Project Portfolio Management Trap
I am sure your organization has had its share of failed projects. The reasons for project failure could be many. Some of the project failures may include any or all the following factors.
- Poor planning,
- Ambiguous requirements
- Inadequate or incompetent resources
- Ineffective stakeholder management
- Unreasonable and tight deadlines – the list is endless.
While most organizations focus on the capability of the project manager and the team, very few enterprises go beyond.
You might be wondering – if the project has failed, for sure some or multiple aspects of project management would have proved to be ineffective.
Yes, you are right in a way, but not necessarily all the time!
Remember, it is not the project manager and the team that decided to undertake the project!
The choice of projects to be undertaken happens at the senior management or the business unit level. The PPM (Project Portfolio Management) fraternity refers to them as Portfolio Managers.
Let me elucidate further.
Firms have one set of professionals who are externally focused. These professionals review the external business environment, assess the macroeconomic scenario, analyze organizational strategies and evaluate projects or programs to be undertaken to meet business goals and objectives. Such a decision sets the stage for the program and project managers who get down to plan and execute programs or projects depending on complexity, size, value, and other parameters.
In essence, we have a set of business leaders who analyze and decide to undertake programs and projects, while we have another set of managers to plan and execute them.
To put the above in a business sense, the portfolio managers are accountable to the business cases they propose while the program and project managers are responsible for ensuring they deliver against the project requirements. Trust the PPM context is clear.
Now, let us reflect the original question – the Project Portfolio Management process trap!
Today’s business, economic, competitive, regulatory, and political environment is very complicated. Industry refers to it as VUCA – volatile, uncertain, complex and ambiguous.
In such a situation, how do portfolio managers decide projects to be undertaken or not?
I am sure these business leaders analyze various opportunities before either approving, rejecting, or putting them on hold.
So, where is the trap?
By project portfolio trap, we are referring to the lack of robust governance mechanisms that organizations must implement. In the absence of such governance, enterprises that initiate projects and programs that have ‘failure’ written all over them – even before program and project managers commence their planning.
Don’t these business leaders use powerful spreadsheets to analyze programs and projects? The answer is yes.
But can spreadsheets and standalone applications do the justice required for complex initiatives?
Most probably not!
If not, what does Project Portfolio Management process entail?
A robust Project Portfolio Management should address but not limited to the following business dimensions.
- Strategic linkages to business goals and objectives
- Expected competitive advantage
- External environmental factors
- Event and non-event based risks
- Investments and costs involved
- Short term and long term benefits
- Key financial ratios such as NPV, IRR, Pay Back Period, etc.
- Compliance with regulatory and environmental needs
Also, the Project Portfolio Management should take care of the following critical aspects.
- Seamlessly connect Project Portfolio Management decisions to program and project execution.
- Any changes to the business case should automatically flow into the program and projects.
- Any negative deviations in program and project performance should trigger alerts for business case review
- Integrate PPM with organizational systems for finance & accounting, procurement, and other functional areas.
Please reflect if our spreadsheets could accomplish all of the above. If not, how do business leaders get convinced that their decisions stand the test of time?
In the absence of any of the above, it is no surprise that organizations fall into the project portfolio trap!
Would you not want to avoid this project portfolio trap?
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