Created by:
Change Portfolio Management Office CREATING AND MANAGING A CHANGE PORTFOLIO
Public Use
21st April 2015
Julia Hodkin
Background to YBS Group
Change Landscape
Structuring the Change Plan
Understanding the Risk Profile of the Portfolio
Risk Based Change Management
Governance
Assurance
Contingency Planning
Resource Allocation
Understanding the Value Profile of the Portfolio
Prioritising and Re-prioritising the in flight Portfolio
The “Air Traffic Control” Function
Contents
In 1864 the Huddersfield Equitable Permanent Benefit Building Society was founded in Huddersfield, and
expansion through a series of agreed mergers, predominantly with the Bradford Permanent Building
Society in 1975, has seen Yorkshire Building Society evolve into the national building society that it is
today.
In 1992 YBS took over the Sussex-based Haywards Heath Building Society
In 2001, YBS merged with the Gainsborough Building Society
In 2008, YBS merged with the Barnsley Building
In 2010, YBS completed the merger with Chelsea Building Society
In 2011, YBS merged with what was then the ninth largest building society at the time, Norwich and
Peterborough
Also in 2011, YBS announced it was buying the Egg savings and mortgage business from Citi in a deal
worth £2.5 billion
Accord Mortgages is also part of the YBS Group
Ambition to grow from £37bn of assets to £50bn by 2019
Background to YBS Group
Whilst change has always been a constant requirement in business the pace at
which it must be executed has escalated dramatically in the last 5 years.
Some facts:
Volatility of business margins has more than doubled since the 1980s, with more than half of the
most turbulent fiscal quarters over the last 30 years occurring in the last decade
The formally strong correlation between market share and profitability has faded sharply
Those able to react rapidly and effectively to threats and opportunities are the ones able to exploit
the windows of opportunity for profitability whilst less agile competitors play catch up
What this meant for YBS:
Companies are either growing or dying, so:
YBS needed to act immediately to mitigate existing risk
YBS wanted to act immediately to enable achievement of it’s growth ambitions
If YBS can respond more quickly and effectively to threats and opportunities - without destabilising its
BAU activities - it could gain significant competitive advantage in the current business climate
…Competitive Advantage Through Change Excellence
Change Landscape
5 Year Plan:
1. Articulated the Business Outcomes that were required – e.g. Customer offerings such as new product
launches, Regulatory/Legal position etc.
2. Articulated the Business Capabilities that would need to have been established in order to enable the
business outcomes – e.g. Strategic technologies, Organisation structure, Staff competencies etc.
3. Defined the projects and programmes that would be needed to deliver the capabilities.
Structuring the 5 Year Change Plan
The Annual Portfolio Plan:
1. Categorised by type – Regulatory, Infrastructure, Productivity, Growth
2. Grouped by ‘Theme’ – Customer experience, Financial performance etc.
We needed to understand:
1. The complexity of what we wanted to do
2. The risks associated with it
3. The inter dependencies
4. How we would prioritise the work
Understanding the Annual Portfolio Plan
Value Parameters
- Financial
- Benefit confidence
- Strategic Importance
- Customer Impact
- Enabling/Capability
Weighted by Category
High Low Feasibility
Feasibility Parameters
- Complexity
- Robustness of Solution
- Business Capability
- Delivery Capability
- Customer Impact
Can be used:
- During the Portfolio Planning round to:
- Perform a coarse first cut of the most/least desirable projects
- Determine whether we are selecting a portfolio that carries a
level of risk that is outside our appetite
- During the year at Change Board to:
- Determine whether NEW projects are worth starting
- Determine when new projects can start dependent on what
skill level resource they require
- During the year at Change Board to determine whether
resources should be reallocated from a low value project to a
higher value project
High
Low
Value
Risk Profiling
Lower Than
Average Risk Average
Risk Higher Than
Average Risk
25% of
Portfolio
25% of
Portfolio 50% of
Portfolio
Feasibility
Low High Risk
Low High
Assume that in general
terms a portfolio of change
has the following ‘bell’
profile:
• c. 25% are Higher than
average risk
• c. 50% are Average risk
• c. 25% are Lower than
average risk
High Risk Average
Risk
Low Risk
High
Low
Value
2015 Portfolio Risk Profile
Lower Than
Average Risk
Average
Risk
Higher Than
Average Risk
Feasibility
Low High Risk
Low High
High
Low
Value
What is the Company’s risk
appetite?
Align the governance and
controls to the risk appetite
of the company
Risk Based Change Management
On projects of ‘average’ risk there is a balance point between the amount of risk they carry
and the amount of controls applied to the project to reduce the risk of failure.
To apply more control would potentially reduce the likelihood of failure but the costs of the
controls may outweigh the additional benefit they bring.
Similarly too little control would expose the project to a greater chance of failure.
High Risk
Low Risk
Too much control…
Cost of control > Cost of failure
Too little control…
Cost of failure > Cost of control
Risk Based Change Management
High risk projects demand
greater control to balance the
cost of failure against the cost
of control
High
Risk
Low
Risk
Low risk projects demand less
control to balance the cost of
failure against the cost of
control
High
Risk
Low
Risk
High Low Feasibility
High
Low
Value
Gold Standard
- Risk reduction Profiling implemented
- Full Communications plan required
- Weekly status reporting
- PM capability level – Senior Project
Manager
- Governance compliance must be 100%
Hig
h R
isk
Risk Based Governance
Bronze
Standard
Silver
Standard
Gold
Standard
Silver Standard
- Risks – will include contingency plans
should the risk become an issue
- Fortnightly status reporting
- PM capability level – “intermediate”
Project Manager
- Governance compliance >80%
Bronze Standard
- Risks, Issues, Dependencies,
Assumptions and Lessons management
- Monthly status reporting
- Key mandatory documents such as
Project Definition & Architecture
Definition Documents
- Basic Comms plan
- PM capability level – “Junior” Project
Manager
High Low Feasibility
High
Low
Value
Gold Standard
- Scheduled Health Checks
- Attend All Stage Gates
- Mandatory Quarterly Self Assessments
- Scheduled Deep-dive assessments
Hig
h R
isk
Risk Based Assurance
Bronze Standard
- Event driven Health Checks
- Pass stage gates by self certification
and validation from CPMO Hub
managers
- Voluntary self assessments
Silver Standard
- Event driven Health Checks
- Attend key stage gates only
- Quarterly self assessments
recommended
- Event driven Deep-dive assessments
Additional scrutiny
via ‘spot checks’
Silver
Standard
Gold
Standard
Bronze
Standard
High Low Feasibility
High
Low
Value
Gold Standard
- 45% Starting provision??
Hig
h R
isk
Risk Based Contingency Management
Bronze Standard
- 10% Starting provision??
Silver Standard
- 30% Starting provision??
Silver
Standard
Gold
Standard
Bronze
Standard
Initial Contingency determined from position on graph. As the project moves through it’s lifecycle the more secure the
financials become and the need for contingency reduces. Therefore as a project presents to Change Board at specific
funding gates, then the contingency provision can be reduced and be made available for other projects
For the High Value and Medium-High Risk Projects you need to use the most highly skilled change resources available
For the High Value but Low Risk Projects any surplus highly skilled PMs can be used, or if they adhere fully to the required
Governance and Assurance frameworks, then a fully trained BAU resource could lead these projects.
For the Lower Value but Low Risk projects a BAU resource could run these without having to follow the Governance or
Assurance frameworks as the cost of enforcing them may negate the relatively low value the project is delivering
For the Low Value and High Risk projects no resources should be allocated
High Low Feasibility
High
Low
Value
Risk Based Skill Allocation
DO NOT DO
Highly Skilled
Project &
Programme
Managers
Skilled
Project &
Programme
Managers or
Trained BAU
Resources
BAU
Resources
The Value Profile
High Low Feasibility
High
Low
Value
High Value
Average Value
Low Value
The Value Profile is specific to each individual Company. It can include fiscal measures such as scale of investment cost,
payback period, ongoing cash flow, certainty of benefit, scale of external expense etc. but it can also include non-fiscal
benefits such as risk avoidance, customer impact, reputational enhancement, etc.
In FS clearly compliance with FSA and PRA requirements is a hygiene factor which has value. This is not relevant for a
media-based company or a component manufacturer.
A company which is on the point of a merger, flotation or which has significant cost base challenges will not want to
spend money on external fees which create a direct impact on the P&L. Therefore type of expenditure required could
be a key parameter.
What does “Value”
mean to your
Company??
Speed of payback??
Scale of payback??
FSA Compliance??
Net Promoter Score??
Technical risk
avoidance??
Internal only
expense??
Re-prioritising In Flight Projects
High Low Feasibility
High
Low
Value
This High Value project
is Amber and
forecasting Red. It
utilises some of the
same resources as a
lower value project
Delay or put on hold
the lower value project
in order to redirect
resources to the higher
value project
We can look to prop up ‘at risk’
High Value outcomes by seeking
out lower value projects to defer
or put on hold in order to re-
allocate resources to key projects.
Prioritising New Projects
High Low Feasibility
High
Low
Value
New project coming to
Change Board –
indicating its of high
value and of medium
feasibility.
Implications are you
would need a very
skilled PM or
Programme Manager,
and Gold standard
governance and
assurance
New project coming to
Change Board –
indicating its of high
value and of medium-
high feasibility.
Implications are you
would need a skilled
PM, and Silver standard
governance and
assurance
New project coming to
Change Board –
indicating its of low
value and of medium
feasibility.
Implications are you
would want to question
whether this project is
something you would
want to invest in.
We can also make better
investment decisions and prioritise
the order in which projects are
started dependent on the value
they drive, and the type of
resource they require.
For example we may choose not to
start a valuable project for 2 or 3
months in order to allow one of
our most skilled PMs to roll off a
project they are finishing and be
available to run the new project.
We may also choose not to start a
project if it does not drive enough
value, especially is resources are
already stretched AND/OR we have
a significant amount of risk still in
undelivered projects which may
require contingent resourcing.
Implementing tools and processes which increase objectivity and transparency brings with it challenges:
Gaining Stakeholder buy in and input to:
The principles
The parameters
The weighting
The ‘moderated’ final model
Resistance from Sponsors to having to justify the drivers for ‘pet’ projects
Conflicting priorities and values of Stakeholders
Effort required to complete:
The initial modelling exercise
The refreshes each time a project raises a Change Request or Funding Request
Modelling Challenges
Take-off “Defining the flight path and
launching the planes with a safe
flight plan and everyone on board”
Flight “Making sure the planes reach
their destination intact and on
time whilst optimising capacity;
managing turbulence and shocks
Landing “Controlling descent and making sure
the runway is clear, the terminal is
ready and people disembark safely”
The Air Traffic Control Analogy
Delivering a transformation requires control analogous to air traffic control: reputations are dependent on
successful outcomes; you have to know where you are going and when you need to arrive, with a plan to get
there; there are several stages - take-off, flight and landing – and all have to be done well for a successful
outcome; each stage is fraught with risk, so everyone has to work together in harmony and with discipline
towards a successful outcome; you need to be in control at all times (and know you’re in control); and you need
a clear runway to land.
Done well ATC will allow the Change Board to effectively govern the Portfolio resulting in improved
decision making and increased confidence in delivery – we will be in control
What is ATC?
The Change Plan
Sets out the journey to 2019, reflecting business strategic priorities with a clear view on dependencies &
outcomes
The Portfolio Plan
Sets out the schedule of projects and programmes to manage and control
the delivery of change
The Business Impact Plan
Shows the aggregate change from a Business perspective, including
readiness and release scheduling
The Benefits Plan
Shows how the benefits anticipated at the start of the journey will be
delivered in practice
The change journey to achieve 2019 outcomes is complex and difficult. Understanding and
navigating that journey can be much easier if we focus on 4 key components to ATC. Getting this
focus and sustaining it will substantially increase our chances of success
The 4 Components of ATC
The Key Steps YBS Group has taken in structuring and controlling it’s Change Portfolio are:
Understand the Business Outcomes required
Determine the capabilities needed and the projects to deliver them
Understand the risk and value profile of the portfolio
Align governance and assurance with the Business’s risk appetite
Understand what Value means to the Business
Constantly re-assess the value and risk of projects as they move through their lifecycle to ensure
focus remains on the most valuable ones and that controls are proportionate to risk.
Use the ATC function to constantly review the threats and opportunities for the Portfolio
Summary