project portfolio management metrics for work

8/17/2019 Project portfolio management metrics for work

1/55

Project Portfolio Management:

James C. Brown

Sr. Manager, Research PMO

Pioneer Hi-Bred International


2/55

Agenda

PPM Interest

What is Project Portfolio Management?

MythsBenefits

Implementation Steps

Portfolio Management Models

Types of Portfolio Metrics

Measurement Lessons

Dashboard Tips

Screenshots


3/55


PPM Interest

Definitions

Challenges

M ths

Benefits

Implementation Steps


4/55

PPM Interest


5/55

PPM Interest


6/55

PPM Interest


7/55

Project Portfolio Management

From PMBOK 4th edition:

The centralized management of one or more portfolios,which includes identifying, prioritizing, authorizing,managing, and controlling projects, programs, and otherrelated work, to achieve specific strategic business


8/55

PPM Scope

PPM allows an organization to measure the impact of projectmanagement on procurement, human resources, cost, and productquality at a company-wide level.

Program level – cumulative management of projects contributing tocommon ro ram ob ectives.

Portfolio – allows programs or projects to be prioritized for completion, , .


9/55

Who is your PPM audience?

Most senior executives are not interested in the measures of successused by project management:

– sco e

– time – cost

–

Their measures of success are: – profitability

– return on investment

– deliver of benefits

– taking advantage of windows of opportunity


10/55

Who is your PPM audience?

Executives used to be interested in just two things about projects:

– when will they be finished

–

Executives are now more interested in:

– w a m x o po en a pro ec s w prov e e es u za on ohuman and cash resources to maximize long-range growth and

return on investment for the company? – ow o e pro ec s suppor s ra eg c n a ves

– how will the projects affect the value of corporate shares(stock)?


11/55

Project Portfolio Management

From Project Portfolio Management: A Practical Guide toSelecting Projects, Managing Portfolios, and Maximizing

ene s arvey . ev ne

The bridge between traditional operations management.


12/55

Past/Current State

Strategies Schedule/timeObjectives, goals Project costs

Business performance Project performance

Stockholder satisfaction Stakeholder satisfaction

Project selection and mix Scope/change control

Resource availability Resource utilization

Cash flow, income Cash usage


13/55

PPM as the Hub

Budget Scope,Chan e,

Resource Availability

Flow Opportunity

Management(Projects)

Cost Control

Demand(Internal

Strategic andTactical

Project

Selection andPortfolio

Projects)ans

Management

ResourceResource

ProjectControl and

Performance

BusinessPerformance

Risk Assessment

Allocation AllocationanManagement


14/55

PPM Enables Project Selection Project 5

• Aligns projects with organizationpriorities and capabilities• Top-down governance Project2

Project1

Project 4

approach to determine whichprojects to fund

• Uses a set of project selection

Project3

overnance • Creates a diversified projectportfolio by selecting a propermix of project work across Funded Projects

eren ec no og es an nesof business• Maps project work to individual

a lications within the ortfolio

14


15/55

Challenges of PPM

Organization

milestones, schedules etc.• Consulting engagements

• In some industries project timescales reflect product lifecycles andcan be up to 40 years long.

• Defense Infrastructure Pharmaceutical

• The other end of the spectrum is a three to four month projecttimescale

• Mobile phones, computers, electronic games


16/55

Challenges of PPM

Cultural

• .

• Management not buying into the process because they may getexpose . et pro ects ecome expose .

• Heard more failure stories than success.

• Brings a level of detail that may create a fear factor among some.


17/55

Challenges of PPM

Knowledge

• There is a lack of knowledge from consultants in this space.

• Reliance on consultants to solve the problem. Implementation ofPPM is a change management process.

• Advocated by software consultants, but often they are not equipped

to address issues around change management.

• The consultancy market tends to use a ‘bus load’ of consultants forlar e software de lo ment and this is a dead end.

• Some design at a very high level of maturity (e.g. level four of five).


18/55

PPM: Three Dangerous Myths

Myth 1: PPM resides with IT

Defining a PPM rollout involves strategic questions often outside IT's

purview.

What are all the company projects under way or in the queue?

Are they projects the company should be doing?

How are they prioritized? Budgeted? Resourced?

Which business lines are profiting by them, and which are not?

ow oes managemen o a n ns g s n o e r progress


19/55


Myth 2: The Right Tool Drives PPM Success

'

and its appetite and ability to advance. If it's at level 1now, realistically how feasible is level 4 or 5, and how rapidly can the

• Is there an executive commitment to the effort and expenseinvolved?

• What path will maturity take?

• What business benefits must PPM deliver?

The choice of tool is secondary to these considerations. The best toolis the one that most fully serves the very particular needs of thecompany, regardless of the judgment of the technology marketplace.


20/55


Myth 3: The Best Starting Place is PPM Best Practices

are y are compan es rea y o mp emen es prac ces ou o

the gate.

Start first with:

Standard definitions Measureable success criteriaos an ene s es ma es

Labor and non-laborestimates

Return on investmentExternal dependenciesStakeholder inputs


21/55

Benefits of PPM (but not a Silver Bullet)

1. Getting products to market on time resulting in safeguarded orincreased revenue.

2. Driving delivery of quality products with increases clientsatisfaction and reduces warranty claims.

3. Reducing cost through supporting procurement in the effective

acquisition and use of material resources.

4. Increasing productivity by assigning human resources to prioritywork and ensuring that they are assigned according to their skill

sets.


22/55

Benefits of PPM (but not a Silver Bullet)

5. Increasing profitability by emphasizing projects that providemaximum return on investment.

6. Planning/forecasting human resource and equipment demand andcomparing them to available resource and equipment in order tobetter understand enterprise capacity and meet present and futurehuman resource and equipment needs.


23/55

Implementing PPM

1. Apply a PPM approach to the management of their projects.

2. Identifying what scope of programs/projects is to be managed withthe PPM system.

3. Determining what project performance information is measured forexample, duration vs. effort vs. costs.

4. Developing and employing a common methodology, includinginputs, processes, roles and outputs, to manage the completion of

.

5. Selecting the right technology tools to support their PPM system.


24/55

Implementing PPM

6. Role training project and product management resources on theuse and application of the methodology.

7. Measuring compliance on the use of the methodology andconfiguring tools to gather and report performance information.

8. Acquiring and maintaining management’s support in the ongoing

use and im rovement of PPM.


25/55


Portfolio Management Tools


26/55

Portfolio Value vs. Cost Launch Pipeline Calendar Market b Technolo

Non-Capital

Effort Hours and ROI

Newness Risk vs.Innovation

Strategic Impact Matrix

Risk vs. Return Chart

n mum equ remenChecklist

And more . . .


27/55

Strategic Linkage

StrategyProject 1

Project x

Project 2

Goal

Goal

Strategy

Strategy

Project 5Project 4

MissionGoal

Strategy

Strategy

Project 7

Pro ect 9

Project 8

Goal

Strategy

Strategy

Project 10

Project 12

Project 11

StrategyProject y

Project 13

Desiredoutcomes Means:

Methods to achieve them

What: Actions we

will take


28/55

Sample Strategy Elements

Acquisitions

Buy & integrate Y

Buy & integrate Z

Growth to$5Billion

Developing saleschannels in Asia

Research &

recommend 3channels

Mission

customersatisfaction

customerparticipation in ourdecisions

Establish 5 customer

involvement centersncrease

from newproducts

Buildingindustry-leadingcompetence in X

Fund universityCollaborative X

recurring program

EndsGoals

MeansStrategies

Project/ProgramCandidates for

Portfolio


29/55

Project Scoring Model

Total Project Score

Project

Deliverable

Value to the

Organization

DurationTotal Cost StrategicFinancial

QualityScope ROICompetitive

Issues

PaybackPeriod

NewBusinessIssues

Benefit/CostRatio

CapabilityImprovement


30/55

Project Scoring Model (Addition of Schema, Points)

Total Project Score

70 of 100 points

Value to theOrganization

40 of 60 points

ProjectDeliverable

30 of 40 points

Duration

5 of 8 points

Total Cost

5 of 10 points

Strategic

20 of 36 points

Financial

20 of 24 points

Quality

10 of 10 points

Scope

10 of 12 points

ROI6 of 8 points

Competitive Issues4 of 6 points

Payback Period4 of 4 points

New Business Issues10 of 12 points

Cost-Benefit Ratio10 of 12 points

CapabilityImprovement6 of 18 points


31/55


32/55

Launch the Right ProgramsSelect hi h value – low risk ro rams

HighValue

100 50 0

0

High Value

High Risk

Postpone

High Value

Low Risk

Good toShift Right Go

e s s V a l u e

50

Low ValueHigh Risk

Low ValueLow Risk

B u s i n

Rethink Shift Up

100

LowValue

Ability to Execute SuccessfullyHighRisk

LowRisk


33/55

NewProducts

CostReductions

TypesInstitutional

6%Medical

23%Target=40%

27%Target=10%

Target=10%

Industrial

Automotive20%

Target=10%

Extensions

Platforms9%

Target=15%

25%Target=20%

arge =

23%Fixes

18%Target=10% Residential

39%Target=40%


34/55

o j e c t 1

o j e c t 2

o j e c t 3

o j e c t 4

o j e c t 5

o j e c t 6

o j e c t 7

o j e c t 8

o j e c t 9

o j e c t 1 0

o j e c t 1 1

o j e c t 1 2

o j e c t 1 3

o j e c t 1 4

o j e c t 1 5

Row

Projects

Objectives: P P P P P P P P P P P P P P P Scores

Establish Competitive Product Lines 1 2 2 2 7

Maintain Product Competitiveness 1 2 2 1 2 8

Reduce Operating Costs 1 1 1 2 1 1 1 2 10

Increase Ca acit /Headcount Ratio 1 1 2 1 2 7

Establish Infrastructure for Growth 1 1 2 2 6

Maintain Infrastructure 2 1 1 4

Growth Through Acquisition 2 2 4

Column Scores 5 2 3 5 4 0 3 5 1 3 0 3 6 2 4

= No Contribution (0)

1 = Supports (1)

2 = Fulfills (2)


35/55


5 Types of Portfolio Metrics

Measurement Lessons

Dashboard Tips


36/55


Category Key Questions Sample Metrics

strategic objectives?

“run the business”

% of Portfolio in “growe us ness

% of Portfolio in

“innovate the business”

% of Portfolio inShort/Medium/Long-term

% of portfolio in Largeand Extra Large Projects


37/55



prioritization and

sequencing of projectsgiven current capacity?

intake

% of growth in initiatives

Resource utilization(human, material,

ca ital

Recruiting pipeline


38/55



extent did we achieve

our objectives?

% on budget

or o o an su -portfolio IRR

$ saved for consolidationefforts


39/55



in-flight, how is our

execution progressing?

programs and projects

# of issues by severity


40/55



managing program and

project budgets andwhat are the financial

% funding in-flight

ren s comm e u nospent

P f li M L


41/55

Portfolio Measurement Lessons

Introduce new metrics only when necessary

Quality versus Quantity

rototype ear y an o ten

Kee the visuals clear and messa es cris

10 D hb d Ti


42/55

10 Dashboard Tips

1. Know the questions your dashboard is trying to answerbefore building it

2. Make sure you can actually collect the data you want to

3. Know our audience and understand how theconsume information

4. Begin by summarizing and analyzing data you alreadydeliver

D hb d Ti


43/55

Dashboard Tips

5. Your first dashboard should never use a dashboardtool – That will come later

6. Dashboards should always have a printable version

7. Incorporate application instrumentation into system

desi n rocess

8. Make sure those responsible for creating the

dashboard understand who is reading it – it willincrease quality


44/55

Sample Dashboards


45/55

Sample Dashboards

Portfolio Mana ement Tem late

Future Cost Model 5 Year Plan (Excel based PPM)

Wrap Up


46/55

Wrap Up

Find what works / is accepted, and use it consistently


47/55

Thank You!

James Brown, PMP, PGMP, OPM3, PMI-SP

email: [email protected]


48/55


Appendix

Potential Enterprise Tools $$$$$


49/55

Potential Enterprise Tools $$$$$

Gartner (June 2010)


50/55

50


51/55

51


52/55

52


53/55


54/55

54


55/55

–

Human Resource and Organizational Competency – train on a

Technology Tools – through consistent, concise, relevant, reliable andme y n orma on

Performance Measurement

PPM Scope – decide which projects should be managed by its PPMs stem

project portfolio management metrics for work

Documents