The Brexit vote may have set in train a series of negative consequences to the UK’s and EU’s economy but at least one impact can be perceived as positive: companies are now paying more attention to where they put their investments.

Portfolio Management is gaining a renewed interest in our not-so-small PPM world.

Let’s not forget: projects can be referred to as social complex entities, vehicles for transformational change, or even political objects, but at the end of the day, projects are investments to be managed.

As investments, they need to be carefully selected, prioritised, implemented and monitored.

While the theory makes senses, in practice many companies are still neglecting the importance of effective portfolio management capabilities.

They continue to pour money down the drain. Doing projects on a first-come-first-served basis, approving pet projects, selecting projects without thoroughly evaluating their business cases, or simply putting the emphasis on doing the projects right, without even thinking if they are doing the right projects.

Make no mistake: ‘there is nothing quite so useless, as doing with great efficiency, something that should not be done at all’ (Peter Drucker, The Management Guru).

Simply put, that’s what Portfolio Management is about: balancing contrasting needs (what I call the 3 Rs of Portfolio Management – risk, resources, and return).

3 Rs of Project Management - Risk Return and Resources

In order to maximise the investment and ensure that the right projects – the ones that align to the organisation’s strategic objectives – get done.

The Portfolio Management process is usually represented as a pipeline, from which proposals are filtered until a selection is made.

It may seem obvious but it’s important to stress that Portfolio Management is a top-down approach to determine your portfolio of projects and programmes.

This means that the strategic objectives of the organisation (supported by business drivers) are foundational to the Portfolio Management process and need to be made clear to all the interested parties.

Long story short, a business driver is a goal that your company wants to accomplish which contributes to their strategic objectives.

They should be measurable so that you can objectively determine how your projects affect them (e.g. how much of an impact will this project have in increasing our customer satisfaction rate?).

From here, business drivers are then prioritised, that is, the key stakeholders in the Portfolio Management process should rank the importance of each driver compared to other drivers (e.g. do we care more about improving our customer satisfaction rate or improve our internal financial processes?).

This will later enable stakeholders to systematically and objectively rank the importance of their projects with respect to business goals rather than arbitrarily assigning priorities to projects and letting pet projects get away with it.

Once these pre-requisites are in place (you’ll be amazed to know how many companies don’t know what their strategic goals are!), you should be in a good position to initiate the Portfolio Management process, which is generally composed of the following phases:

Portfolio Management Diagram - Marisa Silva - Wellingtone Project Management

  1. Ideation: All ideas, business problems and needs should be captured as project proposals; at this stage, only high-level information is available to be provided.
  2. Evaluation: All proposals are assessed regarding their attractiveness (do they have a sufficiently robust business case? What is their risk exposure?) and achievability (do we have the budget? What about the resources to do it?). This phase should also include an evaluation of the alignment of the project with the strategic objectives of the company, which will determine if the project is worth doing or not.
    Figure 3 – Should we do it?
    Figure 3 - Marisa Silva - You May be Doing the Right Projects But Are You Doing Right By Your Projects
  3. Prioritisation: Following the evaluation phase, projects are prioritised, either against the business drivers previously agreed and/or by using other portfolio tools such as a scoring matrix. The prioritisation will enable stakeholders to identify which projects contributes the most to the achievement of the strategic objectives, as well as will provide an opportunity to discuss when should (and could) they be done.
  4. Selection: The culmination of the previous steps is the selection of the portfolio for the period in analysis. Once selected, projects will follow the Project Management lifecycle.
  5. Monitoring: The world will not stop while you are building your portfolio for the next fiscal year – priorities will probably change and projects will probably get delayed. The Portfolio Management process is thus a continuous cycle, where an effective tracking and monitoring of projects will enable projects that are no longer expected to realise benefits to be discontinued, and new projects entering the pipeline to be started.

Companies new to Portfolio Management tend to focus more  in the selection and prioritisation phases e.g. project proposals. However, it should be noted that Portfolio Management doesn’t stop there but is indeed a dynamic and continuous process that should allow your organisation to answer the following questions:

  • What projects to initiate?
  • What projects to continue?
  • What projects to terminate?

In fact, it’s not rare to find companies where killing projects is perceived as a shameful action. It may actually take courage to stop a project in progress but this shouldn’t be shameful at all. Embarrassment (not to mention professional ethics) should not be to stop something that everyone knows will not deliver the intended benefits but, knowing so and still continue to waste the organisation’s resources (time, people, money) when these could be employed in more beneficial endeavours.

It may actually take courage to stop a project in progress but this shouldn’t be shameful at all. Embarrassment (not to mention professional ethics) should not be to stop something that everyone knows will not deliver the intended benefits but, knowing so and still continue to waste the organisation’s resources (time, people, money) when these could be employed in more beneficial endeavours.

And you? Are you putting your energy (and money!) in the right projects?

Luckily enough, I may just know a very good company to help you!