Which comes first?
Is it a case of having mature programme and project management practices embedded within an organisation prior to turning to portfolio management? Or vice versa?
If we concentrate on maturing programme and project management processes first without addressing the foundations of portfolio management, then we risk doing the wrong projects right! Right in this case means according to agreed processes and standards.
What value are we adding by implementing something that we didn’t require strategically in the first place?
“Perfect” project/programme management practices are not a pre-requisite to embarking on portfolio management. In effect, without the solid foundations of portfolio management an organisation’s continued success is at risk.
So where do we start?
Portfolio management bridges the gap between the “what for” (strategy formulation) and the “how” (day-to-day tactical implementation).
The focus is on ensuring that the “right” projects and programmes are being selected, that those very initiatives continue to be the right ones in light of changing external conditions AND that the forecast return on investment is achieved.
7 Steps to embark on Portfolio Management
1. Agree with executives what Portfolio Management is (and what it isn’t) and the key objectives. What are we trying to achieve with portfolio management? Remember it should focus on ensuring that the portfolio:
- Represents optimal allocation of resources
- Is sufficient and initiatives are necessary to achieve strategy
- Will realise all potential benefits
2. Ensure agreement what initiatives (programmes and projects) will be included within the portfolio. Surprisingly this can open the debate on the definition of a project and what is strategic for an organisation.
3. Compile a Portfolio Register. Do you have a single listing of current programmes/projects, including costs, benefits, dates, risks, progress by division/enterprise level? The mere fact of doing this exercise can often identify duplicate, non-strategic and/or poor performing projects.
4. Defined Portfolio Decision Making/Governance structures. Who makes the decisions about what is included in the portfolio and when (including ongoing in times when initiatives need to be re-prioritised or removed)? Portfolio management decision making needs to be aligned and consistent with the wider organisational governance framework.
5. Agree Standard Investment Criteria to Appraise and Prioritise initiatives. It is important to understand and agree why an initiative is to be included within a portfolio (both upfront and ongoing). Consider return (attractiveness) and risk (achievability).
6. Summarise your Portfolio into an overall Portfolio- level plan. Address what the portfolio is to achieve and include a (portfolio) delivery schedule, highlighting key dependencies. Use this plan as the baseline for portfolio performance.
7. Review Portfolio performance regularly. Not only does this help identify areas of adjustments for re-alignment to strategy, but it communicates a clear message to all that portfolio management is a disciplined end-to end approach to collectively managing initiatives in order to achieve strategic objectives.
The constant challenge is to do more with less. This means prioritising investment and focusing on those initiatives that will deliver the agreed strategic needs and provide the required benefits. Speak to us about your Portfolio Management Journey. +65 6818 5771