Portfolio Management has been a buzz word banded around for a good few years within the project management world; more recently APM announced a new specialist interest group for Portfolio Management (but not yet listed amongst the older groups on the website) and there is a Portfolio Management guidance from the OGC (still available in draft form, to be published in January 2011). There was a whole conference devoted to it in March 2010 and some great presentations still available to view now.
So you have some materials to go and check out but essentially portfolio management is defined as;
Portfolio Management is a co-ordinated collection of strategic processes and decisions that together enable the most effective balance of organisational Change and Business as Usual. OGC Portfolio Management
You may also have heard the saying; “doing the right projects and doing them right” which basically means not only do we have to deliver projects correctly, using good project management methods, processes, tools and people but an organisation has to choose the right projects to do in the first place. This is where portfolio management comes in. The new guidance from OGC lays out the benefits of portfolio management;
- More of the ‘right’ Programmes and Projects being undertaken in terms of greater financial benefits and contribution to Strategic Targets, business priorities and fewer ‘wrong’ ones started or more killed off earlier via active management of the Project Portfolio.
- Removal of redundant and duplicated Projects.
- More effective implementation of Programmes and Projects via management of the Project pipeline, Project
dependencies, interdependencies and constraints (including resources, skills, infrastructure, change appetite, etc.) and redirecting resources when Projects do not deliver or are no longer strategically aligned. - More efficient resource utilisation.
- Greater benefits realisation via active approaches to exploitation of the capacity and capability created.
- Improved transparency, accountability and Organizational Governance.
- Improved engagement and communication between Senior Management in understanding and meeting organisational needs and expectations.
The interesting thing for me about portfolio management is that it is not new – at least the name isn’t. In my previous life within professional services and working within the Project Office, portfolio management was the name given to a collection of projects being delivered but they weren’t interrelated, in other words they weren’t a programme. The collection of projects were being delivered to a single organisation but each had no bearing on the other. The term portfolio management was also used to describe the collection of projects that had a common theme i.e., they were being delivered to organisations within the telecoms sector or the public sector. Again the only commonality was the sector; but they had to be monitored, reported and managed by a group manager. So for me the term portfolio management held a completely different definition to the one now on the scene. Is anyone else in the professional services or consultancy field in project management also used to this definition?
Over the coming months we’ll cover more on portfolio management; especially the effects it has on you – the project professional. We’ll be looking into the career development aspects of portfolio management and sharing with you the market view on portfolio management.
Image © hectorir and used with permission.
Twitter: jeffclarkct
Great Article. I’m a big fan of portfolio management and have done this before. It really helps the organization focus on doing the right work, and employs some upfront analysis to assess the capacity of the organization to get the workload done.
Twitter: itgEvangelist
You’re right Lindsay, the term Portfolio Management is not new. And yes, it has many meanings.
In the world of project and program management, we use the acronym PPM. Even this is problematic. For some folks, this means Project Portfolio Management. Used in this way, it addresses the discretionary spend on projects and programs. This is a great starting point for organizations dipping their toes in the PPM waters for the first time.
When I use the term PPM, I mean Project AND Portfolio Management. This may seem like a trivial distinction, but adding the “and” is huge. This definition of PPM includes ALL spend, non-discretionary in addition to discretionary. Interpreted in this manner, PPM provides the governance for all investments, those required to run the business (existing systems) as well as those devoted to new ventures (projects and programs).
One of the slides in my PPM presentation is titled, “The P’s in PPM.” I use that slide to illustrate the ambiguity of not only the PPM term, but the terms portfolio, program, and project. I urge all organizations to choose definitions applicable to their specific business circumstances and objectives. Once they do, they must then regularly revisit these definitions and revise them as necessary.
And we’re just glancing on the potential complexities of Project and Portfolio Management. I’m not talking about portfolios of projects simply sorted by a common theme. I’m talking about multiple portfolios of investments. Investments are placed in one portfolio vs. another based on the realization that the aggregate of those investments meets an overarching goal or objective. Placing them in the same portfolio enables the orchestration required to ensure the portfolio is managed as a single entity.
Your post does a good job of recognizing Portfolio Management has many meanings. I actually include no less than a half dozen definitions in my PPM presentation (again, insisting organizations need to find the right fit and flavor). Here is my favorite. It comes from the Project Management Institute’s (PMI) Standard for Portfolio Management:
Portfolio management is the centralized management of one or more portfolios, which includes identifying, prioritizing, authorizing, managing, and controlling projects, programs, and other related work, to achieve specific strategic business objectives.
I like it because it lists all of the activities required to do PPM well.
Oh, and welcome to the world of PPM. It is great to have you because we have a lot of work to do.
Steve Romero, IT Governance Evangelist
http://community.ca.com/blogs/theitgovernanceevangelist/