Programs and Portfolios - Multi-project Management

Programs and Portfolios –
Multi-project Management
Bryan Fenech
www.ppmintelligence.com
Copyright © 2014

WHAT THIS PRESENTATION
COVERS?

Contents of this lecture
• In this presentation we will cover
– Definitions and comparison of programs and portfolios
– Organisational context
– Origins – multi-project management challenges and industry
responses

DEFINITIONS AND
COMPARISON

What is a Program?
• A program is a collection of projects and
operational initiatives that are related to an
organisational change objective – e.g.,
developing a new manufacturing capability

What is a Portfolio?
• A portfolio is a collection of organisational
change initiatives – i.e., projects and
programs
• A portfolio may be comprised of sub-portfolios
that aggregate projects and
programs at various organisational levels –
e.g., Divisional Portfolios

What is Program Management?
• Program management is the coordinated
delivery of projects and operational
initiatives to achieve synergy benefits not
available if managing them separately:
– consolidation of project management functions
– dependency management
– optimising the order and timing of delivery

What is Portfolio Management?
• Portfolio management is the centralized
management of one or more portfolios
according to a number of portfolio
investment processes and rules with the aim
of:
– making good investment choices in terms of strategic
alignment and value
– optimising return on investment

The business problem
• The business problem
that portfolio
management
addresses is a far
more complex one
than that of program
management
Risk
Constraints
Strategic
Objectives

What are we trying to achieve?
• Integrating all decision-making to ensure:
– the portfolio is optimal – i.e., it meets strategic objectives,
without violating constraints, and is within acceptable levels of
risk
– delivery of projects and programs comprising the portfolio is
efficient and effective
– potential benefits are realised

ORGANISATIONAL CONTEXT

Strategy and governance
* Image adapted from the Standard for Portfolio
Management (PMI)

Project, programs and portfolios
Comparative Dimension Project Management Program Management Portfolio Management
Key imperative Doing things right Doing things right Doing the right things
Delivery scope A set of specific
deliverables
A business problem or
opportunity
Organizational strategic
objectives
Management focus Task performance Project performance Aggregate performance
Management tools Detailed schedules
based on work products
High level schedules
based on projects
Value indicators based
on aggregations of
performance, risk and
benefits data
Success measures Within budget, on time,
to specification
New business capability Strategic objectives and
value

Project, program or portfolio?
• Development of a new product
• The collection of projects in a Bank’s wealth
management division
• The collection of projects to set up a new
branch of a business in a different country

ORIGINS

It was not that long ago
Work without computers and telecommunications
•Hardcopy record keeping
•Manual management and retrieval of information
• Slower creation and access to information
… the internet, email or social media
•Communications and collaboration largely limited to face-to-face meetings
and physical mail
•Conduction research required travel to a library, university or similar
institutions
•Slower propagation of ideas

Winds of change
• Increasingly rapid development and
diffusion of new disruptive technologies
• Significant opportunities emerging in global
markets and the internationalization of
markets and industries

Shifting strategic focus
• Innovation versus repeatability
• Investment versus cost containment
• Flexibility and responsiveness versus size and
stability
• Knowledge assets versus property, plant and
machinery

Making strategy more dynamic
• A dramatic shift of emphasis and
reconfiguration of the relative importance
between strategy formulation and
implementation
• This shift in the focus of business strategy is
consistent with the original military and
political conception of strategy as dynamic
and action-oriented

Execution – the missing element
Analysis
•Where are we? Where do we want to be?
•Techniques – general environment (PEST) analysis, 5 forces analysis, SWOT,
sustainable competitive capabilities
Planning
•What is our plan to we get from here to there?
•Techniques – cost leadership versus differentiation, innovation, quality, fast-cycle
market strategies
Execution
•How do we carry out the plan?
•Techniques – ?

Adopting project management
• The ubiquity of project management is a
relatively recent phenomenon
• The widespread adoption of project
management by business and government
is inextricably linked to the digital
technology revolution and its disruptive
socio-economic effects

Why project management?
• As organizations have found it necessary to
change more frequently, they have
increasingly turned to project management
because it provides a set of proven tools,
techniques and disciplines for implementing
change in dynamic business environments
• This management approach has been
termed “management by projects”

The multi-project environment
• This has led to the emergence of a
fundamentally new management
environment and paradigm – the multi-project
environment
• As the project orientation of an organization
increases, multiple projects are carried out
simultaneously

Seven multi-project challenges
• Demand exceeds capacity
• Competition between projects
• Complex interdependency
• Autonomy versus control
• Innovation versus predictability
• Accessing project knowledge
• Disruption of traditional institutions

Demand exceeds capacity
• “…there are usually more projects available
for selection than can be undertaken within
the physical and financial constraints of a
firm” (Archer and Ghasemzadeh, 1999)
• When this happens “each active project
blocks the progress of other projects …[it] is
like having the organization’s arteries
clogged” (Kendall and Rollins, 2003)

Competition between projects
• “Survival of the fittest is a concept that
belongs to this mindset and competition
and battles were exactly what I found in my
empirical studies. Battles to get the highest
priority among the projects, battles to get
specific employees on projects, struggles to
get attention from top management and so
on” (Eskerod, 1996)

Complex interdependency
• Outputs and objectives which together
contribute to the overall development
objectives of the parent organization
• Shared resources including people, capital
investment pool, information, materials,
equipment and technology
• Direct dependencies between projects

Autonomy versus control
• Project management implies
independence, decentralization and
delegation of authority
• “If an organization manages many
individual projects, each with its own
dedicated project manager, there will
inevitably be little or no control of projects”
(Van Der Merwe, 1997)

Innovation versus predictability
• Innovation requires risks to be undertaken
and investment in exploratory activity
…project management is concerned with
time, cost and requirements (Midler, 2000)
• Project management as an example of
Leonard-Barton’s “core rigidities”
• Adaptations of project management – e.g.,
Agile, prototyping and iterative approaches

Accessing project knowledge
• While projects are especially suited to
learning, lessons are not being
systematically integrated into the
organisational knowledge base:
– Projects are self contained, idiosyncratic and
finite
– Project knowledge is multi-disciplinary while
parent organisation is usually segregated by
function

Disrupting traditional institutions
• Traditional organisations do not handle the
transactional overload of intensified
communications
• A rigid hierarchy and division of labour is
contradicted by the empowerment of self
organizing units and facilitation of
collaboration within multi-disciplinary teams

Responses to challenges
Category Response Problem Addressed
Delivery methods Program management, change
management disciplines
Coordinating and marshalling
project-based activity
Governance Project portfolio management
(PPM)
Making good investment choices
and ensuring return on investment
Functions Steering Committees, PMOs Driving cross functional integration
Organisational Structure Matrix organisations, skunk works,
project based organisations
(PBOs)
Managing both dynamic
(change) and static (operational)
business contexts
Roles and responsibilities Project managers, change
managers, business owners,
sponsors, etc
Improving professionalism in
performance of project activity
Standards PMBOK, Prince2, MSP, P3O, etc Improving predictability and
success rates
Organisational Maturity models OPM3, PMMM, CMMM-I, P3M3,
etc
Making change business as usual

END OF PRESENTATION

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Copyright © Bryan Fenech 2014
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Programs and Portfolios - Multi-project Management

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