University of Khartoum

School of Management Studies

September 2014

Portfolio Management

Prepared by:

1. Yousif Alghaly Ahmed M.
2. Tilal Abd Eljaleel Mahmoud
3. Ahmed Mohamed Ebrahim
4. Khalid Hashim



Instructor:
Eng. Abobaker Sami



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What Are We Presenting?
Project Portfolio Management. PPM
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AGENDA
Portfolio management.
Portfolio management principle.
Portfolio management Cycles

LEARNING OBJECTIVES
Provide a structure for applying the PMI
standards for Portfolio Management.
Enable understanding and application through
life cycle management .
Comments about Symptoms & benefits of
adopting Portfolio Management .
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A person who undertakes to
carry a cat home by the tail
learns ten times as much as a
person who simply watches.
Mark Twain

Portfolio:
The totality of an organizations investment (or
segment thereof) in the changes required to
achieve its strategic objectives.
Portfolio Management:
Portfolio Management is a coordinated
collection of strategic processes and
decisions that together enable the most
effective balance of organizational change
and Business As Usual (BAU).
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PROJECT PORTFOLIO MANAGEMENT
The objective of PPM is to create the
mix of projects most likely to support
the achievement of the
organization's goals, aligned with
the preferred strategies, and within
the organization's resource (4M)
constraints.


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Programme
Managing Successful
Programmes (MSP) defines a
programme as a temporary,
flexible organization created
to coordinate, direct and
oversee the implementation of
a set of related projects and
activities in order to deliver
outcomes and benefits
related to the organization's
strategic objectives.
A programme is likely to have
a life that spans several years.
Programme
management
MSP defines programme
management as the
action of carrying out the
coordinated organization,
direction and
implementation of a
dossier of projects and
transformation activities
(i.e. the programme) to
achieve outcomes and
realize benefits of strategic
importance to the business.

Project
A project is also a temporary
organization, usually existing
for a much shorter time than a
programme, which will deliver
on~ or more outputs in
accordance with a specific
business case.
A particular project may or
may not be part of a
programme. Whereas
programmes deal with
outcomes, projects deal with
outputs.

Project
management
Project management is
the planning, monitoring
and control of all aspects
of the project and the
motivation of all those
involved in it to achieve
the project objectives on
time and to the specified
cost, quality and
performance.


From the above it can be
seen that the key
differences between
portfolios and portfolio
management on the one
hand, and programmes,
projects and PPM on the
other are:

Programmes and projects are
temporary organizational
structures, whereas the portfolio
is permanent.
Programmes and projects are
primarily focused on delivery of
outcomes and outputs
respectively. The portfolio, in
contrast, is focused on the
overall contribution of these
outcomes, benefits and outputs
to strategic objectives.
Portfolio management is
concerned with ensuring that
the programmes and projects
undertaken are the right ones in
the context of the organization's
strategic objectives; maximizing
benefits realization; and
ensuring that lessons learned
are identified, disseminated and
applied in the future

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PROGRAMMES AND PROJECTS
SPECIFICALLY FOCUS ON 'DOING THINGS
RIGHT', WHERE AS PORTFOLIO
MANAGEMENT IS ABOUT A COMBINATION
OF 'DOING THE RIGHT THINGS' AND
'DOING THINGS RIGHT' AT A COLLECTIVE
LEVEL.
Note
PORTFOLIO MANAGEMENT
PRINCIPLES
The portfolio management principles represent the
foundations upon which effective portfolio
management is built; they provide the
organizational environment in which the portfolio
definition and delivery practices can operate
effectively. These are generic principles - the way in
which they are applied must be tailored to suit the
organizational circumstances whilst ensuring that
the underlying rationale is maintained.


the portfolio
management
principles provide
the context within
which the portfolio
definition and
portfolio delivery
cycles, and their
constituent
practices, operate.

5 - PORTFOLIO PRINCIPLES
Five flexible principles upon which successful
approaches to portfolio management depend.
These are :
1. Senior management commitment.
2. Alignment with the organization's governance
framework
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5 - PORTFOLIO PRINCIPLES
3. Alignment with the organization's strategic
objectives
4. The use of a portfolio office (virtual or
otherwise) to support senior-management
decision-making
5. Working within an energized change culture.
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PRINCIPLE 1: SENIOR MANAGEMENT COMMITMENT
The National Audit Office (NAO) reports that senior
level engagement is crucial in three ways by:
1. Providing a mechanism to prioritize the
programme and project portfolio in line with business
objectives.
2. Creating a clear decision-making structure with
agreed lines of accountability so that decisions are
made swiftly and in line with business strategy.
3. Demonstrating that senior management is
committed to the change.
PRINCIPLE 2: GOVERNANCE ALIGNMENT
Research and practical experience indicate that
a key factor behind successful implementation of
portfolio management is effective governance,
i.e. clarity about what decisions are made, where
and by whom, and what criteria are used in
reaching these decisions

PRINCIPLE 3: STRATEGY ALIGNMENT
Strategic alignment means that the allocation of
funds to different types of initiative (for example,
infrastructure, research, strategic, operational
support etc.)

PRINCIPLE 4: PORTFOLIO OFFICE
Portfolio management enables the
relevant portfolio governance bodies
to make better and more informed
investment decisions. A function is
therefore required to provide timely
and accurate information to facilitate
that decision-making process
PRINCIPLE 4: PORTFOLIO OFFICE
The key services provided by this function include:
1. Defining portfolio-wide PPM standards, processes and templates to
ensure consistent approaches are applied and to provide a clear
line of sight across the portfolio.
2. Providing an assurance to senior management on effective and
efficient management and delivery of change initiatives.
3. Providing a challenge or critical-friend role for individual initiatives.
(A critical friend is a trusted person who offers critiques of a work as
a friend.)
4. Preparing t he portfolio strategy and delivery plan
5. Preparing the portfolio dashboard.
6. Improving the links and feedback loop between policy and
strategy formulation and PPM delivery.



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PRINCIPLE 5: ENERGIZED CHANGE CULTURE
The portfolio management cycles of definition and
delivery are driven by organizational energy, and in
the context of portfolio management an energized
change culture includes elements such as:
Senior management commitment, communication
and motivation
A mutual and shared desire to succeed based on
effective employee engagement.
Effective governance with an appropriate level of
bureaucracy.
Culture and behaviors reflective of a focus on t he
overall good and success of the organization rather
than individual interests.
PORTFOLIO MANAGEMENT CYCLES

PORTFOLIO DEFINITION CYCLE
PORTFOLIO DELIVERY CYCLE

THE PORTFOLIO
MANAGEMENT CYCLES
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PORTFOLIO MANAGEMENT
PRACTICES
1. The portfolio definition cycle - understand,
categorize, prioritize, balance and plan.
2. The portfolio delivery cycle management
control, benefits management, financial
management, risk management, stakeholder
engagement, organizational governance
and resource management.
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PORTFOLIO DEFINITION CYCLE
The purpose of the portfolio definition cycle is to
collate key information that will provide clarity to
senior management on the collection of change
initiatives which will deliver the greatest
contribution to the strategic objectives, subject to
consideration of risk/achievability, resource
constraints and cost/affordability.
The key output of the portfolio definition cycle is
an understanding of what the portfolio is going to
deliver
PORTFOLIO DELIVERY CYCLE
The purpose of the portfolio delivery cycle is
to ensure the successful implementation of the
planned change initiatives as agreed in the
portfolio strategy and delivery plan, whilst also
ensuring t hat the portfolio adapts to changes in
the strategic objectives, project and programme
delivery and lessons learned.
PORTFOLIO DEFINITION
CYCLE
five practices found within the portfolio definition
cycle:
Understand
Categorize
Prioritize
Balance
Plan.
PRACTICE 1 : UNDERSTAND
the purpose of the 'understand' practice is to
obtain a clear view of what is in the current
portfolio and the project development pipeline,
performance to date and the forecast costs,
benefits, and risks to delivery and benefits
realization.
PRACTICE 2: CATEGORIZE
Categorization organizes change initiatives into
groups, segments or sub-portfolios based on the
strategic objectives or other groupings as
required.
PRACTICE 3: PRIORITIZE
Prioritizing ranks the change initiatives within the portfolio
based on one or more agreed measures. The most
common measures are financial metrics and/or some
form of multi-criteria analysis (NPV,IRR and Payback)
Prioritize help senior management and the portfolio
governance body answer the following questions.
1. Which initiatives should the organization invest in?
2. What are the most important initiatives?
3. What initiatives must be resourced above all others?

PRACTICE 4: BALANCE
Periodization results in ranked list of strategic
changes .the purpose of that (balance)
practice is to ensure that the resulting portfolio is
balanced in term of factors such as timing,
coverage of all strategic objective, impact
across the business, stages of overall risk , return
profile.
PRACTICE 5 : PLAN
The purpose of the plan practice is to collect
information from the portfolio definition cycle
and create portfolio strategy and delivery plan
which will be approved by portfolio direction
group / investment committee.
PORTFOLIO DELIVERY CYCLE-
COMPARISON BETWEEN : PMI & MOP
PMI : Portfolio is divided into 4
phases which are:

Phase 1: (Prepare)
Categorization
Identification
Phase 2: (Plan)
Evaluation
Selection
Prioritization
Balancing



Phase 3:(Execute)
Authorization
Activation
Phase 4: (Harvest)
Reporting
Review
Benefit
Change
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PORTFOLIO DELIVERY CYCLE- COMPARISON
BETWEEN : PMI & MOP
MoP: Portfolio is divided into
2 cycles which are:



5 Definition Cycle:
Understand
Categorize
Prioritize
Balance
Plan



7 Delivery Cycle:
Management Control
Benefit Management
Financial Management
Risk Management
Stakeholder engagement
Organizational Governance
Resource Management

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PORTFOLIO LIFE-CYCLE-PMI
Unlike projects and programs, portfolios are less
likely to have a defined start and finish.
Portfolio management is a more continual cycle
coordinating projects and programs.
It may, however, be constrained by a strategic
planning cycle that reviews strategy over a
defined period.
If an organization has, for example, a three-year
strategic planning cycle, then the portfolio
cycle will have compatible time constraints
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The aim of the portfolio is to co-ordinate projects and programs!

Initiation This is a one-off phase that represents the
point at which the host organization decides to set
up a portfolio. It is where the infrastructure is created
that enables the portfolio cycle to operate
Definition the projects, programs and change to
business-as-usual required to meet portfolio
objectives are identified and evaluated in a
selection process that maximizes the effectiveness
and efficiency of the portfolio.
Categorization the projects and programs may be
organized into sub-portfolios or groups that share
certain characteristics, such as alignment with
particular strategic objectives.

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Prioritization priorities can be set by strategic objective,
return on investment or any other chosen metric. On the
assumption that no organization has sufficient resource
to do everything it wants, the prioritization process forms
the basis of the next phase.
Balancing the portfolio must be balanced in terms of
risk, resource usage, cash flow and impact across the
business.

Portfolio management incorporates the overall
governance of projects and programs within the host
organization. The portfolio management team may be
responsible not only for coordinating the projects and
programs to deliver strategic objectives, but also for
improving the maturity of project, program and portfolio
management.


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A PORTFOLIO IS A RELATED SET OF ASSETS THAT
COMPETE FOR RESOURCES AND DELIVER VALUE
FOR AN ORGANIZATION.
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Portfolio
Asset 5

$
Asset 4

$
Asset 3

$
Asset 2

$
Asset 1

$
Value
Delivered
Interactions among the assets increase the complexity of portfolio
decision-making. Examples:
Synergy, cannibalization, and halo effects among assets
Common variables that affect multiple assets (e.g., oil price)
Contribution to the same organizational objectives
Competition for multiple types of limited resources
Limited
Resources

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PPM SPECTRUM
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Initiative
Objective
Goal

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WHY PPM ?

Enables to use the resources efficiently
Can get the support of organization
Help organization to align its projects workload
to meet its strategic goal
Make PMs life easier and more rewarding
Organizations implement projects
within limited time and budget




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WHY PPM?

Central oversight of budget
Risk management
Demand and investment management with the
standardization of investment procedure, rules,
and plans

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WHY PPM?

Improved ability to deliver project
Faster response to the changing circumstances
Focus on more important things
Seek for the same goal
Easier to find dependencies among projects


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WHY PPM

Do the right work
Use the right resources
Identify problems and solve it easily


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PORTFOLIO LIFE CYCLE MANAGEMENT
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Contributed by Shawn Maynard. 2005

A portfolio manager needs to design, develop,
implement, and maintain a portfolio management
information system but how the available solutions
look like and how their performance.
These information systems not only provide data
acquisition and management but also decision
support, and reporting and graphing.
Making project portfolio data entry, change and
review easy, the tools may include features to
support project selection, project management,
and resource allocation
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UNSUCCESSFUL
PORTFOLIOS:
Kendall & Rollins (2003) state that there
are four major reasons why portfolios
are unsuccessful. These reasons are:
(i) too many projects in the portfolio,
(ii) the wrong projects are in the
portfolio,
(iii) the projects are not linked to the
strategy of the organization, and
(iv) the portfolio is unbalanced.
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SUCCESSFUL PORTFOLIOS:
In contrast to the PMI definition, portfolio success
is defined by:
(i) the average project success over all projects,
(ii) the exploitation of synergies between projects
within the portfolio that might additionally
increase the overall portfolio value,
(iii) the portfolio fit to the organization's business
strategy, and
(iv) the portfolio balance in terms of risk, area of
application and use of technology (Beringer,
Jonas, & Kock, 2013).
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PORTFOLIO SUCCESS
CRITERIA:
The main portfolio success criteria according
to Beringer et al. (2013) and Meskendahl (2010) are the:
1. maximization of the financial value of the
portfolio,
2. linking the portfolio to the organization's
strategy,
3. balancing the projects within the
portfolio taking into consideration the
organization's capacities.
4. and the average single project success
of the portfolio.
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CONCLUSION:
Companies are using the project management
discipline to manage multiple projects with
limited resources in a competitive environment;
A successful portfolio management strategy
must comprise an end-to-end framework that
methodically guides organizations from project
selection through execution.
The success of a portfolio is also measured
against the benefits that need to be realized.

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CONCLUSION:
Portfolio success is measured in terms of the
aggregate investment performance and
benefit realization of the portfolio (Project
Management Institute, 2013b).
Portfolio management is focused on the
achievement of the organizational strategies
and objectives.
Measure the success of a portfolio remains
difficult as the strategies and objectives span
across the entire organization and all its
divisions.
The success of a portfolio is therefore complex
and integrated.
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CONCLUSION:
PMI or Prince 2?
Similarities;
Both focus on elements like Strategy, prioritizing,
balancing, categorization, planning, defining,
etc
Both make it clear about the roles of key people
who are involved
Both have great graphical examples of things
like categorization, and weighted scoring ,, so
you cant go wrong with either.



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Differences;
PMI publication is massively process based there
is inputs and outputs for everything and each
process in detail.
Mop does not have a process any where it has
principles and practices which are all
happening at the same time because it
represents the real world.
Real case studies in Mop and no cases in the
PMI
Mop puts people and organizational energy at
the heart of the portfolio management model,
however there is no reference to any people .


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Thank You
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