Starting a portfolio

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How to get started –managing a project and programme portfolio


Introduction• This guide is aimed at those responsible for arranging and managing

investment in projects and programmes across the whole of an organisation or for a specific department

• This guide sets out the initial steps to:— Help you understand what portfolio management is and its benefits

— Help you define the purpose for creating a portfolio in your organisation

— Provide examples of the challenges and resistance you will experience when trying to establish a portfolio approach

— Give you some ideas for:— Identifying all existing initiatives

— Categorising the initiatives so that you can see their impact by function, by contribution to strategic objectives or by resource usage

— Creating criteria for initiatives to form part of your portfolio

• To access the white paper ‘Building Capability for Effective Portfolio Management’ go to http://www.maventraining.co.uk/whitepapers/

2 © Maven Training 2011

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Scope of the work

• Portfolios represent the totality of an organisations investment in the changes required to achieve its strategic objectives

• Portfolio Management is a coordinated collection of strategic processes and decisions that together enable a more effective balance of organisational change and business as usual

• The portfolio already exists (although it might not be called a portfolio) as there are projects and programmes taking place throughout the organisation at any one time, but portfolio management is formalising what is known about it and how it can be managed better as a group of initiatives

• To undertake portfolio management you first need to understand the scale of the work already underway in organisational change (projects and programmes) and business as usual(daily pressure of work and small scale change initiatives to make improvements to this daily work)



Benefits of portfolio management• Greater emphasis on achievement of strategic objectives

— Clearer link between actual activity and ideas in the Business Plan

— Increase in the emphasis given to realising benefits and the subsequent increase in their achievement

• More effective use of resources:— Reduction in costs from stopping or not starting initiatives that do not

contribute sufficient benefits

— Increase in availability of resources to undertake projects and change initiatives deemed high priority

— A reduction in project and change activity that is a duplication of effort or is running at cross purposes

— Fewer resources are involved in preparing for change, with consequent reduced pressure on all resources

— Fewer initiatives mean less disruption to day-to-day business activity



Why do you need a portfolio?• Need to understand the total spend that the organisation is making on

improvements and changes to the way it operates – many organisations are surprised by the figures once they total the spend because prior to the creation of a portfolio the spend was ‘hidden’ in departmental budgets and the total investment in change was not calculated

• Need to see how much change is underway and how much capacity the organisation has for more change – in some cases the need for a portfolio approach is driven by pressure on resources who cannot assimilate the deliverables from multiple projects into their working practices whilst at the same time managing growth in the volume of their business as usual activities

• Need to understand where changes are taking place (resources split between projects and programmes and business as usual) and where the organisation is ‘stable’ with limited project and programme management activity

• Need to understand the current resources assigned to projects and programmes in order to undertake an expansion (hiring) or contraction (redundancy/restructuring)

• Need to understand what initiatives are underway prior to the launch of a new strategic direction, where some of the existing initiatives will be stopped, some given greater emphasis and the need for additional initiatives identified



Challenges• Those running the projects and programmes will see your

initial information gathering about existing work as:

— A threat to their autonomy to run them

— A threat to the continuation of these initiatives as comparing them against each other in a portfolio will show up the weaknesses (limited benefits, cost overruns, delays, resource conflicts etc)

• Building a portfolio requires information gathering and planning which can be seen as an additional bureaucratic step that does not add any additional value to the organisation

• Project and programme managers believe that they are already reporting the information that you want and that portfolio management is an additional administrative burden for them



Identifying existing initiatives

• Who to ask - to create a comprehensive understanding of the existing portfolio, don’t just take the information you are given in reports about project activity in each department. You need to ask likely recipients of project deliverables, who may identify initiatives that have not been formally documented but are using resources – see next slide for examples of who to ask

• What to ask – compile a set of characteristics about each possible project and programme and make sure you ask all managers and read all reports to gain the same information for each initiative. For example:

— Type of initiative – decide if you are going to capture details of all the projects within a programme separately or just record high level information about each programme

— Project deliverables – systems, processes, staff hires, new locations, new equipment, new or changed contracts with suppliers etc.

— Number and type of resources involved in each project

— The expected costs and types of cost e.g. consultancy, equipment, licences etc – and define if the costs are from a departmental or central budget

— The benefits expected from each initiative, ideally quantified in financial terms


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Portfolio stakeholders

External stakeholdersInternal

stakeholders

Support staff

Customer facing staff

Managers

Business line 3

Business line 2

Business line 1

Function 3

Function 2

Function 1

SeniorManagers

Executives

Board

SuppliersCustomers Reviewers

Regulators

Auditors

Media

Financial analysts

All others

Essential

All others

High value


Building the portfolio – categorise

• Organises change initiatives into groups, types or segments

• Categories can be based on:— Type of deliverable or type of benefit— Sponsoring department— Users or those that will need to change their way of working

to benefit from the project— Strategic objective that the project or programme

contributes to e.g.— Growth in customers, staff, product or service range, locations

serviced by the organisation, number of offices— Increase in productivity by person/team/department— Decrease in cost of sales— Decrease in staff turnover/increase in staff satisfaction— Decrease in customer complaints/increase in customer satisfaction



Building the portfolio – prioritise

• Once you understand what work is being undertaken, organise the portfolio so that the following questions can be answered:— What are the most important initiatives?— Which initiatives should the organisation invest in?— What initiatives no longer meet the strategic objectives and can

be retired from the portfolio?• Identify the importance of each strategic objective and give

each importance a weighting• Assess each initiative for its contribution to the strategic

objectives and give it a score• Multiply the score by the weighting and rank each initiative

with highest scores first – see next slide for an example of this approach



Prioritisation example - 1

• Weighting:— Critical to the survival/success of the organisation has a

weighting of 3 i.e. 3 times more important than the least important objective

— Important to the survival/success of the organisation has a weighting of 2

— Useful for the achievement of the strategy has a weighting of 1

• For each initiative, identify its contribution to the strategic objectives of the organisation:— No contribution = 0

— Some contribution = 5

— Significant contribution = 10



Prioritisation example - 2


Name of initiative Weighting Contribution Total valueMarketing programme 2 5 10Upgrade of office software 1 0 0Leasing of new office 2 5 10Hiring new sales team 3 10 30Sale of subsidiary company 2 5 10Launch of new product 3 10 30

Name of initiative Weighting Contribution Total valueHiring new sales team 3 10 30Launch of new product 3 10 30Marketing programme 2 5 10Leasing of new office 2 5 10Sale of subsidiary company 2 5 10Upgrade of office software 1 0 0


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Starting a portfolio

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