Project Portfolio Management Essential for Successful Strategy Implementation
By Dr. Werner Meyer PhD, CCP, PMP
The most effective method of implementing an organisation's strategy is through projects, but for organisations that select a sub-optimal mix of projects, the consequences are often dire. When you decide to do any project, you need to ensure it is aligned to the organisational strategy. This is done through portfolio management, where project selection comes in. Project portfolio management is an essential skill for any manager who wants to ensure successful strategy implementation.
Project portfolio management can be defined as the methods and techniques used by organisations to evaluate current or proposed projects in order to select, organise and manage projects that align to the organisation's business strategy and which obtain the greatest possible value from the organisation's limited resources.
"The fundamental premise of portfolio management is that when an organisation is doing or planning to do projects, we need to ensure those projects support the strategy of the organisation," says Werner Meyer, Founder of ProjectLink.
It's about prioritising projects based on available capital, risks involved, duration, and profitable yields. It is also about creating transparent processes for the organisation's project management and project delivery.
"A common problem that we find is that companies select projects that are not based on their business strategy. The projects being selected are based on the desires and goals of an individual or a selected group of individuals who have authority," he says. A result of this is decision-making grounded on subjective outlooks rather than a set of objectives processed and calculated with the guidance of a designed methodology.
As such, ProjectLink supports the appointed managers and the ongoing process of portfolio management by providing intentional, periodic and targeted interventions such as workshops.
ProjectLink's Portfolio Management services involve managing portfolio processes on behalf of the client, such as the facilitation of workshop and planning sessions, and performance-analysis towards determining or confirming the following key objectives:
* The company's strategy, related objectives, and associated criteria;
* Individual programmes and projects that should, or potentially could, achieve these objectives;
* Individual programmes and projects that should, or could, assist in achieving the objectives indirectly, eg, through dependencies with other programmes or projects;
* The optimal combination of projects with the use of Weighted Factor Scoring and Analytical Hierarchy Process;
* Whether the portfolio remains relevant, optimal and balanced;
* Portfolio governance, which included establishing policies and procedures, drafting thorough portfolio management plans and performing work accordingly, etc; and
* Portfolio risk analysis (both qualitative and quantitative).
Workshops include provision of or assistance with processes that typically apply to portfolio management: portfolio selection, balancing, governance, and analysis, among others. These services are performed by a small group of highly qualified and suitably experienced consultants, utilising a methodology founded on contemporary perspectives on the matter such as the Project Management Institute (PMI) and the Office of Government Commerce (OGC). The methodology is developed and customised for each client during these workshops.
ProjectLink has also recently developed and launched a Project Portfolio Evaluation, Selection and Management course. This is a master class course that was created to empower managers with the theory, terminology, tools and skills to apply a mathematical approach to portfolio management. "It covers some of the latest research on the psychology of portfolio decision-making and it gives attendees a holistic view of the hard and soft factors that affect decision-makers," says Werner.
Project portfolio management ensures the projects that are being executed are aligned with the organisation's strategy; this is essential to ensuring benefits realisation.