1.Strategic Project Portfolio Management Oscar de Lucio, MBA, PMP UMT Consulting GroupSession ADV08PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only

2. Arriving to Portfolio Management Portfolio Management is an approach to achieving strategic goalsby selecting, prioritizing, assessing and managing work basedupon their alignment and contribution to the organizationsPM integrationstrategies and objectives in Enterprise Portfolio Standard for Portfolio Management - PMI 2006Management Widespread PMWidespread PMculturecultureLean OperationsLean OperationsCMM (SEI)CMM (SEI) PMBOKPMBOKPMBOK PM process PM process PM process TQM SixSigma TQM SixSigma TQM SixSigmaPDCA MBO PDCA MBOPDCA MBO PDCA MBOPERT CPM PERT CPMPERT CPM PERT CPMWBSWBS WBSWBSGantt ChartGantt ChartGantt ChartGantt ChartGantt Chart 1910s1950s-60s 1980s1990s2000s TimePMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 3. Portfolio links strategy & executionPrioritization SelectionStrategy Portfolio Success:Transparency ControlStrategic Alignment Risk management Portfolio Management Value MaximizationResource allocation Governance Decision makingProject ExecutionBalance 3PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 4. Building blocks of Portfolio Management1 Define an actionable strategyStrategy2 Generate the right work1 Portfolio Management 3 Select the optimal work 2 3 4Project Execution 4 Monitor Portfolio against objectives 4PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 5. Poll What do you do well?1 Define an actionable strategy: We have clear objectives that we focus on. 2 Generate the right work: We create project ideas and build business cases consistently and well. 3 Select the optimal work: We prioritize and select work based on priorities and within constraints well. 4 Monitor Portfolio against objectives: We track, report and monitor the work well. 5 PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 6. Poll results What needs to be improved across organizations (), and What is currently done well ( ) What do you De fine a ctiona bleneed to 1 stra te gyimprove?What do you Ge ne ra te the right currently do 2w ork w ellSe le ct the optim a l 3 w ork Monitor Portfolio 4 to de live r va lue0%10%20% 30% 40% 50%60%70%80%UMT Consulting Group poll responses from 75 participants in webcast November 8th 2006 webcast 6PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 7. Building blocks of Portfolio Management1 Define an actionable strategyStrategy2 Generate the right work1 Portfolio Management 3 Select the optimal work 2 3 44 Project Execution Monitor Portfolio against objectivesPMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 8. 1Define an actionable strategyWhich framework do organizations mainly use to do Strategic Planning?Balanced Scorecard 22% Strategic plans need to be Portfolio actionable Other standard framework 2% Portfolio ManagementInternally defined orcombination of multiple49%starts with defining anactionable strategy Dont use a strategic 13% planning framework Need a way to focusThe strategic planning on strategic objectivesprocess is not clear14% 0% 10% 20% 30% 40% 50% 60%UMT Consulting Group poll responses from 150 participants in webcast August 22nd 2006webcast8PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 9. 1Learning from strategy planningLearnings from strategy planning toapply in Portfolio Management: Hoshin KanriMethod / Compass / Control Financial perspective is notenough, need strategic view What gets measured gets done 9PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 10. 1Example strategic Business Drivers StrategyBusiness Driver ListStrategic Drivers: Cover the strategy Measurable Actionable Clear Simple 5 to 12 statements 10 PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 11. 1 The difficulty of trade offs Michael Porter article What is strategy?: Managers have become confused about the necessity of making choices Taught by popular management thinkers that they do not have to make trade offs, managers have acquired a macho sense that to do so is a sign of weakness. Organizational realities work against strategy. Trade offs are frightening and making no choice is sometimes preferred to taking blame for a bad choice... The failure to choose sometimes comes down to the reluctance to disappoint valued managers or employees. PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 12. 1 Make trade offs & priorities explicitPairwiseThe Pairwise comparison comparisonis a prime example of thisconsensus-buildingdiscussion EffectivelyManage Risk isMore Importantthan EnhanceEffectivenessDiscuss priorities at a strategic level Priorities are re-balanced periodically 12PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 13. Building blocks of Portfolio Management1 Define an actionable strategyStrategy2 Generate the right work1 Portfolio Management 3 Select the optimal work 2 3 4Project Execution 4 Monitor Portfolio against objectivesPMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 14. 2 Generate the right workTop Down: Annual Strategic/BudgetPlanning Work created directly from the Strategic Initiative 1Strategic Initiative 2 Create aobjectivesProgram 1 Project x Roadmap andProject 1Baseline theProject Portfolio Proposed PortfolioLink Top Down and Bottom UpBottom Up:Follow a Portfolio Work generated to Change Process address new to add/change opportunity/needs work14PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 15. Building blocks of Portfolio Management1 Define an actionable strategyStrategy2 Generate the right work1 Portfolio Management 3 Select the optimal work 2 3 4Project Execution 4 Monitor Portfolio against objectivesPMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 16. 3 Select the optimal workBudget and ProposedResource Portfolio ConstraintsOptimalPortfolioSelectedTactics to select the optimal portfolio of projects: Change the semantics of the conversation to talk value Bring the right reliable data with analysis16 PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 17. 3 Define Portfolio value of a project Business DriversProject deliverables dontProject link a project with the Proposalsportfolio objectivesthe project benefits do! Project value is defined based on contribution to strategic drivers17 PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 18. 3 Selection data and analysisUse all dimensions of the business case (need valid data!)HVLCHVHCLVLC LVHCCost 18 PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 19. 3 Selection data and analysisStrategic Total #PortfolioValue EBIT 1 2 3 1Original Selection51% $389 M2Optimal Selection 82% $564 MFinal Selection (includes 3mandated projects)75% $526 M 2 31Strategic Value Gain = 24%EBIT Increase = $137MMPMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 19 20. 3Selecting projects NOT to do The reality of cancelling/stopping projects: Resource reallocation Vendor contracts Stop-Start additional costs Culture and Morale But the reality of continuing the wrong projects is even worse! The best way to avoid cancelling projects is selecting the right ones to start withPMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 21. 3Selection and resource capacity It is tempting for organizations to look exclusively at resource capacity planning as THE solution to resolve selection: Managers are under increasing pressure to deliver tangible, measurable performance improvements. Operational efficiency provides reassuring progress but superior profitability remains elusive (M. Porter) The demanding reality of selection driven by resource capacity:Required OptimalAvailableResources Portfolio?Resources ResourcesAvailability of Project Plans Project PlansIndividuals in Skills, Teams,Assigned toResources for Built Updated! Resource Pool Experience Project WorkProject Work PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 22. Building blocks of Portfolio Management1 Define an actionable strategyStrategy2 Generate the right work1 Portfolio Management 3 Select the optimal work 2 3 4Project Execution 4 Monitor Portfolio against objectivesPMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 23. 4Monitor Portfolio to deliver value Creating and selecting the optimal work is not enough. Budget andProposedResourcePortfolio ConstraintsOptimal Ongoing Portfolio Management Portfolio to Maximize Value Selected 23PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 24. 4End-to-end lifecycle management Projects are to Portfolio Management what tasks are to Project Management Portfolio Dashboard: focus on key metrics, less is more 24 PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 25. Organizational adoption challenges Short term needs for results can threat long term capability build Silo efforts limit the value: 50% of the portfolio performance is driven by projectpractices Need to build and integrate the portfolio in itsorganizational context Organizational resistance to make strategic trade offsPMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 26. Conclusions Strategy vision needs to be operationalized: 1 Define an actionable strategy 2 Generate the right work 3 Select the optimal work 4 Monitor Portfolio to deliver value 26 PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only 27. Contact InformationName:Oscar de Lucio, MBA, PMPUMT Consulting GroupEmail: odelucio@umt.comPhone: 212 965 0550Session #: ADV08 PMI is a registered trade and service mark of the Project Management Institute, Inc. 2008 Permission is granted to PMI for Congress attendee use only 28. About UMT Consulting Group Enterprise Project, PMO and Portfolio Management Consultants Microsoft EPM Gold Certified Partner 18 years of experience working with Global organizations Headquarters in New York and London; with local offices across the US and Europe PMI is a registered trade and service mark of the Project Management Institute, Inc.2008 Permission is granted to PMI for Congress attendee use only