Project or portfolio management: where to start improvement?
Improving in project space
Project, program, and portfolio management are key to properly define and run today’s innovation activities across all industries. With shorter product life cycles, more frequent service and business model innovations, with joint development, the need for improving the capabilities in project and portfolio management is turning business critical. Improvement of this capability is a top priority, as demonstrated by the interest in the PPM Accelerate benchmark, the PPM Monitor, and the PPM Annual Conference (to name a few top-level initiatives in 2011 in the Netherlands alone).
Once such an improvement need has been identified, one of the key questions is where to start. Reference models available (such as IPMA, Prince II) suggest that maturity at the project level is needed in order to make progress in program and portfolio management. Executives we work with understand the logic but seem unhappy (or impatient) about when to get to better portfolio results. Are they right, and is there a better way to improve?
Let’s have a look at the top 3 reasons for starting improvements at either the project management level or at the portfolio management level.
Reasons to start with improving project management
1. Build the foundation first (bottom-up)
“If project management is not mature, project execution is unpredictable so the management information for portfolio management is unreliable.”
2. Start with the longest activity
“Since project management changes will affect the largest and most diverse group of people (especially the team members), these changes will have long lead times and should be started early on in any program.”
3. Start with efficiency and motivation
“Improving project management is supposed to increase efficiency in project execution. This will generate financial savings (less “wasted” money and effort) as well as increase motivation for the team members.”
Or should we start top-down:
Reasons start with improving portfolio management
1. Go for effectiveness first
The best reason to start on the portfolio management side I have heard so far: “Why spend time on improving projects we should not be running in the first place?” Since portfolio management is not just about eliminating the bad projects, it is also about selecting the right set from among all the good projects.
2. Go for the quick win
Since the portfolio management process is a decision-making process with a limited set of stakeholders (executives and analysts), the associated change process can run at a fast pace. The speed of improvement here is typically dependent on the maturity of the portfolio selection criteria (see the next point). On top of this, since portfolio management is an executive process, the sponsorship for this improvement is obvious. It requires executives to “walk the talk” by implementing change in their own processes and behaviour.
3. Improved efficiency and motivation
A key ingredient of improving portfolio management is the further elaboration of strategy and goals into portfolio and project targets. Project teams and team members derive high motivation levels from clear goals and constraints for their projects. This motivation in itself already increases productivity and efficiency. A good business case is part of all project management models; it explains and quantifies the expected project benefits versus its costs and risks.
How to get to improvements quickly?
Now, any real improvement program faces both aspects. Start early with selecting which projects to run (and to improve), developing the business case, and monitoring progress of projects and assumptions.
For this to work at least some common “building blocks” need to be in place:
- an up-to-date list of projects and project candidates (what are we running and planning to start?);
- high-level business case and project plan with an owner;
- a link between strategy, projects, and resource allocation (financial, technical and other);
- executive sponsorship and hands-on involvement.
Does your improvement plan properly address these building blocks and does it follow a consistent improvement strategy?