Mgt 613 Project Portfolio Management and the PMO

Mgt 613 - Project Portfolio Management and the PMO Module 1 – Fundamentals of Project Portfolio Management (PPM) Dr. Alan C. Maltz Howe School of Technology Management Stevens Institute of Technology Alan. Maltz@stevens. edu 1 © Alan C. Maltz, Ph. D, 2014

Design of Mgt 613… CULTURE ROLES, COMPETENCIES & RESPONSIBILITIES PROCESSES & METHODOLOGIES FUNDAMENTAL PRINCIPLES DEFINITIONS 2 © Alan C. Maltz, Ph. D, 2014

What do you know about project management? What is a project? What is project management? 3 © Alan C. Maltz, Ph. D, 2014

A project. . v Temporary endeavor to create a unique product or service. • Temporary = discrete start and stop dates. v Unique = a need to progressively elaborate the characteristics of the product or service. • Progressively = sequence of steps • Elaborated = careful details PMBOK p 5 -6 4 © Alan C. Maltz, Ph. D, 2014

Project Management. . Application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder requirements and expectations. It balances competing demands among: • Stakeholder segments with different needs and expectations • Scope, cost, time, and quality (and other success measures) 5 © Alan C. Maltz, Ph. D, 2014

What is a program? A group of related projects or subprograms that are managed in a coordinated way to obtain benefits not available from managing them individually. (PMI 2013) 6 © Alan C. Maltz, Ph. D, 2014

How important is project management to the organization? What are typical project success measures? 7 © Alan C. Maltz, Ph. D, 2014

What are the areas that most executives are interested in? Are project and program management enough for an organization to survive in its competitive environments? 8 © Alan C. Maltz, Ph. D, 2014

What is a portfolio? Projects, programs, sub-portfolios, and operations managed as a group to achieve strategic objectives ( PMI, 2013) 9 © Alan C. Maltz, Ph. D, 2014

Organizational Strategy… The plan of goals, policies, and actions that provide the overall direction and focus of the organization (PMI, p. 7) 10 © Alan C. Maltz, Ph. D, 2014

Definitions of Project, Program, and Portfolio PROJECT • A temporary endeavor undertaken to create a desired outcome e. g. capability, service, Product; a Project sometimes has technical and commercial dependencies with other Projects within a Program or Portfolio PROGRAM • A group of related Projects whose interdependencies dictate how they are resourced in alignment with the organization’s objectives; A Program is comprised of Projects that often have technical and commercial dependencies between each other within the Portfolio PORTFOLIO • A collection of Projects and/or Programs that are grouped together to facilitate their effective management to meet the organization’s objectives on an ongoing basis; A Portfolio is actively managed to meet short- and long-term goals through the addition to and termination of assets from the Portfolio 11 © Alan C. Maltz, Ph. D, 2014

Project-Program-Portfolio PROJECT (from Table 1. 1, PMI 2013) PROGRAMS PORTFOLIOS Project managers manage technicians, specialists, etc. Program managers manage project managers Portfolio managers may manage or coordinate portfolio management staff. Project managers are team players who motivate using their knowledge and skills. Program managers are leaders providing vision and leadership. Portfolio managers are leaders providing insight and synthesis. Project managers conduct detailed planning to manage the delivery of products of the project. Program managers create high-level plans providing guidance to projects where detailed plans are created Portfolio managers create and maintain necessary process and communication relative to the aggregate portfolio. Project managers monitor and controls tasks and the work of producing the projects products. Program managers monitor projects and ongoing work through governance structures. Portfolio managers monitor aggregate performance and value indicators. 12 © Alan C. Maltz, Ph. D, 2014

What is project portfolio management? The centralized management of one or more portfolios to achieve strategic objectives. . (PMI, 2013) PPM resource allocation to achieve corporate new product objective (Cooper, p. 1) 13 © Alan C. Maltz, Ph. D, 2014

PPM at Apple. . Cook is labeled as more of a manager and less of a visionary, causing current and former Apple employees to worry that without Steve Jobs, Apple is losing its "frenetic pace and focus" on new products. Employees also worry that the company may be working on too many projects at once. Under Mr. Cook, current and former employees say Apple may be spreading itself too thin, pursuing too many ideas and compromising the "laser focus" that Mr. Jobs used to create the i. Mac, i. Phone and i. Pad. "It was Steve's job to say no, " one of these people said. “Tim is not as comfortable doing that. ” WSJ 7/7/2014 14 © Alan C. Maltz, Ph. D, 2014

The value drivers of PPM…. • TIME • RISK • COST • VALUE 15 © Alan C. Maltz, Ph. D, 2014

What happens when you lack effective PPM? No PPM means. . Immediate Result l Reluctant to kill projects l New projects added l No focus l Too many projects l Resources spread l Execution suffers l. Increased time to market l. High failure rates l Weak decision points l Poor ‘Go/kill/hold/fix’ decisions l Too many mediocre, low value projects l Good projects starved l Too few top product winners l Chaotic launches l No rigorous criteria l Selection based on emotion, politics l Wrong projects are selected l Many failures l No strategic criteria for project selection l Projects lack strategic direction and alignment l Diluted effort l New products don’t support strategy End result: poor NP performance Because of…? Cooper p. 5 16 © Alan C. Maltz, Ph. D, 2014

The Organizational Context of PPM Vision Mission Organizational Strategy and Objectives High-Level Operations Planning and Management Project Portfolio Planning and Management of On. Going Operations Management of Authorized Programs and Projects (recurring activities) (projectized activities) Producing Value Increasing Value Production Capability Organizational Resources 17 Fig. 1 -3. PMI 2013 © Alan C. Maltz, Ph. D, 2014

Is portfolio management a bridge between operations management and project management? 18 © Alan C. Maltz, Ph. D, 2014

The Bridge. . In traditional organizations, responsibility for determining and achieving the organization’s goals is assigned to the operations function. A problem common to many organizations is that there is no connection between the operations and projects functions and no structured, consistent, and meaningful flow of information. The organization’s objectives (enterprise-level goals) are hardly ever communicated to the project office, and the periodic measurements made by the projects group cannot be related to these objectives. P. 19 (Levine 2005) 19 © Alan C. Maltz, Ph. D, 2014

Portfolio management and organizational governance Organizational governance Strategic Planning Management by Projects Portfolio Management of Operations Program Management Project Management Processes, Tools, Metrics 20 © Alan C. Maltz, Ph. D, 2014

Portfolio management process groups Aligning Process Group: How components will be categorized, evaluated, and selected for inclusion, and managed in the portfolio (PMI 2013). Monitoring and Controlling Process Group: Performance indicators are reviewed periodically for alignment with strategic objectives (PMI 2013). 21 © Alan C. Maltz, Ph. D, 2014

Portfolio management process (PMI 2013) Strategic Planning Process Output: Current Strategic Plan Portfolio Management Processes Aligning Process Group (3. 2. 1) Identification (3. 2. 1. 1) Monitoring and Controlling Process Group (3. 2. 2) Component Processes Component Execution and Reporting Prioritization (3. 2. 1. 5) Current Strategic Plan l. Goals Definitions & Categories Categorization (3. 2. 1. 2) Portfolio Reporting and Review (3. 2. 2. 1) Portfolio Balancing (3. 2. 1. 6) l. Key Performance Criteria l. Capacity Definition Evaluation (3. 2. 1. 3) Authorization (3. 2. 1. 7) No Selection (3. 2. 1. 4) Strategic Change (3. 2. 2. 2) Yes v PPM links with strategy v PPM is a continuous business process 22 © Alan C. Maltz, Ph. D, 2014

Who are portfolio stakeholders? 23 © Alan C. Maltz, Ph. D, 2014

Project-Program-Portfolio PROJECT (from Table 1 -1, PMI 2013) PROGRAMS PORTFOLIOS Projects have a narrow scope with specific deliverables. Programs have a wide scope that may have to change to meet the benefit expectations of the organization. Portfolios have a business scope that changes with the strategic goals of the organization. The project manager tries to keep change to a minimum. Program managers have to expect change and even embrace it. Portfolio managers continually monitor changes in the broad environment. Success is measured by budget, on time, and products delivered to specification. Success is measured in terms of Return On Investment (ROI), new capabilities, and benefit delivery. Success is measured in terms of aggregate performance of portfolio components. Leadership style focuses on task delivery and directive in order to meet the success criteria. Leadership style focuses on managing relationships, and conflict resolution. Program manager’s need to facilitate and manage the political aspects of the stakeholder management. Leadership style focuses on adding value to portfolio decision-making. 24 © Alan C. Maltz, Ph. D, 2014

What are the requirements for effective PPM? Corporate goals, objectives & strategies must be basis for NP portfolio selection Senior management must drive strategy and involved in NP portfolio selections Effective communications 25 © Alan C. Maltz, Ph. D, 2014

What leaders do: three goals of PPM Maximization of Value: Long-term profitability, return on investment, etc. Balance: to develop a balanced portfolio: long-term projects VS short, fast ones; high-risk long shot vs. lowerrisk sure bets; the various markets; different technologies of technology types; different project types- new products, improvements, cost reductions, fundamental research Strategic Alignment: to ensure that, regardless of all other considerations, the final portfolio of projects is strategically aligned and truly reflects the business’s strategy (Cooper, Edgett et al. 2001) 26 © Alan C. Maltz, Ph. D, 2014

Thank You - Questions? Alan C. Maltz, Ph. D. Howe School of Technology Management Stevens Institute of Technology Castle Point on the Hudson Hoboken, NJ 07030 Phone: +1 (561) 632 -4848 E-mail: alan. maltz@stevens. edu Web: http: //www. stevens. edu/ 27 © Alan C. Maltz, Ph. D, 2014