Beware of Project Dependencies


Managing Project Dependencies

Managing project dependencies are an important part of portfolio planning as well as tactically managing project execution. Unknown dependencies represent a major portfolio risk and in complex environments, inadequate identification of project dependencies can derail projects or programs. Dependencies can be any deliverable, process, standard, technology, or product that is produced by one project team (or work group) but impacts another project or program. Projects that impact other projects may be referred to as upstream projects, predecessors, or givers. Projects that are impacted by other projects may be referred to as downstream projects, successors, or receivers.

Senior leadership needs to proactively manage and monitor project dependencies within the portfolio. If left unmanaged, the negative impact of such dependencies can severely affect schedule, scope, and cost. Schedule slides will be the most common impact when project teams have a technical dependency with another project and need certain deliverables to fulfill the scope of the project, but higher project costs can be incurred when projects are delayed or reworked due to scope changes. When a downstream project is impacted by an upstream project, the dependent project may still be able to move forward with reduced scope or an expensive scope change required to accommodate a work around as a result of the dependency. I have seen expensive work-arounds implemented as temporary (i.e. “throw away”) solutions that would not have been developed had the upstream deliverables been ready on time.

Proactive management of project dependencies can significantly reduce these risks and expenses. Senior leaders should ask the right questions at gate reviews such as, “what is the real impact to this project if upstream project deliverables are not ready in time?” Will it impact the schedule by a week? By a month? Or longer?” “Are workarounds available if upstream project deliverables are not ready in time?” “If yes, what is the cost of the workaround?”

Thorough investigation and planning is needed in order to mitigate against these risks. Good portfolio planning will give decision makers the information they need to launch the right new projects at the right time and sequence the work in the right order to minimize schedule delays, scope change, and budget increases. When it makes sense, a program manager may be needed to oversee the execution of related projects and help manage dependencies between multiple projects. Furthermore, without understanding the relationships between projects, senior management may make a decision regarding one project without understanding the downstream repercussions to dependent projects.  Having this information will also help decision makers make better decisions about in-flight projects. Understanding the impacts of one project on another project is very important, but may be missed unless dependencies are proactively tracked and managed.

The Types of Project Dependencies

There are several types of dependencies that portfolio teams should be aware of:

  • Technical dependencies: “a relationship between two projects that affects the technical outcome of project deliverables”. A technical dependency exists when one project cannot move forward (easily) without a deliverable from another project. This is similar to a finish-to-start relationship common in project schedules, except that it exists between projects. Example: in the IT environment projects may need certain infrastructure to be in place before the project solution can be released. If another project is responsible for setting up the new infrastructure, then there is a hard dependency between the two projects. Having multiple dependencies of this type only compounds the problem and quickly increases the complexity of completing the project on time, within scope, and within budget.
  • Schedule dependencies: (sometimes referred to as a synchronization dependency): “a relationship between two projects where the timing of one project impacts the outcome of another project”. A schedule dependency occurs when project deliverables are needed at the same time in order for both projects to finish. An IT example would be one project decommissioning a system but waiting on another project to complete a data warehouse needed to archive the legacy system’s data. This type of dependency is similar to a finish-to-finish relationship common in project schedules.
  • Resource dependencies: “a shared critical resource between two projects”. A resource dependency only exists when critical resources are shared between projects. This dependency type is often managed at the portfolio level and resource manager level, but project teams should be aware of shared critical resources. If one project is off track and needs additional unplanned effort from critical resources, the other projects may be impacted as well.
  • Information dependencies: this is a less critical relationship, but may be worth noting so that important information is communicated to the impacted projects in a timely way. There are two aspects of an information dependency:
    1. Information shared from one project to another that would impact the latter’s scope or approach to completing the project. An informational dependency commonly exists when there is a known touch point between two projects and is based on changes to engineering standards, operational procedures, architecture, security, etc. For example, one project is working on changes to certain standards and procedures that affects another project. The upstream project team may not yet know what the final deliverable or solution is, but a downstream project knows that the results may impact its project’s design. There may not be a technical deliverable as described above, but changes to standards and procedures could create future re-work, so both project teams need to stay in close communication.
    2. The need to incorporate the capabilities and knowledge gained through another project. In this instance, important information gained from one project team should be passed on to another project team. This may occur more often in engineering environments.

In addition to the various dependency types, it is also important to denote the level of impact for each dependency. This is similar to project risk management where the level of impact varies from risk to risk. Impact could be measured in terms of schedule delays, scope impacts, and cost. Mature organizations may use more sophisticated methods of measuring impact, but less mature organizations can utilize a simple high, medium, low scoring to denote levels of impact. In the next post we will cover the tactics of managing project dependencies.

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Project Pipeline Management


Project pipeline management is an important component of project portfolio management (PPM) because it encompasses the work needed to “select the right projects”. Pipeline management involves steps to ensure that an adequate number of project proposals are generated, evaluated, and screened out at various stages of the intake process that meet strategic objectives. There are four major sub-components to pipeline management: ideation, work in-take processes, and Stage-Gate™ reviews illustrated in the figure below.

1) Ideation
Ideation is the process by which new project ideas are generated. This is slightly different from the work in-take process by which project requests are formally brought forward to a governance board. Ideation is important for collecting the best ideas from the organization, for collecting a sufficient number of project proposals to generate higher quality projects, and to maintain a healthy organization by engaging employees to submit their ideas.

2) Opportunity Management
Opportunity management complements ideation and further strengthens the project selection process. Some ideas may be great, but for one reason or another, the timing is not right or some other constraint makes the execution of the idea difficult or impossible. For this reason, organizations should establish a “parking lot” of good ideas waiting to enter the project pipeline. This parking lot is really a collection of all of the opportunities waiting to be captured.  The processes for managing opportunities are similar to the processes for managing risks except that opportunities are future events that could produce positive outcomes for the organization. Opportunities often fall into the “should do” or “could do” categories, but enable organizations to achieve more or perform better than planned. Without an opportunity management process, organizations risk losing visibility of potentially beneficial future projects.

3) Work In-Take
The work in-take process refers to the steps of developing a project proposal and bringing it to the governance board for a go/no-go decision. This process works in conjunction with both ideation and stage-gate, but can also be a standalone process. When used with ideation and Stage-gate, the work in-take process helps bridge these other two processes together.  The work in-take process is important so that all project proposals are created in a consistent manner with common tools and processes. The unintended consequences of not having a work in-take process include organizational confusion, time delays, and quality erosion.

4)  Decision Gates
Decision gates (also known as Stage-Gate™) are a critical component of pipeline management. A winning portfolio must contain winning projects, therefore the portfolio management team (PMT) must be able to discriminate between good projects and great projects. The decision gate process enables the PMT to review these projects based on preselected strategic criteria at the gate reviews of the decision gate process. At each of those gates, important project information is provided to the Portfolio Management Team to make a go/no-go decision related to the project. Without this mechanism, unnecessary or poorly planned projects can enter the portfolio and bog down the work load of the organization, hampering the benefits realized from truly important and strategic projects.

Project Pipeline Management

 

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Portfolio Management V-Model Part 2


In part 1 of the portfolio management V-model we looked at the left side of V (process and data) that drives better decision making. In part 2 we will look at the right side of the V (leadership and governance) and then tie everything together. Let’s start with governance.

PPM V-Model

Establishing portfolio management governance is a critical component for successful execution of PPM. Peter Weill and Jeanne Ross, authors of IT Governance, define governance as “specifying the decision rights and accountability framework to encourage desirable behavior in using IT. Governance determines who makes the decisions. Management is the process of making and implementing the decisions.” They make the point that IT governance is the most important factor in generating business value from IT and that good governance design allows enterprises to deliver superior results on their IT investments.

Governance is the foundation for all of the other portfolio mechanics, and without it, PPM doesn’t work. All benefits of project portfolio management hinge on the execution of portfolio governance. According to Howard A. Rubin, former executive vice president at Meta Group, “a good governance structure is central to making [PPM] work.” Furthermore, “Portfolio management without governance is an empty concept”. These quotes highlight the need for a well-defined and properly structured governance in order to manage the project portfolio.

Leadership is a critical component that brings the governance framework and the visionand goals of the organization together. Good leaders will develop the right goals and strategies for the organization. At the same time, good leaders will also develop the necessary governance infrastructure to make good decisions that will drive the execution of the strategy they have put in place. Moreover, good leaders will hold management accountable for following the governance process and will take ownership for achieving the organizational goals. In sum, leadership drives accountability.

Good governance processes enable better decision making but do not ensure it. The real decision makers on the portfolio governance board should be strong strategic leaders who make the right decisions at the right time. Portfolio management requires prioritization and trade-off decisions, which can be difficult tasks amidst strong politics and/or dynamic environments. True leaders will not compromise and accept mediocre results, even when that is the easiest path to take. Good strategic leaders will make difficult decisions (aka “the right decisions”) in the face of difficult circumstances. This is why leadership is needed in addition to governance for making better strategic decisions.

We can connect all of the components together now and see how they fit together. Good decision making requires having the right data at the right time, and it also requires strong leadership to utilize that data for making the best decision possible at any point in time. In order to have good data, organizational processes are required to collect the data and maintain it. Governance processes are also needed to ensure that the governance board operates efficiently and effectively. Even if there are good governance processes and place, and the roles and responsibilities are well understood, real leadership is needed to make difficult decisions that best utilize resources and accomplish company goals (even when not popular among all stakeholders). These decisions relate to the projects and programs in the portfolio that will execute strategy and meet company objectives. The simple portfolio management V-model helps tie together four critical components of PPM that lead to better decision making and result in greater strategic execution.

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Portfolio Planning vs Strategic Planning


Too often, the modus operandi for many organizations is to receive requests and filter them through a stage-gate process in order to evaluate the merit of the request and select the right projects. If the project is selected, a project team is assembled and the project planning begins. There is nothing wrong with this process, in fact, it is an important component of portfolio management.  The shortcoming relates to the lack of strategic planning and portfolio planning.

Strategic planning occurs once a strategic direction has been established within the organization. It is beyond the scope of this post to discuss how strategy is developed. Rather, our focus is on executing the strategy. The primary assumption is that strategies have been developed. From here, the senior leaders should be able to outline the major items they believe are necessary to accomplish or fulfill the strategy. These major items help define what the company intends to do on a larger scale (“the big whats”).  Going one step further, the senior leaders may have an idea of when these major items need to be initiated. With this information, a strategic roadmap can be built to lay out when major components of the strategies should be executed. This strategic roadmap is a critical component of strategic planning.  At this point, we are looking at strategic components from a 50,000 foot view. Few details may exist for each major component listed. If more information can be provided, all the better. The critical point is that the senior leaders outline some of the major items needed for the completion of the strategy.

Before the traditional portfolio management practitioners raise their arms in protest, I would point out that all of these projects will be reviewed like any other project and need to be prioritized. The creation of a strategic roadmap does not violate key PPM principles. Rather, the strategic roadmap aids the portfolio planning process by acknowledging major efforts that need to be undertaken. Without this view, it is all too easy for decision makers to approve projects (perhaps the right projects) at the wrong time. The creation of a strategic roadmap is a proactive step of leadership to better manage the portfolio. It is far easier to anticipate resource shortages when you can see all of the major efforts on the horizon. It is also easier to acknowledge the need for strong prioritization when key strategic projects compete for resources with smaller projects. The strategic roadmap is a key deliverable of the strategic planning process and is a major input for good portfolio planning.

Portfolio planning at a more tactical level helps senior leadership know when projects will get worked. Portfolio planning improves overall portfolio success by taking into account the limited resources (financial and human) and comparing this against known project dependencies in order to properly sequence projects. Strategic planning is proactive work that outlines the major components needed to accomplish strategic goals. Strategic planning will not account for the numerous small projects that get requested throughout the year (that’s the role of the portfolio management process).   Portfolio planning utilizes select information from all project requests (large and small) to sequence the projects (based on dependencies, resource constraints, and priorities) in a way that creates an ideal portfolio at a given point in time.

Portfolio Planning3

The chart above highlights three parallel steps of the planning process: strategic planning, portfolio planning, and project planning. Strategic planning often covers a 1-3 year planning horizon (or longer) and is generally longer than portfolio planning and project planning (except for large and/or complex projects).

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Tactical or Strategic PPM


Fundamentally, portfolio management is about strategic execution and maximizing value to the organization through important project investments. Through various processes, leadership teams can determine how well their project investments align to key strategic goals. Optimization techniques can further enhance the value of the portfolio, ensuring that organizations get the biggest bang for their project buck. Nevertheless, some organizations turn to portfolio management to merely help at the tactical level—getting projects done—and are less concerned with using portfolio management for strategic execution. Organizations should be mindful of their portfolio management approach—is it strategic, tactical, or both?

Tactically, portfolio management as a discipline can help organizations execute projects through better portfolio planning which includes: short-term resource capacity management, managing dependencies, and sequencing projects.

1) Resource capacity management from a short-term tactical perspective (less than six months) enables organizations to minimize over-utilization and unnecessary multi-tasking, both of which increase the risk of failed project delivery. By protecting organizational capacity, projects are more likely to have key team members available when needed to accomplish project work. In addition, fewer projects usually means less multi-tasking which is a known killer of project success.

2) Managing dependencies at the portfolio level starts with identifying all the upstream and downstream relationships to each project in the portfolio. More dependencies means more complexity and increases the overall risk to portfolio success. This is not merely a program management function, but is part of portfolio planning because such dependencies can span across the entire portfolio. When organizations understand the dependencies between projects, the portfolio management team (PMT) can make better tactical decisions to ensure that upstream projects do not negatively impact downstream projects.

3) Project sequencing is another part of portfolio planning because it is related to managing dependencies. Some dependencies affect project schedules (finish-to-start, finish to finish, etc.) and in order for these projects to be successful, project sequencing needs to be managed. The PMT should understand these relationships in order to initiate projects at the right time otherwise projects could be launched too soon only to find out that other work needs to be completed first (resulting in delays and likely re-work).

Although project portfolio management (PPM) has been traditionally performed to support strategic execution, some organizations may use a sub-set of the portfolio processes and adopt a more tactical approach to portfolio management. While this may seem less than ideal to seasoned portfolio management practitioners, it still yields benefits for existing projects and programs, and can ensure greater success than if no portfolio processes were utilized.

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What is Strategic Execution?


Strategic execution must accompany strategic planning, otherwise the strategic objectives and goals simply becomes words on a page. In my experience, I have seen companies post their strategies on a wall without any method or approach for ensuring that those strategies are accomplished. About 30 years ago, a survey was conducted highlighting that about 90% of strategies were never fulfilled. Unfortunately, there is little indication that this figure has dropped much. Hence, there is a strong need for strategic execution.

While ‘strategic execution’ may come across as a mere buzz word, some explanation will help articulate what strategic execution is about. Execution-MIH, specialists in the field of execution management, would describe strategic execution as the ability to translate strategy into reality. It is one thing to develop a strategy, it is another thing to make it actionable and achievable. “[Execution management]  is not just accomplishing a task or a goal, but also to achieve the underlying business objectives…Good execution management will focus on the WHAT as well as the HOW of an achievement.“ Too often, executives focus on the what, but pay too little attention on the how.

Gary Cokins,  a strategist at software company SAS, has pointed out that decision makers need discipline to utilize a comprehensive performance management approach described as “a closed-loop, integrated system that spans the complete management planning and control cycle.” Project portfolio management (PPM) is the comprehensive performance management approach that Gary Cokins is referring to and is the bridge between strategic execution and operational excellence. Having articulated the strategic goals and objectives for an organization, projects and programs are launched that directly accomplish the goals and objectives. These projects and programs become the HOW referred to above. Although some strategic decisions are related to policy changes, most strategic goals require work to be done for its fulfillment. Projects and programs therefore help get this work done, and thus become the vehicles for strategic execution.

In summary, strategic execution is how companies accomplish their strategies. It begins with strategy development and continues with strategic planning. This information feeds a portfolio management system which identifies the best projects and programs (including priority and sequence) and optimizes against resource capacity. The completion of these projects and programs signals the transition of the project work into operations. Once all of the necessary projects and programs related to a particular strategy are complete, the organization should realize the benefits of its strategy.

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