Portfolio Project Management - IT Week, October 2001
Briefing paper: Portfolio Project Management
Assigning an individual manager, team and budget to each IT project may be inefficient because it makes it difficult to reallocate resources if priorities change. Garry Ingram considers an alternatives the economic slowdown bites, IT managers are being asked to deliver more with fewer resources in a shorter time. And as project management margins are squeezed, they have less space to manoeuvre and fewer options to ensure projects are completed on time, and to the desired specification.
Many believe the traditional practice of dealing with each IT project separately is inefficient. For IT staff with heavy work-loads, it may be better to unify the manage-ment of multiple projects to make better use of resources and improve the delegation of responsibilities.
There may be benefits in developing a broad vision of objectives and management across multiple, perhaps unrelated, projects. This approach, sometimes called portfolio project management, can often make better use of resources as well as affording more operating flexibility.
Under traditional project management, each project has a separate, dedicated team, overseen by a different manager. The resources, timescales and scope are controlled within each project, and the business benefit is only achieved upon the project's completion. But this approach may be wasteful, and may become harder to justify given growing budget constraints.
For many firms involved in multiple IT projects, a more efficient method will be needed or the time it takes to complete projects will grow, and it will take longer to achieve a return on investment (ROI).
MATCH RESOURCES WITH PRIORITIES
Projects are assessed in terms of potential benefits, leading to more phased implementations and earlier ROI. The advantage of the portfolio approach is that staff can be used much more flexibly, as resources can be shared between the projects on a part-time or sequential basis. Projects are subdivided into project phases and the team members move from project to project as required. In theory, the total resources allocated per project decreases, making the process more cost effective, although sometimes it may lead to a delay in completion.
Unlike the management of single projects, portfolio management requires an appreciation of the business objectives for all of the projects involved - termed a scope framework. For this reason, it is crucial to gain a thorough understanding of the business benefit of each project as well as its relative priority.
To do this, IT managers should define overall objectives and identify a business sponsor for each project. They must quantify the benefit for each project on a simple scale, and identify subsets of the functionality that are sufficiently modular to be implemented independently. This allows implementation in phases, and managers should estimate the percentage of the project's business benefit as well as the duration that each phase represents.
This process enables the manager to gain a helicopter view of all projects in the portfolio and, based on the quantifiable benefits, the manager can assign an appro-priate level of priority to each project.
Portfolio management also requires a change in the way teams are built. The normal stages of team development - forming the team and defining the common goal - are no longer relevant because the teams are more virtual and fluid, as they may work on a number of projects and the composition of teams may change.
An alternative model that allocates staff to working groups is needed. These groups will not necessarily be restricted to a single project, and individuals must clearly understand their roles and responsibilities. These groups need a structure that allows individuals to communicate easily with one another and the portfolio manager.
To create efficient groups, managers define the role of each person and their responsibility within every project stream. Some staff might be involved in a single project while others could be working on multiple assignments, either sequentially or in parallel.
Managers also need to implement a reporting mechanism that highlights the impact of slippage, or early completion, across the whole portfolio. They may need a progress-tracking system that is responsive enough to detect overruns for those who are only working one day a week on a project, if such overruns could have a knock-on effect, and if overruns could cause delays elsewhere in projects.
For good portfolio management, communication is paramount. Good structures and mechanisms for reporting and tracking should be in place, and it is also essential to ensure that internal communications are as clear as possible.
Since working groups are usually less cohesive than traditional teams, the portfolio manager must take more responsibility for internal communications, encouraging information-sharing within and between projects.
One of the benefits of portfolio work is the ability to use resources and information across multiple projects. This benefit can best be realised if the whole of the portfolio team appreciates the scope of the entire work being undertaken. If staff can see the big picture, they will understand if it is necessary to make changes which may harm an individual project but benefit the overall portfolio.
Traditionally, each project has a separate board that focuses on the objectives of that project. Portfolio management requires a different approach. To benefit the business, the portfolio manager must have the flexibility to move the focus and the resources between projects. Clearly, this may cause changes that benefit one business area at the expense of another.
To ensure this flexibility, the portfolio board must have responsibility and authority for all of the business areas affected by the projects.
Authority to make changes must be assigned to the portfolio manager at portfolio rather than project level. And finally, any changes to the estimated business benefit or the assigned level of priority for a specific project should be raised as a formal change.
Decision-making is usually more straightforward when only a single project is being managed. With portfolio management the process is more complicated, as it is necessary to consider the effect of decisions on all projects if they have inter-dependencies. But with a greater range of resources available, this can lead to more creative solutions. The important thing is to monitor business benefits and encourage cross-project thinking.
When an issue is raised, it is necessary to assess the impact on the individual project and the portfolio. Analysing the impact on the project - as in traditional management - identifies any implications for timescales and costs. From the scope framework, the priority of that project and the percentage of business benefit within the current phase can be identified. This information will then give an indication of the impact of the issue on the entire portfolio.
All the standard project management tools can be applied, such as altering the time, cost and scope of an assignment. However, portfolio management adds another level of flexibility - the option to shift resources from one project to another. Any such decision should be based on achieving the maximum possible benefit across the portfolio.
In the right circumstances, portfolio management can make more efficient use of resources to achieve greater business benefits. But it is not always straightforward. It requires the adoption of a more strategic, business-focused view. It also calls for staff to recognise that some projects might suffer for the greater good, and they have to trust the portfolio manager to make the right decisions.
ITWeek Briefing Paper
Portfolio project management
- IT managers are under pressure to carry out more work in a shorter timeframe, using fewer resources.
- Traditional project management assigns a manager, a team and dedicated resources to each project.
- This may be inefficient because it tends to prevent the sharing of staff and resources between projects to reflect business priorities.
- Portfolio management takes an overview, controlling multiple projects, and enabling resources to be allocated flexibly to reflect priorities.
HOW TO PRIORITISE WORK
- Allocate project name
- Decide high-level objectives
- Allocate project sponsor
- Determine total, quantifiable, business benefit
- Allocate priority to the project, ranging between one and five
- Plan project in phased modules
- Calculate percentage of total project benefit for each phase, on a non-cumulative analysis
- Calculate percentage of total project duration for each phase.