Doing Portfolio Mechanics by Hand

In a recent discussion on LinkedIn regarding portfolio tool implementations, one consultant commented that the most successful deployments have been done in phases with an upgrade to a more sophisticated tool being done after improving process maturity.

Such an approach makes a lot of sense and could be likened to using a calculator after learning how to do math by hand. I think the analogy is appropriate. Educators encourage kids to learn the basic and important mathematical skills before using a calculator so that they understand foundational concepts.

The same could apply to project portfolio management in the sense that organizations are better off learning the portfolio mechanics and process disciplines ‘by hand’ before jumping into a dedicated portfolio tool. I believe that those organizations that learn to do PPM ‘by hand’ will end up maturing faster and/or utilizing a full fledged portfolio tool better than had they gone straight to the sophisticated software. The advantage is in learning the processes behind the tool. “A fool with a tool is still a fool”, but if the ‘fool’ can learn portfolio processes, the organization will not ‘toy’ around with portfolio software but will yield greater results due to the process maturity.

I personally have learned a lot by creating portfolio charts and calculating prioritization scores ‘by hand’. As a result, I have a much better understanding of what a dedicated portfolio tool should do based on the processes we have developed.

Read More

Project Portfolio Management (PPM) – Are we using the wrong Terminology?

I believe that clear terminology and efficient communication are important to have effective operations. I also believe that the term “project portfolio management” is an excellent term to describe the function because it explains what the managers should already be familiar with: maximizing value for the organization through optimizing human and financial resources.

When I explain the concepts of project portfolio management, I point out that our projects help accomplish our strategic objectives and that those projects represent investments by the company both in terms of financial resources and human resources. I go on to explain that our project portfolio is also analogous to a financial portfolio where we balance our investments (long-term and short-term, high risk and low risk) and have the same goal—to maximize value.

The key then is to drive maximum value out of those project investments and PPM helps us do that. I finish by discussing our portfolio management lifecycle which consists of four major steps:

1) Selecting the right projects (selected projects must align with the business strategy and meet other important criteria. The result: the portfolio will contain a higher percentage of winning projects)

2) Optimizing the portfolio (All the steps necessary to construct an optimal portfolio given current limitations and constraints)

3) Protecting the portfolio’s value (During the execution of an optimized portfolio, the aggregate project benefits (portfolio value) must be protected. This occurs by monitoring projects, assessing portfolio health, and managing portfolio risk)

4) Improving portfolio processes (Higher portfolio maturity translates into a greater realization of the benefits of project portfolio management)

I have not had any trouble presenting the concepts of PPM, but communicating concepts and getting increased participation are two different things.

I think the problem could be somewhere else however. In a classic portfolio management article by Rachel Ciliberti <>, she points out that PPM is a blend of management disciplines that combines:

1) A business management focus to ensure that all projects and programs align with the portfolio strategy.
2) A general management focus for managing an organization’s resources and risks.
3) A project management focus for reviewing, assessing, and managing projects and programs to ensure they are meeting or exceeding their planned contribution to the portfolio.

Most good managers will not have any trouble with the first two points. However, a number of managers may not understand the project management language well enough and that may be a stumbling block.

Read More

Book Review—Death by Meetings by Patrick Lencioni Part 2

This post is a continuation of the previous book report on Patrick Lencioni’s book, Death by Meetings. He recommended four types of meetings, three of which are briefly discusses in relation to portfolio management.

2) Weekly tactical meeting: these meetings are focused on tactical issues of immediate concern. There should be discipline to this meeting and structural consistency. A quick lightning round allows everyone to share their top two or three priorities for the week. The next component is a review of key metrics without lengthy discussion. The third component is a real-time agenda, not one created prior to the meeting. Disciplined spontaneity is important for those leading the meetings who can allow the meeting to shape itself based on the most urgent matters.

PPM application: this meeting would allow project and program managers to provide quick status and then address current issues affecting their projects.

3) Monthly strategic meetings: allows managers to wrestle with, analyze, and debate important issues that affect the organization. It is important that they occur regularly so that it serves as a parking lot for strategic matters that get brought up in other meetings. “This gives executives confidence to table critical issues knowing that they will eventually be addressed.”

PPM application: These meetings are particularly relevant to the portfolio management team to actually discuss current strategies and provides time for them to develop clearer strategic criteria. These meetings could also be used for longer-range phasing plans for strategic completion.

4) Quarterly off-site: “provides executives an opportunity to regularly step away from the daily, weekly, even monthly issues that occupy their attention, so that they can review the business in a more holistic manner”. These off-sites should include a comprehensive strategy review, team review, personnel review, and even a competitive industry review.

PPM application: this get away allows the portfolio management team adequate time to consider the strategic direction of the organization and develop future goals.

Read More

Book Review—Death by Meetings by Patrick Lencioni Part 1

Patrick Lencioni’s book, Death by Meetings, is a great book and relevant to the PPM community.

“Meetings are boring because they lack drama”
“Meetings are ineffective because they lack contextual structure”

Problem #1—Lack of drama

Meetings are interactive and relevant to our lives, yet they usually lack some amount of drama. “When a group of intelligent people come together to talk about issues that matter, it is both natural and productive for disagreement to occur. Resolving these issues is what makes a meeting productive, engaging, and fun.”

PPM application: portfolio management is both fun and exciting because it is the mechanism for accomplishing strategic initiatives. There are always ongoing changes that requires participants to be engaged, strategies to be clarified, priorities to be established and communicated, and projects to be executed. Keeping this view in front of the portfolio management team and project managers will help keep everyone focused.

Problem #2—Lack of Contextual Structure

The basic problem is that too many things are crammed into meetings and often frustrate many people for different reasons. Tactical near-term decisions may get added to the same agenda as longer-term strategic items. Nothing gets the attention it deserves, people don’t get to weigh in sufficiently and/or are not adequately prepared. The problem isn’t to necessarily spend more time in meetings as it is to break down the content for the appropriate meeting. To resolve the contextual structure issue, Lencioni advocates four types of meetings:

1) The daily check-in: this may be relevant for a leadership team or another group that does work closely together. It’s intent is to provide everyone a quick overview of the days events in five minutes or less (approximately).

PPM application: for organizations that are project focused, having such a meeting may help project managers and key team members stay on the same page with each other.

Read More

Current Challenges with Capacity Management

Good capacity management leads to better project execution, thus bringing greater benefits to the company. However, there are several challenges associated with resource capacity management, two of which are discussed briefly below.

The first challenge is to understand what level of granularity the organization needs to be successful (i.e. at an organizational level, at a skill code level, or even at the individual by-name level). Data granularity comes with a price. Counting the number of resources in an organization is relatively easy, but provides minimal benefit. Identifying specific skills/roles and tracking this requires more effort. Allocating individuals to project phases requires even more time and energy but enables good organizational capacity management.

The next challenge is keeping the data current which requires project management discipline. Depending on the level of detail, a certain degree of project management expertise (maturity) is required to collect that data. This is where there is significant overlap between project management and portfolio management. In order to have good resource data, the project manager needs to have a reasonable project plan in order to understand the resource requirements. The aggregate of all of that information certainly feeds the portfolio management system, but the data is largely driven by the project plans.

Read More

Using Maturity Models to Understand the End State

Portfolio management maturity models can be a great enabler in making process improvements. Higher maturity often translates into a greater realization of the benefits of PPM.  PPM maturity models are very useful for assessing the current state of the portfolio processes and how to arrive at a higher level of maturity.

However, identifying the end state (also known as ‘future state’) portfolio processes has rarely been discussed in portfolio management literature. The common thought has been to endeavor to reach the highest level of maturity possible. Until now, there has been little acknowledgement that some organizations may not need to strive for level 5 (“optimized”) maturity (an elusive state of maturity to say the least). However, organizations can make a general determination of where their portfolio processes need to be in order to have a legitimate competitive advantage. Having this understanding gives the organization a realistic target for improvement. Such a determination can be made based on two important factors: project criticality (the importance of projects to the organization) and portfolio size (probably in dollars, but for the time being will not be quantified). In order to make a realistic assessment of future state portfolio processes, the portfolio management team first needs to make an honest assessment of project criticality (not an easy task).

The chart below is a conceptual chart depicting an organization’s portfolio maturity goal dependent on the portfolio’s criticality (along the x-axis) and the portfolio magnitude (along the y-axis). The target for many organizations  would probably fall into the “Defined” stage (level 3). For some organizations with either short project lifecycles or low criticality, a level 2 (“Developing” stage) process may be sufficient. For the few organizations where projects may actually lead to increased revenue, a level 4 (“Proactive” stage) process may be necessary.


Portfolio Maturity Based on Magnitude and Criticality

Read More