PROJECT PORTFOLIO MANAGEMENT WHY AND HOW - A RESEARCHER S PERSPECTIVE OPTIMERO & LARS K. HANSEN

Transcription

1 PROJECT PORTFOLIO MANAGEMENT WHY AND HOW - A RESEARCHER S PERSPECTIVE OPTIMERO & LARS K. HANSEN

2 Lars K. Hansen 9 publications

3 RESEARCHER S PERSPECTIVE

4 PLOT Origin Relevance Definitions Roles Concepts Practice 4

5 ORIGIN

6 ORIGIN Originates from the Italian word portafogli: Portare 'carry Foglio 'leaf' 6

7 MODERN PORTFOLIO THEORY Portfolio research formed by Nobel price winner H. M. Markowitz Focus on financial portfolios Groundbreaking article in Journal of Finance in 1952 Risks have to be taking into account at portfolio level Diversification in investments reduces risk at portfolio level 7

8 ORIGIN A portfolio perspective is adopted by: Construction projects New product development projects (NPD) Research and development projects (R&D) Since the early 80 s used in management of IT projects (Mcfarlan, 1981) 8

9 RELEVANCE

10 RELEVANCE 1. Arguments for increasing importance of Project portfolio management in organizations (in general) 2. Arguments for increasing importance of Project portfolio management in your organization? 10

11 MORE PROJECTS Bernstein et al (2016)

12 INCREASING IMPORTANCE OF IT PROJECTS IN BUSINESS Nolan and McFarlan (2005)

13 TOP MANAGEMENT AGENDA A lack of board oversight for IT portfolio is dangerous; it puts the firm at risk the same way the falling to audit its books would Portfolio managers must be a skilled communicators who does not hide behind technology NEW COMPETENCIES jargon or talk down NEEDED to board members (Nolan and McFarlan, 2005). PORTFOLIO 13

14 PPM DEFINITIONS NEW COMPETENCIES NEEDED

15 DIFFERENCES BETWEEN LEVELS Do the right projects Strategic level Portfolio NEW COMPETENCIES NEEDED Program Program Projects Projects Projects Projects Other work Do the projects right Operational level 15

16 PROJECT Project A temporary effort to create a unique product, service or result (PMI, 2008) Project Management The application of knowledge, skills, tools and techniques to project activities to meet the project requirements (PMI, 2008) NEW COMPETENCIES NEEDED 16

17 PROGAM Program A group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually (PMI, 2008) NEW COMPETENCIES NEEDED Program Management The centralized coordinated management of a program to achieve the program s strategic objectives and benefits (PMI, 2008) 17

18 PORTFOLIO Portfolio A collection of components that are grouped together to facilitate the effective management of that work in order to meet strategic business objectives (PMI, 2008) Portfolio management Portfolio management is the centralized management of one or more portfolios, which includes identifying, prioritizing, authorizing, managing, and controlling projects, programs and other related work to achieve specific strategic business objectives (PMI, 2008). NEW COMPETENCIES NEEDED 18

19 PROJECT PORTFOLIO MANAGEMENT LEVELS Kendall and Rollins (2003)

20 PPM DEFINITION (PPM) definition is key in change management efforts (Kotter 1996) In Newport, lack of PPM definition coursed ambiguity in PPM operations and improvement (Hansen and Kræmmergaard, 2013)

21 QUESTIONS 1. What is your organization s definition of PPM? 2. What are the advantages of write down this definition? 21

22 PPM DEFINITIONS FROM RESEARCH [Management of]a collection of components that are grouped together to facilitate the effective management of that work in order to meet strategic business objectives (PMI, 2008) [Management of] a group of projects that are carried out under the sponsorship and/or management of a particular organization. These projects must compete for scarce resources (people, finances, time, etc.) available from the sponsor, since there are usually not enough resources [ ] (Archer & Ghasemzadeh, 1999). IT-portfolio management is concerned with the problem of management the business value of the IT-investment portfolio (Peters & Verhoef, 2008) [..] a dynamic decision process where a list of projects is constantly updated and revised (Martinsuo & Lehttonen, 2007) [..] defined as simultaneous management of the whole collection of projects as one large entity [Meskendahl, 2010) 22

23 PPM ROLES Unger et al (2012): PPM often struggle to provide visible value Benefits of clarify roles: Different PPM roles provides different value, how do we know that we apply to most appropriate role? (Unger et al 2012) Unclear roles and authority (may) cause conflicts

24 PPM ROLES AND BENEFITS Unger et al (2012) 24

25 ARE WE WEARING THE RIGHT CAPS Controller Coordinator Supporter Weekly Floor walking X Monthly follow-up X Quarterly Follow up X Project management support when requested X Kick off meetings X X Line management support X

26 PLOT Origin Relevance Definitions Roles Concepts Practice

27 POINT ONE

28 PMI STANDARD Project Management Institute is the world's leading not-forprofit professional membership association for the project, program and portfolio management profession. Founded in 1969, PMI delivers value for more than 2.9 million professionals working in nearly every country in the world NEW COMPETENCIES NEEDED Mostly used in the private sector and in North America 28

29 PPM STANDARDS 29

30 PPM BEST PRACTICES (PMI, 2008) #1. Relating the portfolio to strategy #2. Allocating finances and human resources #3. Measuring component contributions #4. Strategic risk management NEW COMPETENCIES NEEDED

31 #1. RELATING THE PORTFOLIO TO STRATEGY Question: Do we dedicate our resources to top priorities? Practices: Use strategic drivers Balance between: NEW COMPETENCIES NEEDED Short vs. long term goals High vs. low risk projects Segments Timing

32 #1. RELATING THE PORTFOLIO TO STRATEGY NEW COMPETENCIES NEEDED 32

33 #2. ALLOCATING FINANCES AND HUMAN RESOURCES Question: Do we use our finances in a transparent and efficient way? Practices: A (centralized) overview of costs at Portfolio-, program- and project level NEW COMPETENCIES NEEDED 33

34 #2. ALLOCATING FINANCES RESOURCES 34

35 #2. ALLOCATING FINANCES AND HUMAN RESOURCES Question: Do we allocate our human resources transparent and efficient? Practices: Centralized resource pool Functional division of resources Time tracking NEW COMPETENCIES NEEDED 35

36 #2. ALLOCATING HUMAN RESOURCES NEW COMPETENCIES NEEDED 36

37 #3. MEASURING COMPONENT CONTRIBUTIONS Question: How do we know that our portfolio creates value? Practices: Benefit management at program and project level Business case includes: NEW COMPETENCIES NEEDED Tangible and intangible benefits/costs Long and short term benefits/costs Post project review after 6 months 37

38 #4. STRATEGIC RISK MANAGEMENT Question: How do we avoid doing the same mistakes in later projects? Practices: Apply the rule to track failures (pareto diagrams) Taking advantages of a lessons leaned database Risk management as mandatory in projects 38

39 #4. STRATEGIC RISK MANAGEMENT: PARETO DIAGRAM 39

40 #4. STRATEGIC RISK MANAGEMENT: PARETO DIAGRAM Projekter forsinket mere end 6 måneder N=50 40

41 PPM BEST PRACTICES (PMI, 2008) #1. Relating the portfolio to strategy #2. Allocating finances and human resources #3. Measuring component contributions #4. Strategic risk management NEW COMPETENCIES NEEDED

42 QUESTIONS 1.Does your organization utilize one or more of the four best PPM practices (and which)? 2.How do these best practices fit your organization s existing practices and culture? 42

43 PLOT Origin Relevance Definitions Roles Concepts Practice

44 BAD NEWS FROM RESEARCH PMO implementation often fail, as they do not demonstrate visible value (Singh, 2008) PMOs have a short life expectancy before restructured or shot down (Hobbs and Aubry, 2007) Big bang implementation should be avoided (Fonstad and Robertson, 2006). No clear empirical evidence show a positive correlation between (IT) PPM maturity and performance (Hansen and Kræmmergaard, 2014) 44

45 POINT TWO

46 PPM IS NEEDED Authority, knowledge, resources Control mechanisms (Hansen et. al. 2013)

47 REFERENCES Bernstein, Ethan, et al. "Holacracy HYPE." Harvard Business Review (2016). Fonstad, N. O. "Robertson. D (2006). Transforming a Company, Project by Project: The IT Engagement Model." MIS Quarterly Executive 5.1: Frey, Thorsten. "IT governance Structures, processes, and relationships in IT decision-making." Governance Arrangements for IT Project Portfolio Management. Springer Fachmedien Wiesbaden, Hansen, Lars Kristian, and Pernille Kræmmergaard. "Transforming local government by project portfolio management: Identifying and overcoming control problems." Transforming Government: People, Process and Policy 7.1 (2013): Hansen, Lars Kristian. "IT Project Portfolio Management: Vertical and Horizontal Work Design Problems in a Public Organization." (2013). Hansen LK and Kræmmergaard P (2014) Discourses and Theoretical Assumptions in IT Project Portfolio Management: A Review of The Literature. International Journal of Information Technology Project Management 5(3). Kendall, Gerald I., and Steven C. Rollins. Advanced project portfolio management and the PMO: multiplying ROI at warp speed. J. Ross Publishing, Kotter, John P. Leading change. Harvard Business Press, 1996.

48 REFERENCES Markowitz, Harry. "Portfolio selection." The journal of finance 7.1 (1952): McFarlan, F. Warren. "Portfolio approach to information-systems." Harvard business review 59.5 (1981): Morris, Peter, and Jeffrey K. Pinto. The Wiley guide to project, program, and portfolio management. Vol. 10. John Wiley & Sons, Nolan, R. & McFarlan, F.W. 2005, "Information technology and the board of directors", Harvard business review, vol. 83, no. 10, pp. 96. PMI 2008, The Standard for Portfolio Management, 2st edn, Project Management Institute (PMI), Pennsylvania USA. Singh, Rajendra, Mark Keil, and Vijay Kasi. "Identifying and overcoming the challenges of implementing a project management office." European journal of information systems 18.5 (2009): Unger, Barbara Natalie, Hans Georg Gemünden, and Monique Aubry. "The three roles of a project portfolio management office: Their impact on portfolio management execution and success." International Journal of Project Management 30.5 (2012):

49 THE END THE END