Catching the catfish with Project Portfolio Management

On a rainy day this July, I got a call from a friend of mine. I was a bit surprised to hear from him back then and could barely comprehend the situation he was describing on the phone. What I ultimately managed to gather was that he’s busy fitting himself a new CxO level role these days and needs to put the final touches to his presentation to the corporate planning head. The question he posed was whether he should recommend a significant budget increase in his area of responsibility, or manage within the existing limited budgets. The real issue in his mind was how he could assure optimum alignment of spending with the direction of his organization. Moreover, if he acts either way, how can be sure of delivering the value he promised the organization on the basis of his strategic initiatives?

This question is all too familiar and the concerns are real and legitimate. Indian industries facing a shaky economy and fierce competition, find themselves in a position where they have to innovate for their survival and growth. Nearly every large organization across the globe is feeling the impact of this internal misalignment of priorities. In a nutshell, each company is struggling control its own catfish – its portfolio of projects (F. Warren McFarlan, 2003).

In this scenario, organizations are asking themselves the following questions:

• How does the enterprise ensure that its expenditures and resources are aligned with its key business goals?
• Is there a way for the enterprise to find out if the totality of its works is directed towards moving the business forward?
• What does the enterprise do when it has defined more projects than it has resources for, especially with cost pressures increasing every day?

The answer to these questions lies in the discipline of ‘Project Portfolio Management (PPM).

PPM is a disciplined process which enables enterprises to prioritize its various initiatives by understanding its business goals and balance multiple evaluation criteria. It enables enterprises to view and control their entire suite of investments as one set of interdependent activities in one place, as a portfolio, rather than one at a time. This way the project portfolio as a whole continues to address strategic initiatives, even as these initiatives change over time, thereby serving as the critical link between executive vision and the work of the enterprise.

Key steps involved in implementing a PPM process are:

1. Define the Funding and Budgeting Process: This step involves defining the crucial funding, budgeting and decision making processes. Critical questions on budget allocation, funding decision hierarchy, ownership and governance matrix are defined.

2. Define the Portfolio Management Process: This step involves defining the process of receiving, validating and approving new project requests along with the Portfolio management team and its responsibilities.

3. Define the PPM Framework and Prioritization Criteria: This step involves defining the criteria across different business domains along with project classification, prioritization criteria/parameters, weight ages, scoring anchors and ranking methods. All such criteria need to be aligned to the business strategy and articulation of the strategy is critical.

4. Determine the Project and Resource Capacity: This step involves determining the capacity in terms of resources that will be used for project work. This proves useful in prioritizing the projects vis-à-vis available resources and bandwidth.

5. Define the Portfolio Review and Updation Process

No process is complete without defining the updation and review process. The portfolio reports and communication process needs understanding from multiple stakeholder perspectives. A sound PM practice becomes critical for relevance of project performance information.