Mastering Project Portfolio Management
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Mastering Project Portfolio Management

A Systems Approach to Achieving Strategic Objectives

Michael Bible, Susan Bivins

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eBook - ePub

Mastering Project Portfolio Management

A Systems Approach to Achieving Strategic Objectives

Michael Bible, Susan Bivins

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Información del libro

Official reference material for the Portfolio Management Professional (PfMP) Credential ExaminationThis unique text provides a holistic view of project portfolio management (PPM) that includes people, process, tools, and techniques that work synergistically within the organization to produce portfolio decisions with the best chance of success. It illustrates the entire PPM process from strategic planning through portfolio evaluation and adjustment, including prioritizing objectives, identifying and evaluating candidate projects, selecting optimal portfolios using portfolio analysis, establishing project and portfolio performance metrics, measuring portfolio performance, and project portfolio governance.Rather than just an abstract discussion, Mastering Project Portfolio Management simulates real-world portfolio management through sample scenarios demonstrating advanced decision-making techniques and the use of decision-making software that readers are given access to. This book guides readers step-by-step through the entire project portfolio management process and is ideal for corporate and government training programs and as a primary text for graduate level academic courses.

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Información

Año
2011
ISBN
9781604277197
Edición
1
Categoría
Business
Categoría
Project Management
1
Introduction to Project Portfolio Management

Many organizations fund and execute projects without using formal project portfolio management (PPM); that is, projects are selected using ad hoc decision processes, often leading to project portfolios that are unrelated to or that fail to achieve strategic goals and objectives. Other organizations practice PPM but don’t know how to optimize the portfolios they select, and they may not manage portfolio execution to ensure the achievement of anticipated benefits. In today’s fast-paced environment, investing in the right portfolio is imperative, but making the necessary decisions is impossible without the requisite process and tools. Selecting and managing a project portfolio is a network of complex decisions requiring a robust process, clear roles and responsibilities, and appropriate decision methods.
While no approach can guarantee the right decisions all the time, this book provides a guide to a disciplined process. It is supported by appropriate decision tools and techniques that enables people to make the complex decisions required to optimize project portfolio selection and effectively manage execution to best support the achievement of organizational goals and objectives. Between the covers is a holistic view of PPM that includes people, process, tools, and techniques that work together synergistically to produce results. We begin with a PPM model that conceptually illustrates the entire process from strategic planning through portfolio evaluation and revision. To put the decision processes and tools in context, we describe roles and responsibilities, major activities, and governance concepts necessary to deliver successful portfolios.
In this chapter we introduce the concepts of PPM that are presented in greater depth in later chapters, including the conceptual process model, the iterative phases of portfolio selection and management, and an overview of roles, responsibilities, and governance. First, however, we distinguish project management, program management, and enterprise project management (EPM) from portfolio management and provide a brief overview of the growth in acceptance of project management.
Often project management is loosely described as the processes and practices needed to do things right, while portfolio management is described as the processes and practices needed to do the right things. Project management is the business of meeting the triple constraints of schedule, cost, and quality, while at the same time, producing deliverables that meet specifications and satisfy the customer. Program management is the business of delivering multiple related projects in accordance with the same principles. EPM, in our view, is project and program management as managed consistently across the enterprise or some appropriate subset of the enterprise; it is still focused on managing enterprise resources to deliver the same results as those for an individual project, albeit rolled up into easily understood dashboards that can provide the progress results at any level of detail. Thus, project management, program management, and enterprise program management are all largely focused on doing things right.
Portfolio management, although related, is different from project management in the sense that projects and programs are the constituent members of a project portfolio, and these constituents are subject to the project management processes intended to yield the desired results and progress measurements. Portfolio management seeks to ensure that the selected constituents of the portfolio, taken together, are those that can best achieve the strategic goals and objectives of the organization, and that the portfolio is adjusted to ensure that it continues to do so in the face of changes in organizational strategy or the failure of constituent projects to deliver on anticipated benefits. Thus, portfolio management is focused on doing the right things.
1.1 ACCEPTANCE OF PROJECT MANAGEMENT

Although the roots of project management extend to ancient times, formal project management has only gained wide acceptance and traction in many organizations within the last half century. Business and government agencies have become more aware of the need to manage projects using formal practices and processes to ensure greater project success, that is, doing the work right (PMI, 2008). Meredith and Mantel (2006) provide three primary reasons to explain the emergence of project management: “. . . (1) the exponential growth of human knowledge; (2) the growing demand for a broad range of complex, sophisticated, customized goods and services; and (3) the evolution of worldwide competitive markets for the production and consumption of goods and services.” These reasons have not gone unnoticed. Throughout the U.S. Department of Defense (DoD), there is a growing emphasis on program and project management as the department’s acquisition personnel design, develop, and procure hundreds of billions of dollars of advanced military equipment. DoD’s Defense Acquisition University (DAU) is dedicated to training and educating personnel formally in defense acquisition program and project management and establishing standards for program management career field certification (DAU, 2010). Additionally, the National Aeronautics and Space Administration established the Academy of Program/Project and Engineering Leadership, and many leading corporations have established project management training programs and project management offices (PMOs) to develop project management methodologies tailored to specific organizational needs.
The growing emphasis of project management can also be illustrated through the expansion of project management professional certification from the Project Management Institute (PMI). Founded in 1969, PMI has grown to over 420,000 members with a “primary goal to advance the practice, science, and profession of project management throughout the world in a conscientious and proactive manner so that organizations everywhere will embrace, value, and utilize project management and then attribute their successes to it” (PMI, 2010). Not only do organizations want to complete projects successfully by doing the work right, but they also want to successfully complete the right projects. Completing projects on time and within budget has little to no value if projects fail to contribute to the successful achievement of the organization’s strategic objectives. Project connection to strategic objectives becomes even more important when the organization is undertaking many projects simultaneously that require utilization of the organization’s valued resources.
1.2 OVERVIEW OF PPM

The less a project contributes to accomplishing an organization’s goals and objectives, the less value it creates and the more resources are wasted, or at least inefficiently utilized. To better utilize resources and achieve desired outcomes, organizations are becoming more concerned about what projects to undertake in the first place, which has led to a more formal process called project portfolio management (PPM). Harvey Levine (2005) defines PPM as “. . . a set of business practices that brings the world of projects into tight integration with other business operations. It brings projects into harmony with the strategies, resources, and executive oversight of the enterprise and provides the structure and processes for project portfolio governance.” PMI more broadly defines PPM as “. . . the coordinated management of portfolio components to achieve specific organizational objectives.” (PMI, 2008) The authors of this book would also suggest that PPM is a flexible, responsive, and iterative process to select and execute the right projects that maximize achievement of the organization’s strategic goals and objectives subject to physical, political, financial, and other resource constraints.
The PPM process can be thought of as the actionable management process necessary to achieve the organization’s strategic objectives through project portfolio selection, implementation, monitoring and control, and evaluation. As noted earlier, PPM is not the same as EPM or the management of multiple related projects as the name might imply. A project portfolio is a group of projects selected and executed specifically because together they best help an organization to achieve its objectives. The objectives are the lowest-level output of the strategic planning process that produces the organization’s mission, vision, goals, and the objectives that support each goal. The fundamental task of PPM is to select a portfolio of projects that maximizes the achievement of those objectives while achieving balance among, and coverage of, the objectives. Although effective PPM contributes to the achievement of organizational objectives, it is not the only source of achievement. The organization’s ongoing business operations also contribute to the achievement of objectives, which we discuss later in this section.
Because those involved in PPM must understand how their own organizations produce goals and objectives, the authors have chosen to broadly describe the strategic planning process in this book. The PPM challenge is linking what the organization actually chooses to do with that specified in the strategic plan. As the strategic plan changes, the PPM process must allow the portfolio to change and adapt accordingly. This adaptation can be compared to the actions of a ship’s crew underway on the ocean. As the captain orders course corrections, the helmsman adjusts the heading and the ship follows accordingly. The helmsman doesn’t wait around wondering what he should do; he acts instinctively, because that is the disciplined process aboard the ship. As an organization’s strategic course changes, so must project portfolios, and its PPM process must be adaptable, flexible, and responsive to rapidly adjust its limited resources in an ever changing global marketplace.
Every organization is resource constrained. An effective PPM process provides the structure to make reasoned trade-offs about how the resources should be allocated to maximize potential benefits. If the essence of project management is communication (Cioffi, 2002), the essence of PPM is reasoned decision making. Thus, sound decision making through a disciplined and methodical process is a crucial attribute of an effective PPM process. Through such a process the organization can make rational decisions on how best to employ constrained resources across objectives to maximize benefits of its project portfolios.
A critical point to understand about PPM is that it is an iterative process linking the strategic objectives of the organization to the projects it undertakes to achieve those objectives. This book is not intended to provide detailed guidance on how to develop an organization’s strategic plan. A plethora of literature addressing different strategic planning models exists. However, this book does address the basic prerequisites or inputs to effective PPM decision making; thus, we discuss the basic process for defining the mission, vision, goals, and objectives that provide the foundation for PPM.
Once the portfolio(s) is selected and implemented, continuous monitoring and controlling of project and portfolio performance is necessary. Some projects will perform well and require no action, while others may perform poorly and require corrective action—or even termination. New projects may need to be added to address changing market conditions, exploit emerging opportunities, or react to competitors. Even projects that perform well may be considered for termination to adjust for changing strategies, market conditions, competition, and new opportunities.
1.3 PPM MODEL OVERVIEW

The PPM model conceptually illustrated in Figure 1.1 shows the authors’ version of the PPM process from strategic planning through portfolio evaluation and adjustment. The model aids in visualizing the PPM process and its integration with the organization’s strategic planning process; it also shows the connection to identifying, evaluating, and selecting projects for the portfolio and monitoring and controlling the portfolio once implemented. Using the model as a backdrop throughout the book, critical elements of the process show where portfolio decision making increases the chances of achieving strategic goals and objectives; specifically, we describe and demonstrate the processes and tools to prioritize organizational objectives, identify and evaluate candidate projects, select optimal portfolios, and evaluate portfolio performance.
The PPM process presented in Figure 1.1 prescribes five phases:
  1. Strategic
  2. Screening
  3. Selection
  4. Implementation
  5. Evaluation
While the phases are presented in sequence, the process should not be thought of as strictly linear. Rather, PPM is an iterative sequential process with regularly planned cycles; it also requires the flexibility to adapt to external or internal factors affecting the objectives of the organization and thus to execute any phase or set of steps on demand in addition to planned cycles. Whether the external factor is a financial crisis, such as the one that occurred in 2008, or an internal factor, such as poorly performing projects, the PPM process must be responsive to timely adjustments. Although we do not suggest that dramatic portfolio changes be made on a daily, weekly, or even monthly basis, the speed of change in today’s environment suggests the need for a nimble PPM process. A brief overview of each phase is provided in this chapter, with detailed information about each addressed in the chapters to follow.
Figure 1.1 PPM process overview
The background shaded boxes in Figure 1.1 are intended to show logical groupings of the PPM phases into three PPM areas:
  1. Strategic Planning delivers the prerequisite prioritized goals and objectives
  2. Identify, Evaluate & Select Project Portfolio results in selection of optimal portfolios given specified organizational constraints
  3. Monitor, Evaluate & Control provides the means to measure portfolio performance and adjust the portfolio contents.
1.3.1 Strategic Phase Overview
During the strategic phase, the organization establishes or revises its strategic plan, including the mission, vision, goals, and objectives. This phase provides the foundation for effective PPM as the strategic plan establishes the goals and objectives to which project portfolios contribute. Commonly, large and well-established corporations have well-defined missions, vision statements, values, goals, and objectives from previously developed strategic plan cycles, and these elements undergo periodic review and revision. However, the quality of the elements of the strategic plan can vary with the seriousness and expertise of the people who develop them. Unfortunately, even when the vision, goals, and objectives are well-defined and articulated, they may not be valid or achievable. Fuller and Green (2005) contend that “the leader sets measurable goals and objectives for the organization. A goal or objective for which attainment cannot be measured is worthless.”
From a clear and unambiguous mission and vision, goals and subordinate objectives can be developed to specify how the organization will realize the vision through achievement of these goals and objectives. Attainment of objectives is a responsibility requiring contribution from all elements of the organization, including targeted achievements from operations as well as projects at all levels of the organization. Although this book is targeted at selecting the optimal portfolio of projects anticipated to achieve organizational objectives and measuring performance during implementation to ensure the portfolio maintains relevance to the strategic plan, it is important to note that attaining them is not the sole responsibility of project management. Activities from ongoing operations, including manufacturing, sales, finance, and human resources play an immense part in achieving the organization’s strategic initiatives; if the organization can’t efficiently manufacture a great product engineered during a new product deve...

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Estilos de citas para Mastering Project Portfolio Management

APA 6 Citation

Bible, M., & Bivins, S. (2011). Mastering Project Portfolio Management (1st ed.). J. Ross Publishing. Retrieved from https://www.perlego.com/book/1355085/mastering-project-portfolio-management-a-systems-approach-to-achieving-strategic-objectives-pdf (Original work published 2011)

Chicago Citation

Bible, Michael, and Susan Bivins. (2011) 2011. Mastering Project Portfolio Management. 1st ed. J. Ross Publishing. https://www.perlego.com/book/1355085/mastering-project-portfolio-management-a-systems-approach-to-achieving-strategic-objectives-pdf.

Harvard Citation

Bible, M. and Bivins, S. (2011) Mastering Project Portfolio Management. 1st edn. J. Ross Publishing. Available at: https://www.perlego.com/book/1355085/mastering-project-portfolio-management-a-systems-approach-to-achieving-strategic-objectives-pdf (Accessed: 14 October 2022).

MLA 7 Citation

Bible, Michael, and Susan Bivins. Mastering Project Portfolio Management. 1st ed. J. Ross Publishing, 2011. Web. 14 Oct. 2022.