of dashboards or balanced scorecards

used to monitor and report performance relative to the strategy.

Strategic Plan

1/13/2012 22 © 2012 SoftwareMatters.com, Inc. 1/13/2012 22 © 2012 SoftwareMatters.com, Inc.

Strategy to Project Alignment Mapping Steps 6-7: Identify how your project impacts the performance reporting

© 2010 SoftwareMatters.com, Inc. 22

Measurement

Data

KPI

Dashboard

Balanced

Scorecard

Other Systems

& Data

Organizational Strategy & Objectives

Operational Planning

Initiatives

Strategic Planning

Project Portfolio

Strategic and Operational Programs & Projects

Comprehensive Portfolio View The Standard for Portfolio Management, Second Edition

(Project Management Institute ©2008)

6. Identify the measurements used to monitor implementation of the strategy.

7. Map the flow of data from your project to the balanced scorecard or

dashboards.

Strategic Plan

1/13/2012 23 © 2012 SoftwareMatters.com, Inc. 1/13/2012 23 © 2012 SoftwareMatters.com, Inc.

The Problem with Metrics

Project Status Focus:

Addresses the process of implementing one component of the Strategy.

Focus is on the project performance and outcomes in terms of cost, resources, schedule, scope and quality.

Strategy Implementation Status Focus:

Addresses the result of putting the strategy in place.

Focus is on the strategic objectives (e.g., new products, improved efficiency, etc.) and monitoring the outcomes of the implemented strategy.

Project Alignment:

Identifies the elements of the strategy the project supports.

Establishes methods to gauge both the impact of a project on strategy during project execution.

Establishes methods to gauge the impact of the results of a project on strategy.

Project status metrics used in monitoring projects differ from metrics used to monitor strategy. Some projects require strategy specific metrics. For other projects the generic PM metrics such as earned value may be sufficient.

1/13/2012 24 © 2012 SoftwareMatters.com, Inc.

Alignment from the PM/PPM Process &

Tool Perspective

Other considerations for maintaining alignment:

Include strategic planning process data requirements in PPM solution design – Availability

of data necessary for controlling projects is a base requirement for PM/PPM systems. Applying the same

design process to the data required for strategic planning can result in close to real time assessment of project

portfolio alignment.

Include monitoring of strategy as a part of project change Management – Change

happens, not just to projects. Monitoring changes in the organizational strategy has very little cost and can help

project teams be proactive in assessing the impact of and responding to change.

__________________________________________________________

__________________________________________________________

1/13/2012 25 © 2012 SoftwareMatters.com, Inc.

Alignment and PPM solution design

Tip #4…

When setting up the project repository a new project / program or configuring a PPM system, include strategic plan attributes and measures as fields and ensure processes are in place that result in ongoing maintenance of this information.

Project Selection Process output…

Attributes of selection process useful in standard

project / program reports

1/13/2012 26 © 2012 SoftwareMatters.com, Inc.

Applying Strategic Planning to PM/PPM

Tools Example – Project Selection Process

The project selection process of many organizations results in clearly stated selection criteria,

approaches to express the value of projects whose benefits are often intangible, and final ratings

as to the relative priority of projects relative to other projects. Some opportunities to help maintain

alignment related to project selection processes include:

Include the results of the Project Selection processes as attributes of projects or

programs in the PM/PPM tools – Often data used as the basis for the selection of projects is not moved from the

spreadsheet or PPM optimization tool into the PM/PPM software used for planning and tracking. Prioritization criteria values,

assumptions, savings/benefits targets, etc., are useful from a tactical perspective in managing project portfolios.

Use the results of the project selection process as part of the project decision making process – Making strategic priorities clear at every level provides an objective basis for approaching project trade-offs and resource

allocation. Failure to have a consistent method for identifying the relationship of projects to the strategic plan often results in

repeated negotiations for resources or other project commitments.

Create Project / Program level metrics tied to the Project Selection Process – Even organizations that

use a rigorous project portfolio selection or balancing processes often fail to use the result of these processes to monitor the

implementation of the overall strategy. Project metrics that correlate to these criteria can streamline the monitoring of the strategy

implementation. This helps project managers speak the language of business and not just the language of project management.

1/13/2012 27 © 2012 SoftwareMatters.com, Inc.

Revisiting The Problem with Alignment

Some specific ideas on the problems we started with….

Strategy at high level not clearly linked to project and operational plans

Integrate strategic plan related project selection criteria and metrics into the

PPM system.

Create project selection process that forces strategic alignment

Inability to link projects to strategic objectives in quantifiable ways

Create user defined fields used for every project/program in the portfolio

Implement audit process for strategic alignment fields and related measures

prior to every strategic planning sessions

1/13/2012 28 © 2012 SoftwareMatters.com, Inc.

Revisiting The Problem …

Gap in project and project portfolio data available versus balanced scorecard requirements

Create views in PPM system that mimic balanced scorecard data

Integrate non-PM/PPM system data used for balanced scorecard with PPM system data via standard reports or data integration

Initial clarity on strategic significance of a project diminishes over time (the world moves on)

Create views in PPM system that mimic balanced scorecard data

Integrate non-PM/PPM system data used for balanced scorecard with PPM system data via standard reports or data integration

1/13/2012 29 © 2012 SoftwareMatters.com, Inc.

Revisiting The Problem …

Inability to assess the ongoing value of a project as it relates to the strategic objectives.

Include the project value determination method in regular project/program

reviews with stakeholders

Reassess project / program value as part of project change management and

risk assessment processes

Reassess project portfolio and resource optimization as a result of project

changes

Decision making on the basis of perceived importance instead of the strategic

importance.

Implement measurements that are automatically maintained and independently

verifiable

Allow for management overrides of automated project optimization techniques

and tools and capture the reasons for this as part of the project selection process

1/13/2012 30 © 2012 SoftwareMatters.com, Inc.

Revisiting The Problem …

Lack of visibility of the project portfolio in terms of strategic objectives (i.e., no clear link between the data shown in the balanced scorecard and the portfolio management data)

Automate the creation of reports at the project level that include the raw data fed to dashboards and scorecards

Eliminate Excel as the basis for project selection or optimization (or implement rigorously consistent, auditable methods)

Creating evaluation criteria with the preferred outcomes in mind

Separate the development of project selection criteria from the weighting of the criteria (if weighted criteria are used)

Validate the selection criteria

Use a proven method such as Analytic Hierarchy Process

1/13/2012 31 © 2012 SoftwareMatters.com, Inc.

Tips to Help PMs Focus on Strategy

Tip #1: Identify the specific, measureable, attainable, responsible person, and time specific attributes of your organization’s strategic objectives.

Tip #2: Learn your organization’s strategic planning process, the cycle, and the methods used to select and monitor projects.

Tip #3: Map the relationship of your project to the organization’s strategic objectives including the measurements necessary to ensure ongoing alignment.

Tip #4: When setting up the project repository a new project / program or configuring a PPM system, include strategic plan attributes and measures as fields and ensure processes are in place that result in ongoing maintenance of this information.

Jim Peters Bio: Jim is President of SoftwareMatters.com, Inc., lives in Ventura (Los Angeles area), and delivers PM/PPM

training & consulting, Microsoft Project mentoring, project start-up consulting and software development

services in LA and Silicon Valley. He partners with Forté Systems (www.fortesys.com) of Alexandria, VA, to

provide Project Portfolio Management solutions using Microsoft Project Server and Portfolio Engine (EPM

Live) for clients nationwide. He has over thirty years of experience in project management consulting,

software development, and training. He designs and implements project and project portfolio management

software solutions. He has worked with multiple enterprise project management software products. He

served as Technical Editor for books on Microsoft Project from Wiley, Microsoft Press, and McGraw-Hill.

He is one of the developers of RAS 5.0 a project portfolio management reporting solution, and Provision

BI, a business intelligence framework for SQL Server Reporting Services (www.ras-reporting.com).

Questions? Contact me at [email protected]