managing cost and time in a large portfolio of...
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Managing cost and time in a large
portfolio of projects
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If you can`t manage the time you can`t
manage the project….
(this applies for cost as well off course)
13. mars 2008 www.nsp.ntnu.no 2
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So what`s the problem?
28- 29 april 2014 http://www.prosjektnorge.no 3
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13. mars 2008 www.nsp.ntnu.no 4
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Fundamentals
• What are a large portfolio?
• What are the governing principles or KPI in the
portfolio?
• How will a socio technical system behave?
• What kind of management best to the strategic
targets?
13. mars 2008 www.nsp.ntnu.no 5
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Context 1
• A 5 year dataset of milestone delays from 2008-2012
• All projects in the study are in the acquisition phase, they are
funded and has been through a 1-2 years of pre-planning
• Number of projects vary 334 - 415 a year
• Total budget approximately a billion USD
• The portfolio is organized in 5 programs in 5 different
organizations
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Context 2
• Between 2008-2012 no limit in going fast where given, PM
planned with orders to use funding at a maximum rate.
• Every year, in January, PM must plan a new baseline plan,
which is the reporting baseline.
• Project milestones are internal, but Program Milestones are
logged by the portfolio manager
– four types are defined; contract, delivery, terminate and others
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Context 3
• Every month PM must report deviations;
– Schedule, deviation on so called program milestone
• Common database logged by the portfolio manager
– Budget
– Economic prognosis
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13. mars 2008 www.nsp.ntnu.no 11
Deviation from baseline plan made in jan/feb – arimetric mean for the hole dataset
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What is this knowledge used for?
• The PMI report “pulse of the profession” in 2012
describes trends showing that delays are a global
project management challenge.
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PMI – Pulse of the profession – global survey
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What is this knowledge used for?
• Portfolio management objective is to govern towards
budget = result
• Delay tendency gives information of a “macro
behavior”, the planning fallacy, optimistic time
predictions
• Human error in a system must be compensated for
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What is this knowledge used for?
• In this case, they compensate for human behavior,
the delays, by adding more projects than economy or
budget can hold / overbook the portfolio at the start of
the year.
• The portfolio manager / strategic management plan
with an economic overheight 14-18% more than
budget
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What is this knowledge used for?
• Compensate for human behavior, the delays, by
adding more projects to the portfolio. The portfolio
manager / strategic management plan with an
economic overheight 14-18% more than budget
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Summary
• It is likely that a large project portfolio will be 35-45 % delayed
(or more, according to PMI world survey)
• Depending on business framework and strategy strategies to
compensate can be enforced, in this case;
– Plan with economic overheight
– Observe milestone achievement and economic uncertainty.
– Find the few large projects with cost flexibility and manage their
economic milestones toward the end of the year.
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Conclusion
• Success on project level is not necessarily the same
as success on the portfolio level
• You must know the objectives of the business
strategy and the behaviouristics of your business to
find the right governance strategies
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28- 29 april 2014 http://www.prosjektnorge.no 20
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http://www.prosjektnorge.no 21