Lee Merkhofer Consulting Priority Systems
Implementing project portfolio management

Keys to Implementing Project Portfolio Management (Continued)

6.   Implement Effective Processes

'An efficient and effective process is key to PPM success.'

M. Arlt, "Project Portfolio Management In a Time of Significant and Rapid Change," ESI International Webinar, June 30, 2009.

The value measurement framework defines the logic for choosing projects, but you need process to make it work. Above all else, having high-quality, timely project information is the most important driver for PPM success. At the same time, every minute project managers spend reporting is a minute taken away from project work. You must design your processes to effectively accomplish those components that are the essential contributors to PPM success.

In many organizations, process is not well defined, or actual process does not follow written documentation. Who makes decisions, how, and the steps involved are embedded in organizational culture, and the informal mechanisms and authorities may not be readily apparent or easily ascertained.

In contrast, PPM must be established as a formal, consistent, documented, and repeatable process.. How well the process is executed will have the greatest possible impact on the contribution that PPM makes to the success of organization. True excellence can only be achieved when standardized procedures, tools, training and support functions are well established, implemented, and continuously improved upon.

Your organization will most likely already have processes in place that are relevant to PPM, for example, processes for project planning, capital budgeting, project management, risk management, and resource management. Elements of these processes may need to be refined, expanded, or better coordinated. In addition to defining those new procedures unique to PPM, you'll need to consider the impacts to related functions including resource assignment, benefits realization, and budgeting. You will also likely need to address communication and liaison between the PPM function and others inside (and perhaps outside) the organization.

A common approach is to implement PPM in support of the regular budgeting cycle. In this case, it is helpful to distinguish three phases: (1) preparation, (2) execution, and (3) performance management. Figure 3 shows some of the steps in a typical process.

PPM cycle

Figure 3:   Typical steps in a PPM cycle.

In addition to identifying the steps for PPM, defining PPM process requires specifying how each step is conducted, what decision points or gates exist, who makes decisions, what information and analyses are conducted, and what the schedule is.

7.   Institute Essential Capabilities

The basic capabilities you will need to practice PPM are:

  1. Capability to collect, store, and access project data. You'll need to create one or more standardized templates for collecting data for proposed projects (you might want different templates for different types of projects) and establish a centralized database for storing the collected data. You'll want to make it as easy as possible for the appropriate parties to access project data and to keep it up to date. Simple spreadsheets may be adequate, so long as they can be accessed from the network and you can avoid multiple copies that get out of sync.
  2. Capability to evaluate project proposals. Assuming your project valuation framework is a quantitative model, you'll want it implemented in software so that projects can be evaluated quickly and consistently. Software allows virtually instantaneous analysis of submissions, helping to identify data input errors (which may be prevalent at the beginning when people are still getting used to the new data requirements). Quick analysis also allows for feedback in situations where changes in concept, scope, or workplan are needed in order to make a proposal competitive. Being able to quickly acknowledge, respond and provide guidance to submitters helps establish credibility for the PPM process.
  3. Capability to prioritize projects and identify value-maximizing choices. If your project proposals are independent from one another in the sense that neither the value nor cost of any project depends strongly on what other projects are conducted, then you will want to prioritize projects based on the ratio of project value to project cost. Again, if spreadsheets are adequate, you can easily add such project prioritization capability to your spreadsheet value model.
  4. Capability to collect and manage project documents. Projects typically generate lots of documentation (charters, plans, status reviews, reports, etc.). PPM is likely to add to the burden because it generates more project information and encourages greater use of that information. The simplest approach is to organize all project documentation into a big binder, but if your documentation is in electronic form you should link the documents to the projects in your PPM database. In either case, you will need a process to ensure on-going update and maintenance of your project documentation.
  5. Capability to track and report project/portfolio status. Managing the project portfolio requires the ability to determine the status of projects at any point in time. You'll need to be able to monitor and report where each project stands with respect to PPM workflow (proposal submitted, awaiting data verification, pending, approved, etc.). You will also need to track progress for those projects that are approved and underway (planned versus actual progress, spend rates, issues tracking, milestones, etc.). You'll want a system that ensures that project managers take responsibility for updating information in the project database. Again, spreadsheets may be adequate, but be sure to include dashboard views that roll-up and summarize project data to help identify where attention is needed.
  6. Capability to monitor, learn and improve. PPM's promise is increased value from project investments. You'll want to evaluate and measure the contributions of projects (Did each project complete on time and on budget? Did it produce the anticipated benefits?). You'll also want to evaluate and critique the PPM process (Did the process work smoothly? What do participants think worked well and not so well? What can we do better next time?) Establish mechanisms and capability to regularly mine the experience gained from applications both to refine and improve the project valuation framework and the PPM process.