Project Portfolio Selection Model - Voice narrated
-
Upload
russ-mcdowell-pmp-opm3-prince2-mop -
Category
Business
-
view
3.929 -
download
1
Transcript of Project Portfolio Selection Model - Voice narrated
PPM - Project selection
Choosing the Right ProjectsA Subset of Project Portfolio ManagementRussona Consulting presents:
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#1
Why Is This So ImportantThe greatest waste in business is doing the wrong thing well
Henry Ford
Project management is about doing the projects right
Portfolio management is about doing the right projects
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#- Especially in these belt-tightening days, we have scarce resources, and we need to use them where they will best help the organization2
Presentation ContentsOverviewThe Life CycleBusiness VariablesCyclical VariablesScoring Individual ProjectsBalancing The PortfolioSummary
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
3
Project Portfolio ManagementTo be effective, the portfolio assessment needs to incorporate both short and long term perspectives
The management of an effective PPM is about the selection and prioritization of projects to deliver the highest value, based on the pre-established portfolio business decision and priority criteria- Best Practices for Project Portfolio ManagementWhite Paper Serena Mariner, August 2008
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Organizational Context
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#- Need to provide reference for this slide (OPM3 or the Portfolio standard?)5
Life Cycle Phases
here
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Portfolio ManagementProject Portfolio Management covers 3 key areas:Align the portfolio of projects based on highest value and business criteriaEnsure the investment is being managedEnsure the business achieved the expected benefits
Most organizations have more good ideas than they have resources to deliver on
Focus on doing the right projects
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Roles in Portfolio Management
PMIs Portfolio Management Std. 1st Ed.
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Impact of Too Many ProjectsDelayed benefitsThe expected benefits from the changes take longer to be realized
Projects take longerChanges in business / technology / environment mean more challenged projects
Trying to cover too many bases means that nothing gets done wellUnhappy stakeholders, poor quality results
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Presentation ContentsOverviewThe Life CycleBusiness VariablesCyclical VariablesScoring Individual ProjectsBalancing The PortfolioSummary
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
10
Life Cycle PhasesFollowing TBS EMF, key phases in the project life cycle are:
Business casePortfolio SelectionProject InitiationPlanningExecution Control & MonitoringClose-out Delivery
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Selection Process - CriteriaEnsure that the projects we select reflect the business criteria in terms of achieving business objectives
Transparency required to ensure support for the process
Needs to reflect the capacity of the organization to commit and deliver on selected projects
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Process DemonstrationThis presentation demonstrates how to model this using MS Excel!
Series of slides demonstrating:Ranking of key business objectives (KBOs) against each other
Selection of key criteria for evaluating proposed projectsBusiness factorsTechnology factorsRisk factorsFinancial factors
Using the criteria to weight the proposed projectsProvides a weighted score on which to prioritize
A two step assisted process to finalize the selected projects
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Inputs Required 3 LevelsBusiness Management (> annual)Business criteria (and groupings)Key Business Objectives (KBOs)
Executive (annual)Overall budgetBudget categories % Allocation of the budget to those categories
List of candidate projects (ongoing, regular basis)CategoryOverall costFor each candidate, a scoring against the business criteria
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Project Phases / Reviews
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Pre-Project Stage
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Roles / Responsibilities
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Portfolio Management ProcessesPMIs Portfolio Management Std. 1st Ed.
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Project Alignment ProcessPortfolio selection follows a 7 step process
IdentificationCategorizationEvaluationSelectionPrioritizationPortfolio BalancingAuthorization
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Should provide definitions of each of these steps
Categorization group initiatives into relevant business groups (e.g. infrastructure, R&D, Project Line X, )- group into only ONE category
Evaluation:Gathering all pertinent information in order to evaluate them
Selection:Some may be rejected at this point (ROI too little), payback too long, Change versus project management?
Prioritization:Rank the components within each strategic or funding category (e.g. R&D, cost savings, infrastructure) that needs to be balanced,Provide results for step 6
Balancing: - find the right balance between the projects.
As New Initiatives Are RaisedIdentification someone has gone through the business requirements and developed a business case. Decision made on which option to select
Categorization in some organizations, budgets will have specific categories that need to be balanced(e.g. infrastructure, research and development, employee development)
Evaluation collect the information required to do selection / prioritization
Selection some projects may not meet required qualifications, be mandatory, or customer / contract driven
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Presentation ContentsOverviewThe Life CycleBusiness VariablesCyclical VariablesScoring Individual ProjectsBalancing The PortfolioSummary
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
21
Key Business Objectives (KBOs)Not all KBOs have the same level of benefit for the organization
While there may be multiple key business objectives, they should have different relative weights to the organization
Our project selection process should reflect this in how we rank support of KBOs to candidate initiatives
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Ranking KBOs
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
23
Convert KBOs To Numeric Weighting Factors
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
24
Scoring the Strategic AlignmentsUsing the relative weights of the KBOs from beforeWe now select which KBOs the project supportsNotice that normally the weighted score would be hidden
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Business DriversThere are a number of additional business drivers that most organizations factor in when determining the viability of new initiatives.
These typically do not vary from year to year, and there may be a lot of similarity between organizations within the same industries
Not all of these factors will have the same weight in scoring initiatives
Some examples of factors include:Size of the initiative (people, investment capital)Number of business units involvedFinancial returns (pay-back period, NPV)
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Which Factors to IncludeDetermine the factors that you want to use in your organization
Determine the high level groups and their relative weighting
Create sub-sets if that is not granular enough for your organizationCalculates weighting based on combination of two levels
All factors will be used to compute the total weighted score for each proposed project
Remember, all projects will have to provide a score for each of these criteria
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Done in a piecewise, hierarchical fashion27
High-Level Categorization
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Provide More Granularity as Needed
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Calculated Weights for Sub-categories
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
30
Presentation ContentsOverviewThe Life CycleBusiness VariablesCyclical VariablesScoring Individual ProjectsBalancing The PortfolioSummary
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
31
Annual ChangesTotal amount of budget for the organization
Amount required for keeping the lights onWhats left is the budget for new initiatives projects
Possibly new strategies and goals KBOs
Concept of budget categoriesAllocation between them may change more frequently
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Presentation ContentsOverviewThe Life CycleBusiness VariablesCyclical VariablesScoring Individual ProjectsBalancing The PortfolioSummary
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
33
New Initiatives and ProposalsThe categories are used to score a project as the independent initiatives come in:Use of drop down menus to limit variance of inputUse a visible legend to assist with interpretationInitiatives can be scored as they come inKeep the weighted score invisible, concentrate on the objective score for the initiativeThis data input could be done by a number of different areas:Business analystsPMO functionPortfolio secretariat
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Scoring the Independent Initiatives
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Presentation ContentsOverviewThe Life CycleBusiness VariablesCyclical VariablesScoring Individual ProjectsBalancing The PortfolioSummary
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
36
The Big Picture- Combine all the new initiatives that have come in and determine where you need to draw the line
Shows a series of sheets that:Add all the initiatives in one sheet, with weighted scoresShow them being copied / sorted in orderShow how the cumulative costs contribute to pass 1 decision
For some organizations thats enoughFor others, they may want to apply budget bucketsShows how you can take it one step further to balance the buckets
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Applying the Business Criteria Weighting
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Not that this is not directly using the results from the previous table.Should simplify 38
First Pass at Balancing
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Second Pass at Balancing Categories
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#Selected Projects! Balanced ApproachThat is your list of projects to charter- that is when you know definitively that it is a project- soft commit pending the planning phase
The selection process followed will help in project success becauseOnly approve projects that you can deliver onMethodology lends itself to ensure senior management support for projects selectedWhen resources become available, everyone is aware of the next project that should be selected
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
41
Presentation ContentsOverviewThe Life CycleBusiness VariablesCyclical VariablesScoring Individual ProjectsBalancing The PortfolioSummary
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
42
ConclusionsReadily available tools
Techniques are simple to implement
Separate the scoring from the business weights
Project portfolio is selected from the highest scoring projects within the resources available
Easily extendible to provide for budget categories to ensure adequate funding to traditionally low scoring areas
Logical, methodical approach facilitates stakeholder focus on approval of projects that support the business objectives
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#BenefitsProvides a quantitative, logical process to ensure projects selected best match the strategic direction of your organization
Ensures senior management support because the project is focused on tangible business criteria
Focuses everyone on making the right decisions based on the organizations business drivers
Garners support the result because the process is both visible and fair
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
45
Thank you for your time!Russ McDowell, M. Eng., PMP
Russona Consulting Corp.E-mail: [email protected]: (613) 836-6182
Russ McDowell
Russ McDowellProject Portfolio ManagementPMI OVOC Symposium - 2008#
46
Vision
Mission
Organizational Strategies and Objectives
High Level OperationsPlanning and Management
Management of On-Going Operations(recurring activities)
Management of Authorized Projects(projectized activities)
Project Portfolio Planning and Management
Organizational Resources
Vision
Mission
Organizational Strategies and Objectives
High Level OperationsPlanning and Management
Management of On-Going Operations(recurring activities)
Management of Authorized Projects(projectized activities)
Project Portfolio Planning and Management
Organizational Resources
Sheet1Criteria CategoriesRating
Business Category40%Financial Category20%Risk Category5%
Human Resources Category10%Marketing Category10%Technical Category15%
100%
Sheet1Criteria CategoriesSpecific CriteriaRatingC. RatingBusiness Category40%strategic alignment75%30.0%business impact15%6.0%employee satisfaction5%2.0%customer satisfaction5%2.0%100%Financial Category20%cost savings30%6.0%payback period10%2.0%cost40%8.0%Net Present Value (NPV)20%4.0%100%Risk Category5%business risks50%2.5%technology risks20%1.0%implementation risks15%0.8%public relations15%0.8%100%Human Resources Category10%resources available75%7.5%impact on working conditions25%2.5%100%Marketing Category10%time to implement80%8.0%estimated product life20%2.0%100%Technical Category15%archetecual alignment33%5.0%conformity to standards33%5.0%RAS34%5.1%100%
100%100.0%