Portfoliomanagement pm presentation digitalboardroom public final
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Transcript of Portfoliomanagement pm presentation digitalboardroom public final
F.L.F. BeekmanCAPM Global Competence Center
October 2007
Project Portfolio Management
CAPM Global Competence Center, F.L.F. Beekman, October 2007 2
This presentation contains topics in a mix- of theory- and practice- supplemented by ideas- and thoughts- with hopefully some logic
[email protected] CAPM Global Competence Center = Shared Service Center for Project- and portfolio-Management for Philips Medical Systems
CAPM Global Competence Center, F.L.F. Beekman, October 2007 3
What is PPM?• Project Portfolio Management (PPM) is a significant advance over
traditional PM methods, (which focuses primarily on project execution).• PPM addresses a common problem where scarce resources (money,
people, facilities) are allocated to the wrong projects.• PPM, therefore, goes beyond the art of "managing projects right" and
focuses on "doing the right projects".
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Project Portfolio Management
The objective of PPM is to create the mix of projects most likely to:• support the achievement of the organization's goals,• aligned with the preferred strategies, and• within the organization's resource (people and funding) constraints.
… studies reveal that as many as 70% of IT projects either significantly fall short of deadline and budget goals or they are abandoned altogether prior to completion. –IT Business Edge 2007-09-20
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Why is it important to Philips? Make Philips’ growth ambition happen
“The company at large is now geared for profitable growth. It needs to extend leadership in existing markets, explore and develop new
markets, accelerate change. We’ve talked for long enough. Now we must devote ourselves to successful execution (Kleisterlee)”.
This requires:• Grow by ultimately starting new businesses• Increase profitability through re-allocation of capital towards higher
return opportunities• Leverage the Philips brand and our core competencies in the areas of
Healthcare, Lifestyle and Technology to grow in selected categories and geographies
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ap
plie
d m
ark
eti
ng
applied technologiesexisting
exis
tin
g
new
new
CostInnovation
Break AwayInnovation
FeatureInnovation
MarketInnovation
The Growth Framework
Can it be made ?
Will it be bought ?
temporarycompetitiveadvantages
sustainablecompetitiveadvantages
Growth
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Assignment
Problem description• Project portfolios are managed using Excel and
PowerPoint. • Projects are managed in Clarity• Clarity supports project portfolio management• Why not manage project portfolios in Clarity
Basic requirement:• Focus on communication and insight Charts
– Scatter (X: Chance of success, Y: Attractiveness)
– Pie (Budget percentage per Strategic Bucket)
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0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Worst Performers
Average Performers
Best Performers
Role
of
R&
D in
Busin
ess
Goals
Use
str
atg
ic
buckets
Sr
Mgt
str
ongly
com
mitte
d
to R
&D
Busin
ess
Clim
ate
support
s
innovation
Form
al &
syste
matic
PP
M in
pla
ce
Bala
nce
resourc
es
acro
ss
pro
jects
Port
folio
conta
ins
hig
h v
alu
e
pro
jects
Excele
nt
qualit
y o
f
execution
Tough,
rigoro
us
Go/K
ill
Decis
ion
pro
cess
Custo
mer
focused
Role of R&D in Business Goals
Use strategic buckets
Sr Mgt strongly committed to R&D
Business Climate supports innovation
Formal & systematic PPM in place
Balance resources across projects
Portfolio contains high value projects
Excellent quality of execution
Tough, rigorous Go/Kill Decision process
Customer focused
Percentage of businesses that embrace each best practice
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The pipeline
Which projectsto initiate?
Which projectsto continue?
Which projectsto terminate?
ideatech
projwish
opp
Initiation Definition Design Preparation Realization Delivery AftercareConcept&feasibility Planning Development Execution Implementation Operation
Select projects
Manage project portfolio pipeline
screening Project management
Concept phase selection filter
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Why is an active Go/Kill policy important?
0
10
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Defint
ion
Desig
n
Realis
ation
a-te
st
b-te
st
Usage
%
Error source
Repair moment
Repair costs
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Money spend is never an excuse for spending
more money
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POrtfolio Management Process
Co-operation AOP POMP
Transparency
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Selection
Determination of the optimal or acceptable size of the project pipelineSurveys show: get more projects done with less people by doing fewer projects
- resources scattered over projects; changeover losses- project delays
Ranking projects; By Value and Benefits, such as- Financial models- Resource availability- Alignment with strategies- Risk/Reward (Net present Value NVP) Identification, probability, impact, mitigation -> risk WBS- Scoring Models- Check lists
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Criteria for reporting a project in POMP
Criterion Indicator
1. Potential X-PD / Corporate Function impact
To be derived from portfolio overview of Corporate Functions
2. All projects that involve a significant investment
Component above x EURO
3. All architecture and new technology related projects
To be derived from portfolio overview of the PD’s
4. All projects that are marked as relevant by the Portfolio Governance Board
To be determined by the Portfolio Governance Board, using the existing decision making process
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Distributed Portfolio Management model
PMS Vision, Mission &Business (PD) Strategy
Philips Vision, Mission & Corporate Strategy
Product plans
Integral Roadmapping
Innovation project portfolio management
Pipeline and project management
Business Planning
Portfoliomanagement
“Doing the right projects”
“Doing the projects right”
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Why is “doing the projects right” important?
What if 99% went right???
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406.000 passengers per year who depart on the wrong airplane from Schiphol airport
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700 people will receive the wrong medicine from the pharmacist per day
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161 baby's per month return home withThe wrong parents.
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Why is doing the things right important?
90% x 90% x 90% x 90% x 90% x 90% = 53%
Initiation Definition Design Preparation Realization Aftercare
What does 53% mean for your product quality, for your Time to market?
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Why is “doing the right projects” (=PPM) important?
PM
PPM
75% 100%
66%
100%
50% value realized
50% value lost
Selectingthe rightInvestment
‘Do the rightthings’
Delivering the investments right‘Do the things right’
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• PD’s• Corporate
Functions• EISA• Domain
Boards
• EISA• PD’s• Corporate
Functions• Domain
Boards
• EISA• PD’s• Corporate
Functions
• EISA Board • Portfolio Meeting
• Portfolio Meeting
• Regular Planning & Control mechanism
• Apply selection criteria to portfolio
• Discussion with portfolio owners to select projects
• Ensure compliance to standards (apples-to-apples)
• Ensure completeness of data
• Score projects on evaluation criteria
• Execute fact-based analysis on portfolio via various dimensions
• Prepare recommen- dations on project portfolio mngt including prioritization of projects
• Determine project priorities, based on the business, strategy and existing resource constraints
• Communicate outcome to all stakeholders
• Ensure executive commitment
• Project execution using regular/existing Planning & Control mechanisms
DECISION
MAKING
COMMU-
NICATIONEXECUTION
Wh
at
Wh
o
SELECT
PROJEC
TS
GATHER
DATA
ANALYZE
DATA
PREPARE
DECISION
MAKING
Process steps
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Project & portfolio definition
• Project definition– “Strategic bucket” {Must Do legal or technical, Business necessity, Bottom line
performance improvement, Top line competitive advantage, Innovation}– “Project attractiveness” with sub-fields
• Net Present Value over three years• Payback period• Alignment of project with business strategy
– “Risk / Chance of success” with sub-fields• Business risk• Organizational risk• Project / technology risks
• Portfolio definition– Portfolio with POMP projects
• 3 scenarios on how to lower the POMP budget– 3 program portfolios with existing projects
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Percentage Strategic Bucket
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Attractiveness versus chance of success
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Attractiveness is the outcome of market attractiveness and strategic fit
Market attractiveness- Market size- Market growth- Market profitability- Market life cycle- Competitive intensity- Volatility of demand- Market predictability- …
Strategic fit- Contribution to strategic objectives- Fit with brand promise (brand pillars)- Contribution to financial and non-financial targets- Contribution to one Philips- …
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Chance of success is the outcome of commercial and technical chance of successCommercial chance of success
• Commercial competitive strength- Relative market position (RMS)- Relative brand position- Relative marketing investments- …
• Ability to market and sell- Fit with marketing capabilities - Fit with sales organization- Fit with the required distribution channels- …
• Specific commercial risks - Lead-customer identification- Proven end-user acceptance- ….
Technical chance of success
• Technical competitive strength- Relative IP position- Relative R&D investment- …
• Ability to develop and create- Fit with development skills- Fit with manufacturing/sourcing skills- Fit with supply chain capabilities- Fit with technical know-how- Team maturity- …
• Specific technical risks- Availability of fall back scenario’s- Level of supplier risk - …
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Attractiveness versus chance of success (2)
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Other exciting graphs
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Project maturity models at PMS (1/2)
Basics: Commitment, HW, infra
Basic PM & Time registration; process & practice
PM; process & practice
RM; process & practice
PPM; process & practice
Roadmapping; process & practice
REPORTS
Markets & Strategy
Classical business (operational) driven bottom up model
No aggregation to this level
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Project maturity models at PMS (2/2)
Basics: Commitment, HW, infra
Markets & Strategy
Roadmapping; process & practice
PPM; process & practice
Program mgt; process & practice
PM; process & practice
REPORTS
Top-down model
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PPM Maturity Model (1/2); Adoption of PPM
Maturity level 1 Maturity level 2 Maturity level 3 Maturity level 4 Maturity level 5Decision making process Portfolio-decisions are made ´on
the fly´ based on management insight
Portfolio-decisions are made fact-based but not via a systematic, consistent and explicit process
Portfolio-decisions are made fact-based via a systematic process. The process is however not yet clear, explicit and consistently deployed.
Portfolio-decisions are made fact-based via a systematic and explicit process. The process however is not yet consistently deployed over time and accross the organization.
Portfolio-decisions are made fact-based via a systematic, explicit and consistent process that allows for tracking and learning over time
Level of deployment Some isolated examples of business and/or project portfolio management
Business and/or project portfolio management is done on only one organizational level. Approaches are not aligned and linked
Business and/or project portfolio management is done according to Philips portfolio management framework on only one organizational level. Approaches are not aligned and linked
Business and project portfolio management is done according to Philips portfolio management framework on PD level and on all relevant levels below. Approaches are not aligned and linked
Business and project portfolio management is done according to Philips portfolio management framework on PD level and on all relevant levels below. Approach is aligned and linked
Level of process integration Portfolio management is a stand-alone process
Project portfolio management is linked with project management
Business portfolio management is linked to strategic business planning process.
Project portfolio management is linked to project management and resource management. business portfolio management is linked to strategic business planning process.
Business portfolio management and project portfolio management are fully integrated into the core business processes (business planning, resource planning and project management)
Ad
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PPM Maturity Model (2/2); Quality of PPM
Maturity level 1 Maturity level 2 Maturity level 3 Maturity level 4 Maturity level 5Critera Criteria are picked ´out of the
blue´, no check is done on elements like SMART, differentiation and consistency
Critera are selected with more care, they are SMART however not yet differentiating enough and not yet consistent over time
Critera are SMART and they differentiate well, however they cannot be assessed based on external sources and they are not yet consistent over time
Critera are SMART, differentiating and can be assessed based on external sources . They are however not yet consistent over time
Critera are SMART, differentiating, can be assessed based on external sources and are consistent over time
Data No validation or calibration of data Subjective validation/calibration of the data by own function.
Subjective, cross-disciplinary validation/calibration of the data
Cross disciplinary validation/ calibration of the data based on objective internal information (e.g. actual achievements in past projects)
Cross disciplinary validation/ calibration of the data based on objective internal and external information (if applicable e.g. benchmarks)
Functions involved Supported/driven by one function (i.e. technology, marketing, strategy or finance)
Supported/driven by one function (i.e. technology, marketing, strategy or finance) however some other functions are informed and/or involved
Supported/driven by two or more functions (i.e. technology, marketing, strategy or finance)
Supported/driven by two or more functions (i.e. technology, marketing, strategy or finance), other functions are informed and/or involved
Fully X-functional supported/driven
Availability of tools and training No tools and training available Some tools are available, no training
Some tools and partial training is available.
Portfolio management process is fully supported by tools.Training is available, but not all involved have participated
All involved (incl. decision makers) have been trained and portfolio management process is fully supported by tools
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