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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Tim, great blogs and I like your concept of tactical portfolio management to manage sequencing and prevent resource conflict. Just a thought — some dependencies may not be sequence-oriented. Projects with low direct strategic value may be pre-requisite or co-requisite as enablers for projects with high strategic value. These dependencies are thus strategic in nature and should be considered upstream of the project sequencing that is part of tactical portfolio management.
Hi Sue, thank you for the comments. We are focused on sequencing because the organization has chosen not to prioritize any project work. In lieu of prioritizing, we are trying to do a better job of sequencing. The dependencies are a pseudo-priority based on the downstream impacts. I may not have expressed myself well, but it turns out that we are doing something similar to what you are talking about–there are many “capabilities” needed to support downstream projects, so we are trying to take a more careful approach to initiating new projects based on these dependencies. The capabilities themselves are not strategic, but they support important projects. I was using the word ‘tactical’ in contrast to ‘strategic’ because we are not considering projects from a strategic point of view and are not “doing” portfolio management from a traditional sense, hence the idea of “tactical portfolio management.” Nevertheless, we are doing some portfolio planning by considering the whole portfolio from a more tactical perspective. Thanks again.