Resource Management and Capacity Planning Handbook


Book Review

The Resource Management and Capacity Planning Handbook by Jerry Manas is the authoritative source for any organization wanting to improve its resource management practices in the context of portfolio management.  The opening chapter does a great job of providing basic context of resource management and capacity planning and strongly leverages a benchmark study by Appleseed RMCP and expert practitioners in the field.

Organizations continue to struggle with the matter of resource management and “when you consider the constant change, lack of visibility into resource capacity, and no sense of which work is most important, the result is a perfect storm of resource management chaos.” In order to address this problem, Manas systematically covers key topics chapter by chapter that provide relevant help to companies seeking to improve. This book is not about mere theory, but gives literally hundreds of practical points based on corporate reality.

Chapter 2 addresses the road to maturity for improving resource management. I am a big believer in assessing organizational maturity, and Manas does a great job of acknowledging that organizations are on a road to maturity, and through the help of expert practitioners, gives examples of how organizations have matured their resource management processes.  The chapter also addresses the matter of time tracking and does an excellent job of providing a balanced view of why to do it and how to make it work.

In chapter 3, Manas presents a systems approach for diagnosing the root causes of poor resource management. He brings out a number of points that should strike a chord in any organizations. In the latter half of the chapter, he uses systems thinking to deep dive on estimating resources and tasks. The Resource Management and Capacity Planning Handbook demystifies the complexities of resource capacity and demand management and offers clear ways for maximizing your limited resources to drive business growth and sustainability.

Chapter 4 addresses the much needed topic of leadership and organizational change management. I was very pleased to see an entire chapter devoted to these two subjects, because most of the time in portfolio management literature, the emphasis is either on process or tools, with little regard for the people dimension (which is very critical). Much of the chapter is spent on the “50 ways to lead your users”, which is a systematic and structured approach to leading change in the organization.

Chapter 5 addresses key roles for making resource management and capacity planning successful. One of the key takeaways is that successful organizations very often have dedicated resources to support capacity planning exercises. He also takes time explaining the expanding role of the PMO.

Chapter 6 is an enjoyable chapter on strategic alignment and how not to manage resource capacity management like failed military leaders in the past.

Chapter 7 is a great chapter focusing on the human side of resource management. As chapter 4 addressed the people side of leadership and change management, this chapter does an equally good job of explaining why it is important for organizations to pay attention to the human side of project execution and resource productivity when trying to improve resource management.

Chapter 8 expands upon a white paper Manas wrote called “the Capacity Quadrant”. This chapter speaks more frankly about the topic of portfolio management and the need for visibility, prioritization, optimization, and integration of the portfolio. I loved his white paper on the topic and felt that this chapter could have been moved up earlier in the book to provide a clearer view of resource management and capacity planning within the context of project portfolio management.

The final chapter, chapter 9, concludes with industry specific challenges of resource management and capacity planning. This chapter turned out to be the cherry on top as it provided insight into unique challenges faced by different industries. Learning about challenges faced by other industries actually gives greater context to the capacity planning problem and puts readers on the alert for identifying and solving these problems in their own company.

My Conclusion to Resource Management and Capacity Planning

The Resource Management and Capacity Planning Handbook is a must-have book for PMO directors and senior leaders struggling with making the best use of limited resources. Jerry Manas has a great writing style that makes the book easy to read and easy to understand. He also does a fantastic job of blending theory with reality by explaining key topics and then providing numerous tips on how to be more successful with resource management.

Rating: 5 out of 5 stars

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Portfolio Review Meetings


Portfolio Review Meetings

Portfolio review meetings are a great way to review and assess the entire project portfolio with the governance team. Unfortunately in practice, these meetings can be overwhelming, time consuming, and unproductive. There are many ways to conduct a portfolio review meeting, but one of the key questions of the governance team is “what do they want to accomplish at the end of the portfolio review”? For some organizations, portfolio review meetings are about getting project status of every project in the portfolio. For other organizations, portfolio review meetings are designed to evaluate each project in the portfolio with the intention of updating priorities.

Options for Portfolio Review Meetings

With this background in mind, we can look at four options for conducting portfolio review meetings:

  • OPTION 1: A review of all in-flight projects, current status, relative priority, business value, etc. Some projects may be cancelled, but the primary purpose is to inform the LT of the current in-flight projects.
  • OPTION 2: A partial review of projects in the portfolio consisting of high-value/high-risk projects. This provides more in-depth information of critical initiatives and may result in a possible change of priority of certain projects.
  • OPTION 3: A high-level review of all projects in the portfolio with the intention of updating project priorities for every project in the portfolio.
  • OPTION 4: A review of portfolio scenarios that meet current business needs followed by a selection of a recommended portfolio

Option 4 comes courtesy of Jac Gourden of FLIGHTMAP in a 2012 blog post and is the best approach I have seen for conducting portfolio review meetings. I also have sat through long sessions (although not all-day sessions) of reviewing all the projects in the portfolio and it can be painstakingly tiring. Moreover, these types of portfolio review meetings wear out governance team members and do not yield much value.  While there is certainly a time and a place for review the status of all projects or conducting a lengthy review for the purpose of re-prioritizing projects in the portfolio, taking a strategic view is the way to go. Rather than merely focusing on individual projects, a portfolio team can compile a few portfolio scenarios that should be reviewed by the governance team. In many instances, there is significant overlap between the portfolio scenarios, but the emphasis is on the business goals of the portfolio and how a portfolio scenario supports a certain goal. Some examples of portfolio scenarios include:

  • Revenue Growth Scenario
  • Customer Growth Scenario
  • Market Growth Scenario
  • Reduced R&D Spend Scenario
  • Balanced Portfolio Scenario

These scenarios are easier to produce when efficient frontier analysis is applied. Even after a portfolio recommendation is accepted, there is further work to screen out the projects not included in the portfolio, and in some cases to make worthy exceptions for some projects that would have otherwise been removed from the portfolio.

 

 

What do you think? Have you tried this approach before? How successful was it? Let me know.

 

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Book Review – IT Governance


Book review of IT Governance by Peter Weill and Jeanne Ross (Harvard Business School Publishing, 2004)

IT Governance

Synopsis

“IT governance is the most important factor in generating business value from IT.”

“Good governance design allows enterprises to deliver superior results on their IT investments.”

“Effective IT governance is the single most important predictor of the value an organization generates from IT”

The quotes above should draw attention to the importance of well defined and well communicated IT governance. Although not exciting, IT governance helps generate greater value from IT. The authors 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.”

Much of the book is spent developing two questions. The first question focuses on the types of decisions that must be made to ensure effective management and use of IT. The authors answer this question by describing five key areas of IT governance that require decision making:

IT Principles—a related set of high level statements about how IT is used in the business.

IT Architecture—the organizing logic for data, applications, and infrastructure, captured in a set of policies, relationships, and technical choices to achieve desired business and technical standardization and integration.

IT infrastructure—determining shared and enabling services.

Business Application needs—specifying the business need for purchased or intentionally developed IT applications.

IT Investment and Prioritization—choosing which initiatives to fund and how much to spend.

The second question addressed in the book focuses on who makes these decisions. The authors address this question by describing six archetypes (decision-making styles) used by enterprises in IT decision making:

Business Monarchy—top managers

IT Monarchy—IT specialists

Feudal—each business unit making independent decisions

Federal—combination of the corporate center and the business units with or without IT people involved

IT Duopoly—IT group and one other group (for example, top management or business unit leaders)

Anarchy—isolated individual or small group decision making

Much research and analysis was made by the authors in connecting the decisions being made with the right decision makers. They conducted an extensive survey of over 250 companies across 23 counties. Based on the results, they concluded that the best performers conducted IT governance differently from the low performers and drew conclusions of what distinguished the two groups.

Commentary

IT Governance was very useful to me personally as it is the most thorough work on the topic that I have read and provided a lot of good insight into how to make governance work. Project portfolio management (PPM) is tightly linked with IT governance, “Portfolio management without governance is an empty concept” (Datz). In order to make portfolio management processes successful a proper governance structure must be in place. Project governance is very much about the types of decisions being made and the people who participate in the decision making. The Project Management Institute’s Standard for Portfolio Management 2nd Edition briefly discussed governance but did not go into the same level of detail as this book. Another well respected PPM expert, James Pennypacker, developed a portfolio management maturity model which identifies governance as a key criteria. This book strongly supplements that maturity model.

This book enlarged my view of IT governance particularly with the five key areas of: IT Principles, IT Architecture, IT infrastructure, Business Application Needs, IT Investment and Prioritization. PPM is very focused on the last area of investment and prioritization, but the four preceding areas lead up to the point of making the investment decisions. It was very clear that a governance structure needs to be set up to account for all five areas.

This book also strengthened my view concerning the people involved with governance. I liked the quote stating, “IT governance is a senior management responsibility. If IT is not generating value, senior management should first examine its IT governance practices—who makes decisions and how the decision makers are accountable.” Governance cannot be delegated to someone else. The authors made it very clear that one of the critical success factors of IT governance is the involvement with senior/executive leadership. Without the adequate leadership, solid governance is likely to fail. In addition, “If business leaders do not assume responsibility for converting [IT capabilities] into value, the risk of failure is high. With high risk comes the likelihood of frustrated business leaders who often respond by replacing the IT leadership or abdicating further by outsourcing the whole ‘IT problem’”. Here the point was made that outsourcing IT may come out of a frustration by the business leaders with IT. Yet, the source of the frustration may very well lie in the poor governance structures established.

Another striking point that affects my current work is the need for improved communication with senior management. Governance communication cannot happen too much. The authors found that “the best predictor of IT governance performance is the percentage of managers in leadership positions who can accurately describe IT governance.” They found that most senior managers could not explain their own governance processes, which would explain why their IT governance doesn’t work properly. These points reinforce my need to continually educate senior management and communicate both the process and the results of our governance procedures so that we have greater project success.

The book was reasonably well written. Although the content was great, I felt that the case studies and diagrams were really lacking. I normally like case studies, but I do not feel that the cases used in this book added any value to me. Many of the diagrams could have also been explained better. As far as improvements, the topic of project portfolio management was barely discussed and is quite important in terms of executing strategic change within an organization. I overlooked it because of the book’s value to the topic of governance, but I definitely feel the authors should have spent more time on this topic. Otherwise, this is a great book for a topic that is overlooked but very necessary. I would definitely recommend it to anyone that is involved with portfolio management or any part of IT governance.

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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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Prioritization Matrix


In a recent LinkedIn discussion, questions were asked about the short-comings of prioritization matrices. I would like to highlight the strengths and weaknesses of using such a tool for portfolio management. Firstly, a prioritization matrix differs from a more traditional scoring approach in that it offers a limited number of priority selections. The most simplistic prioritization matrix has three choices, low, medium, and high. Of course, to be effective, every choice should have some predefined criteria. Otherwise, the matrix is of little value because decision makers can have wildly different views for what is of high importance versus low importance.

Strengths
Prioritization matrices have three primary strengths: simplicity, speed, and applicability to all types of work. Prioritization matrices are easy to understand and simple to use. Calculations are not required for determining the relative priority of a project. Basic criteria should be developed for each part of the matrix, but once complete, decision makers can apply the criteria to various types of work. Because of its simplicity, prioritization becomes a much faster exercise and allows decision makers to quickly distinguish important projects from less important projects. In addition, various kinds of work can be prioritized using a prioritization matrix. With a traditional scoring model, it is difficult to evaluate “keep the lights on” type of work, but with a prioritization matrix it is easier to compare priorities for project and non-project work.

Weaknesses
Prioritization matrices are unable to produce a rank ordered list of projects in a portfolio. At best, such a matrix can provide a categorical ranking of projects in the portfolio, but this won’t help prioritize projects within the same category. Prioritization matrices cannot do a good job of evaluating projects based on multiple criteria, and therefore cannot do a thorough job of distinguishing important projects from less important projects. When evaluating multiple large projects, a scoring system will provide a more accurate analysis over a prioritization matrix.

When Should a Prioritization Matrix Be Used?
Prioritization matrices are good for organizations new to the portfolio management process. Due to the simplicity, organizations can quickly get the benefit of prioritization without spending the time to do a thorough scoring of each project. Even in organizations where projects are scored and ranked, prioritization matrices can be used for “pre-screening” purposes to do a preliminary prioritization. This would be commonly used in a stage-gate process before a formal business case has been developed. A governance team could quickly determine a categorical priority for the project at an early gate review. Prioritization matrices can also be used to triage large volumes of project requests to focus the organization on the hottest projects. I have seen this approach used in an organization that received a high volume of small project requests. In this case, scoring would be an over-kill; the organization just needed to determine the most important work at that time.

Priority Matrix Sample

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The Right Portfolio Data at the Right Time


From a very pragmatic point of view, getting the right data at the right time is at the heart of good project portfolio management. If the right data is not available for decision makers to use, the issue will be mediocre results at best. Portfolio management is about selecting the right projects, optimizing the portfolio to deliver maximum benefit, protecting portfolio value to ensure that that value is delivered, and improving portfolio value by maturing organizational processes. At every step, data is required. The quality and quantity of data correlates to portfolio maturity. Some less mature organizations will collect insufficient data which leads to sub-optimal decisions. Other organizations may try to collect too much data before they are ready to utilize it and can do more harm than good by burning out employees with burdensome processes. Mature organizations will have the discipline and rigor to collect the right amount of quality data.

Therefore, understanding the data needed upfront is a success factor for portfolio management. There are several types of portfolio data:

  • Strategic data
  • Resource data
  • Schedule data (forecasts and actuals)
  • Performance data
  • Financial data (estimates and actuals)
  • Time tracking
  • Request data
  • Etc.

Senior management bears the responsibility for identifying the right data to be used in the portfolio management process. In addition, senior leadership needs to drive the accountability for collecting the right data. Without active engagement and feedback from senior management, data quality can suffer.

Organizational processes are very important for ensuring that the right data is collected. Selecting the right projects requires that good data is collected about each candidate project. Such data must be relevant to the senior management team that makes portfolio decisions. Data that is not used for decision making or information sharing is considered a waste. Collecting data comes at a cost, and organizations need to put the right processes in place in order to collect good data. From this angle, portfolio management processes are about collecting a sufficient amount of the right data. Without good standards and processes, important portfolio data will be collected inconsistently resulting in confusion and possible error.

Portfolio tools have a very important place in the portfolio management ecosystem, but only after leadership has identified what is required and lean processes have been created to facilitate data collection. Portfolio systems store and transform project and portfolio data for general consumption (aka reporting and analytics). For less mature organizations with fewer data requirements, simple portfolio systems such as Excel and Sharepoint can be used in the portfolio process. Maturing organizations should select portfolio software that meets the needs of its data requirements.

Lastly, senior leadership needs to use the data in the system for making better portfolio decisions. Strong portfolio systems will generate the reports and analytics necessary to support better investment decisions. Good data is the fuel that makes the portfolio engine run! Without good ‘fuel’, senior management will be unable to drive the organization toward its strategic goals. The data perspective of portfolio management begins and ends with senior leadership.

Data-Perspective-of-PPM

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Highlights from Day 2 of the Gartner PPM Conference


Benefits and Beyond: Rethinking the Strategic Value of Project, Program, and Portfolio Management (Mark Langley-PMI  and Matt Light, Gartner )

  • We need to be able to answer the question, “Why did we do what we did?”
  • Benefits realization is a process throughout the project management lifecycle (among high performing organizations) not just at the end.
  • We have an increased need for leadership.
  • We need two types of project managers: those who are project capable, and a select group of turn-around artists who can also train/mentor junior project managers.
  • Benefits realization = ACCOUNTABILITY, which requires a ‘culture of PPM’
  • Organizations should match talent with appropriate projects
  • If you don’t have a business case, you are guaranteed to not know whether you achieved anticipated value
  • Finally, it requires leaders to deliver benefits

 

Follow the Yellow Brick Road (Michael Hanford, Gartner )

Pros and Cons of Centralized PMO

  • Pros: Can develop a better project management culture faster, everyone reports to the same director
  • Cons: business knowledge ages, disconnected group from the rest of the business

 

Identifying and Harnessing Complexity in Projects, Programs, and Portfolios (Robert Handler, Gartner )

  • See: A Leader’s Framework for Decision Making for more information on the Cynefin model
  • Work in the Simple area of the Cynefin model should not be projectized
  • 80% of projects reside in the complicated area
  • 20% of projects are likely in the complex area (but drive 80% of the value).

 

PPM Marketscope (Daniel Stang, Gartner )

  • Out of the box report is weak for many PPM vendors
  • Most companies never get past time tracking
  • It can take 3+ years to resolve resource management challenges
  • With new implementations, start small and provide ‘just enough’ visibility

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Phased Approach for Portfolio Software Implementations


In a previous blog post, I commented on doing portfolio management ‘by hand’ to learn the processes before adopting a robust portfolio tool. In a recent discussion on LinkedIn, one consultant commented that this most successful PPM software implementations occurred when companies took a phased approach to ease in the new solution. The first phase involved simpler tools to allow the organization to become familiar with portfolio management, followed by the full implementation with the advanced PPM capabilities.

After reading this I felt that there was a lot of wisdom in such an approach. Firstly, it gives the organization time to develop their own portfolio processes without the burden of learning a new tool upfront. Secondly, it allows stakeholders (ie. Project managers, steering team, etc) to understand portfolio processes and be comfortable using them. Third, based on the early experience with project portfolio management, the organization will better understand their own requirements for a full fledged tool.

In a great article on IT Project Portfolio Management, Jonathan Feldman asks organizations to consider the problem they are trying to solve and start with high level data rather than getting too detailed. “If you know what the end goal is, you can start to quantify how close you are to that goal”. Great advice as this too points to the need for a phased approach to implementing portfolio management.

What are your lessons learned with your portfolio management implementations?

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Bubble Charts and Normalization


Bubble charts are common place in portfolio management processes. Without a designated portfolio management tool, I have designed bubble charts by hand using Excel and PowerPoint. To determine a ‘value’, we use our prioritization value scores and compare that among projects. We have risk scores as part of our prioritization criteria that drive the ‘risk’ portion of our bubble charts. The challenge in the past was how to interpret a score. Is a score of 500 good or bad?  Since my organization was experimenting with a new prioritization process, we didn’t know what was good or bad. Therefore, I made the decision to normalize the scores so that we could fairly compare good or bad projects within the portfolio rather than try to determine a threshold for ‘good’ projects. This has been helpful in identifying which projects drive more overall value to the organization compared to other current projects in the portfolio. The downside of this however, is that you are always going to have a few projects that look bad. Until now, I had been normalizing only among current projects in the portfolio, yet it suddenly dawned on me this morning, that I should also normalize among all projects, past and current in order to understand whether we get more value now than in the past.

One advantage of a bubble chart is to locate those projects that are higher value and lower risk and ask the question, “how can we get more of these types of projects in the portfolio?” Likewise with the lower value higher risk projects, we should ask how to avoid those types of projects. By normalizing with respect to past and current projects, we will see whether or not the projects are moving toward the higher value lower risk quadrant.

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Can we absorb all the changes?


In the book, Project Portfolio Management: A View from the Management Trenches, one of the questions posed is ‘can we absorb all the changes?’  At first glance I dismissed the question and instead focused on the four components of the portfolio lifecycle. However, after further reading, it became clearer to me that from a portfolio management perspective, it is very important to understand how much change is being pushed out to the respective organizations. If there is too much change going on, it is hard for employees to absorb it, adapt to it, and accept it. This leads to excessive churn in the organization which has negative implications such as burn out, lowered morale, inability to get work done, etc.

In my experience as a portfolio analyst, I have heard of other organizations complaining about the amount of change we were introducing to them, particularly at the wrong time. Individually, a system manager or project manager may communicate an individual change to an organization or group of users, yet have no idea about the magnitude of changes coming from other system managers and project managers. This is where portfolio management needs to understand both the amount and the timing of change to the company. As the book points out, it is possible to measure the amount of total change and the timing. Having such visibility give senior management a way to optimize the portfolio by adequately sequencing work so as not to overload the system with too much change at any given point in time.

Of course this is a communication issue, where both the project team needs to communicate implementation dates and the project beneficiary needs to communicate “black out” dates. However, without the portfolio level visibility, it is hard to maintain proper surveillance and protect organizations from receiving excessive change.

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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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Strategic Leadership Qualities Part 1


When I think of strategic leadership, particular characteristics stand out that influence the type of leader I would like to be; I will touch briefly on each point.

1) “Walk the talk”—this relates to how real and genuine a leader is, otherwise the ability to lead will diminish due to hypocrisy. A couple examples may help illustrate the point. When a PMO manager or executive states that earned value management is important, yet rarely reviews the data, and worse, never acts on the data, the manager sends a message that is full of “talk” with no “walk”.  Or, when senior managers try to maintain a semblance of governance yet make exceptions to the process, the hypocrisy weakens the governance process.

2) Accountability—a leader not only needs to hold himself/herself accountable in order to walk the talk, but also needs to hold other people accountable. There is a lot to say about accountability, but strategic leadership will drive accountability within the organizations. This is not easy, and requires my third point, backbone.

3) Backbone—refers to the leader’s ability to stay true to their values and decisions in the face of opposition or pressure. Portfolio management is a cross roads of many facets of the business. A good strategic leader may get caught in the cross fire between organizations, but will not back down until problems can be reviewed and resolved.

More to come on strategic leadership…

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Strategic Leadership


Leadership differs from management, most of us agree with that. In regards to portfolio management, strategic leadership is critical.  Peter Drucker has an infamous quote about the difference between leadership and management, “Management is doing things right; leadership is doing the right things.” The distinction between project and portfolio management has also been made with a similar quote, “Project Management is about doing the work right, portfolio management is about doing the right work.” While I wouldn’t minimize the need for project leadership , I would argue that strategic leadership at the portfolio level is critical for making portfolio management sucessful. If we equate the two quotes above, we can see that portfolio management is very much related to effective leadership, because good leaders make sure the right work is getting done.

A lot of articles and books have been written on portfolio management mechanics (“how to”), but very little time has been spent on strategic leadership in relation to portfolio management. In a very general way, we can agree that portfolio management is about doing the right work , but people have to decide what work gets done. Without effective leadership, the right work may not get done (due to pet projects, short-sightedness, etc.).

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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.

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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 <http://www.ibm.com/developerworks/rational/library/apr05/ciliberti/index.html#N10094>, 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.

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