PD-Trak Blog for Project Portfolio Management
By Carla Slater Kettrick
Managing a company’s project portfolio is not unlike managing a client’s personal financial investment portfolio. A financial investment portfolio begins with developing a strategy to meet personal financial objectives, which means investing in things that they feel will benefit them, from bitcoin to oil (click for more information on this). The strategy, whether the client is investing for growth or income, determines the mix of investments needed to achieve those objectives. The portfolio is then managed and assessed regularly to ensure that it remains aligned to achieve the desired outcomes. The same is true for project portfolio managment (PPM). PD-Trak Project Portfolio Management Software gives companies the necessary tools to manage their project portfolios more effectively.
Companies that exercise effective PPM determine the right mix of projects within the portfolio to carry out the company’s strategy that will achieve the stated objectives. Their decisions as to which projects are included in the portfolio are critical in carrying out the organization’s strategy. All projects must support the strategy. As a result, all aspects of the portfolio are tied to the business strategy.
“A critical mistake is to think that PPM is fundamentally the management of multiple projects. This is not so. PPM is the management of the project portfolio so as to maximize the contribution of projects to the overall welfare and success of the enterprise”, says Harvey Levine in his book Project Portfolio Management – A Practical Guide to Selecting Projects, Managing Portfolios, and Maximizing Benefits. Senior leadership must develop a project portfolio management mindset. They must focus the entire organization on the key strategic objectives and balance priorities. Managing the company portfolio is about maximizing the assets of the company to achieve overall success. Executives have a fiduciary responsibility to prioritize projects and balance resources. Projects must be aligned with the firm’s strategy and objectives, effectively use the firm’s resources, and must contribute to the firm’s current health as well as position it for future success. The portfolio must support the strategy.
However, the strategies launched by companies are often undone by poor tactical execution. Achieving the strategy depends on the effectiveness of the company’s PPM. An enterprise PPM framework can provide clear structure, context, and information enabling executive participation and appropriate decision making. PD-Trak helps to guide the project and portfolio management team in the execution of the strategy.
Project portfolio management doesn’t mean just doing the right projects. It means doing the right projects at the right time. “The selected portfolio of project’s and programs must collectively advance the organization”, says Mark Langely, President and CEO of the Project Management Institute (PMI). However, in a survey conducted by PMI, which represented managers who played an active role in project portfolio management, less than 1 in 4 of the respondents said that his or her company implements PPM effectively. Further findings show companies who are better at practicing PPM demonstrate greater success. Of those who execute PPM effectively, 94% stated that portfolio management has a positive tangible impact on their organization’s success.
One key success factor that differentiates high- and low-performing organizations is a strong PPM process. Levine defines PPM “as a set of processes that is supported by people and tools to guide the enterprise in selecting the right projects and the right mix of projects.” PPM sets the organization’s course in the right direction by selecting the best projects to do given a limited set of resources.
One critical mistake that companies often make is committing to more projects than can be delivered. It is the senior leadership’s fiduciary responsibility to fund only the critical projects that have been identified as the greatest potential for success, deliver stakeholder satisfaction and contribute to the bottom line. PD-Trak’s Project Portfolio Management Software facilitates this task by delivering objective, unbiased information to determine which projects meet these criteria.
Having the right software tools in place to carry out the PPM process is crucial. PD-Trak guides the portfolio management process by creating clear guidelines and metrics to determine which projects should proceed, which should be put on hold, and those that must be killed. Decisions are based on objective criteria. Useful PPM tools provide transparency and ensure that senior leadership receives clear and measurable data along with early warning signs of projects that are not meeting targets. Doing so prevents cost overruns, delays in getting products to market and poor product quality.
Levine writes that “the research shows clearly that businesses that feature a systematic portfolio management process, regardless of the specific approach, outperform the rest. Top performers achieve strategic alignment of projects, prioritize and rank their projects effectively so that their portfolios contain high value-to-the-corporation projects, and seek and achieve the right balance and mix of projects. Portfolio management pays off.”
Applying effective PPM practices is becoming increasingly critical. Whether large or small, businesses and organizations must select and manage their investments and execute their projects wisely to reap the maximum benefits from their investment decisions.
PD-Trak is an ideal choice for project and portfolio management. Give us a call to get more information or to schedule a free demo.
A typical stage / phase-gate product development process would start with an initial Investigation or Exploration phase where data is gathered about the market opportunity for a new product, the product and development project is defined, and an initial business case is prepared. When this is done, an initial gate review is typically conducted. This is where the development pipeline funnel significantly narrows as less opportune projects are not approved to move forward. So if 30% of projects are typically killed at this point or subsequent gates, projects representing 142% of the pipeline capacity need to be initiated for investigation.
When these projects are started and are then approved after the first gate review, resources may not be available to continue work on these projects in a subsequent Feasibility or Concept Development phase. A cardinal rule of pipeline management is to avoid overloading the pipeline because there are only three possibilities (or some combination of these possibilities):
- Shortcuts are taken with the development process
- Work takes longer to perform than planned and there are delays
- Significant overtime is required
The recommended approach is to place the approved projects “on hold” until resources are freed up from completing projects to begin work on an approved project. The Project Management Office or a project administrator needs to monitor the project pipeline and determine when resources become available to begin these approved projects. Further, lean product development practices suggest that a regular cadence be established with the release of projects. Unfortunately, this is a step that is often missing in many companies resulting in overloaded pipelines and “bunching” of projects causing rolling bottlenecks. A tool like PD-Trak is required to monitor resources and determine when resources are freeing up to move forward with approved projects.
Many of the clients we work with and companies that we talk to rank time-to-market or meeting development schedules highly important – often the second most important priority after developing a product that meets customer requirements. Yet we generally see product development pipelines that are overloaded. When people are overloaded there are only three possible results.
- Task completion and product schedules are delayed. The effects of this result are obvious – this undermines the time-to-market objective.
- Shortcuts are taken in the process and the intended level of effort with the task. The effects of this are often hidden or not fully understood by management. For example a design engineer may take a known and proven design approach rather than consider design alternatives, one of which might be more optimal. Or rigorous analysis of a design e.g., FEA/CFD/thermal analysis, FMEA, etc., may not be done. Design for manufacturability analysis and collaboration may not be done.
- Overtime is required. This seems like a no cost option to management, but are your personnel going to sustain this extra effort day in and day out? What happens when one of the risk contingencies is realized? Where are the resources to address these issues?
Further project planning often loads people in projects based on 40 hours per week. Even if this planning excludes holidays and vacation time, do your people perform productive project work 40 hours per week over the course of the year? What about sick time, administrative time, training, emails, support for issues that arise on past products, etc.? When you factor in holidays, vacations, sick time, administration time, etc., the effective availability to support projects is typically around 80% of the total time over the course of a year. Even further, queuing theory indicates that as utilization increases towards 100%, the time to perform tasks in a queue rises asymptotically.
So management, get realistic with your pipeline planning if time-to-market is important to your organization. Consider realistic planning factors and utilization levels. Avoid overloading your pipeline. And use tools like PD-Trak (Home) plan and manage your project pipeline and resources.