Project Portfolio Management – Understanding Where Your Program is Today

There are three commonsense categories of past, present, and future when dealing with the basics of project portfolio management: (a) assessing where your program has been, (b) understanding where your program is today, and (c) driving where your program is going.

Understanding Where Your Program is Today

Having an adequate understanding of where the program is today is necessary for sound  decisions and will involve answering some fundamental questions. The questions are

1. What are the business goals and targets for the current year?

2.  Are the goals realistic?

3.  What do you assess as the likelihood you will achieve each of the goals?

These questions regarding business goals and targets may seem unnecessary, but I am continually amazed at organizations that do not have documented, measurable, targets and goals. Some organizations that have them often do not maintain them, or the goals have existed for years or since the “company founder” set them.

Having a business goal of being the “leading provider of Gobbledygook widgets and services” is meaningless without qualification as to what that means. After all, what does “leading provider” mean? How do you know when you’ve attained that status, specifically? When should that goal become reality? Is it even possible?

Often, the program or portfolio manager may be responsible for attaining such a vague goal. It is then up to him or her to characterize what “leading provider” means and to obtain buy-in on their characterization of “leading provider” from stakeholders.

Depending upon where the organization currently is and the resources it has available, there may be a time-phased plan with annual targets for the next five years. Organizations sometimes set goals that are unachievable and it is the program manager’s responsibility to work with stakeholders to establish achievable goals. Continuing with our fundamental questions…

4.  What projects are currently in work and part of the portfolio?

5.  Were in work when the previous year started?

6.  Were born or created during this year?

7.  Were completed already this year?

8.  Have been terminated during this year?

9.  Are in danger of being terminated this year?

The questions about project status are important to define what projects the organization actually has in work. Consider the experience of an organizational leader at a government agency, who was transferred to another part of the agency. He was surprised to learn that there was a lack of solid business goals and targets in this other part of the agency, and this lack of goals created program managers who were not guided properly. The result was that some of the program managers had done nothing new for years, while others were all over the map spending resources and implementing projects that were way out of the scope of the organizational mission.

When portfolio planning, you need a catalog of all projects in work within the organization. Certainly, the program manager must have this for his or her program, but the program manager also needs to be concerned about projects in work outside of the program in shared-resource environments. Rogue or shadow projects outside of the program manager’s control could be consuming organizational resources, slowing the work of projects within the program manager’s control.

The question about projects being terminated is a necessary one. Examine the project failures and overruns your organization has had in the past few years. Assess whether the termination of the project at an earlier timeframe would have saved resources or avoided a tarnished reputation with customers.  Remember the concept of “sunk costs.” People tend to want to recover lost or spent funds and adopt the false and dangerous logic of “we have already invested or spent this much, so we might as well see it through to the end.” In reality, all that matters is the business case on the cost and revenues from this point forward. How much has already been spent or gone down the drain, (the sunk costs) is immaterial.

Organizations sometimes have a problem acknowledging failure.

But the sooner you acknowledge failure, the greater will be the cost savings. For instance, a major telecommunications company rolled out a new service on which they spent triple-digit millions before it was terminated because it didn’t work as advertised. Many technical personnel and employees knew the service would not work well over a year before it was finally terminated. So why did the project continue? It did so because when a few employees brought their findings to the attention of the leadership early in the program, it proved to be a career-limiting move. After witnessing what happened to their peers, other employees just kept quiet until the program imploded.

Implosion of a project is what you want to avoid.

You can avoid implosion by putting poorly performing programs and projects up for termination review as soon as cost and schedule targets have exceeded a certain threshold.  A good threshold for this is typically ranges between 5 and 20 percent.  The overrun and/or behind schedule project should have to justify its continued existence given the poor performance to date.  Many companies do a great job on the majority of projects but they let the ones that go bad, go really, really bad.  Sometimes these one or two bad projects consume all the reserve or profit from an entire portfolio of projects when this negative outcome could have been avoided or softened by good decision much earlier in the projects lifecycle.

Having a current and valid catalog of projects that are currently in work and then verifying these projects have clear objectives that align with business goals and targets for the year and then continually assuring these projects do not spiral out of control is sound portfolio management.  Like a number of aspects of successful project, program and portfolio management, this is not complex but it is time consuming and requires leadership and organizational discipline to perform this effectively.

The basics of Project Portfolio Management are a critical aspect of overall organizational success.

Adapted from The Handbook of Program Management.  Copyright 2017 All rights reserved.

Posted by Dr. James Brown in Portfolio Management, Program Management.


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