Want to ensure quality? Think project portfolio management
Want to Ensure Quality? Think Project Portfolio Management
Portfolio management is critical to project justification and governance—and makes good strategic sense.
BY DEBORAH BIGELOW, PMP, CONTRIBUTING EDITOR
In thinking about the theme for this month's article, quality, I wanted to incorporate one of the hottest trends in our industry, project portfolio management (PPM), but I wasn't sure how they were related. Then I came across an article in Optimize magazine entitled “Putting an End to Project Mis-Management” (October 2002, by J. Kent Crawford and James S. Pennypacker). In the article, Kandi Miller, vice president of information management at Siemens Enterprise Networks, clearly connected the two issues for me. She said, “If quality is important, then project control is essential. And project control without portfolio management is impossible.”
The tie between the two became obvious: PPM is essential to ensure overall quality.
PPM has become one of the hottest topics over the past year. At both the recent PMI® Seminars & Symposium and the PMI Research Conference, there were dozens of papers on the subject. PPM was one of the most discussed topics at the Gartner Information Technology (IT) Expo held in Orlando, Fla., USA. There also was a new conference held in Chicago last November, sponsored by IIR, that was solely dedicated to PPM. IT and business publications now regularly address PPM issues. And Pacific Edge Software has launched a new magazine and Web site, Portfolio Knowledge (www.portfolioknowledge.com), that highlights the latest information on the subject.
PPM is becoming a critical component of project justification and governance. It enables organizations to combine proposed and existing investments to properly assess the allocation of limited resources, time and budget. The bottom line is PPM can improve a company's return on investment (ROI) and time-to-market delivery—and what company doesn't want that?
Companies must allocate the right resources to the right projects.
The bottom line is PPM can improve a company's return on investment (ROI) and time-to-market delivery—and what company doesn't want that?
We all work in environments where there are unlimited needs but limited resources. Sometimes this may mean terminating projects that are not aligned with corporate strategies and won't offer the greatest value to the company's strategic interests. These can be difficult decisions.
PPM can create conflict, confusion and stress. It involves shifting priorities and, ultimately, resources. None of which is ever well received.
PPM involves three steps: fit, utility and balance. The first step, fit, involves assessing current projects and then reviewing the company's strategy. Criteria for selecting and prioritizing the projects must be developed. Before any project is considered for funding, it must meet these criteria. They should include a link to strategic direction, business threshold minimums, and completion of the project-justification paperwork.
The next step is utility. This is where the value of the project is defined by costs, benefits and associated risks. The most critical projects are measured against the predetermined metrics and are reviewed through an analysis process with quantifiable data to ensure forecasted cost and benefits are accurate.
The final step is balance. Here you want to validate project information and existing portfolio decisions. You want to optimize the total portfolio rather than a single project.
The discipline of portfolio management helps a company select and prioritize projects with the greatest potential ROI—before the projects are executed! Effective PPM provides a consistent way to evaluate, select, prioritize, budget and plan for the right projects: those that offer the greatest value to the company's strategic interests. PPM starts with developing a strategic focus and ends with selecting the right projects.
Despite the fact that this sounds quite simple, the reality is that implementing a PPM process requires cultural change, which takes time and effort. But economic pressures are causing corporate managers to take a hard look at late, over-budget projects and ways to ensure quality within their projects. PPM does this. PM
Deborah Bigelow, PMP, is executive vice president of PM Solutions Inc., a Haver-town, Pa., USA-based project management consulting company. She was executive director of the Project Management Institute from 1992 through 1996.
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PM NETWORK | JANUARY 2003 | www.pmi.org