Programs and Portfolios - Multi-project Management

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Programs and Portfolios – Multi-project Management

Bryan Fenech

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 agoWork 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 challengesCategory 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