Mastering Project Portfolio

Management
A Systems Approach to Achieving Strategic Objectives

Chapter 10
Implementing and Governing the Project Portfolio

Overview
1.
2.
3.
4.
5.
6.
7.
8.
9.

Introduction
Portfolio Performance Reporting Structure
PPM Governance during Implementation
Evolving PPM Roles and Responsibilities
Types of Portfolio Performance Monitoring and
Control
Foundation for Monitoring and Controlling
Portfolio
Iterative Nature of PPM
Responding to Strategic Change
Mastering Project Portfolio Management -2
Chapter
10
Summary

Introduction

Optimal project portfolio has now been identified and

selected
The next step is implementation and we now shift
gears to monitoring and controlling as well as
portfolio performance
The focus of this chapter is to:
1.
2.
3.
4.

Establish a structure to collect project performance info

Identify governance as well as roles and responsibilities
Clarify the bounds of decision authority at each level
Establish metrics that will be tracked in order to bring
performance back to baseline such as:

Crashing a schedule
Reallocating resources from a project ahead of schedule to one
that is behind

The process must

deliver
theManagement
right information
to the
Mastering
Project Portfolio
-3
Chapter 10
right people at the right time to enable them to

Prerequisites to PPM Implementation

PPM
Phase

Activities

Output
Iteratio
n
PPM
Area

Strategic
Phase

Screening
Phase

Define
Mission

Pre-Screen
Proposals

Develop
Vision

Create
Business
Cases

Establish
Goals

Determine
Screening
Criteria

Determine
Objectives

Establish
Assumptions

Prioritize
Objectives

Screen
Potential
Projects

Prioritized
Objectives

Candidate
Projects

Strategic
Planning

Selection
Phase
Align
Projects
Determine
Project
Benefits
Select
Initial
Portfolio
Analyze &
Evaluate
Scenarios

Optimal
Project Portfolio

Identify, Evaluate & Select

Project Portfolio

Implementation
Phase

Evaluation
Phase

Establish
Governance
& Roles

Synthesize
Benefits /
Performance
Measurements

Establish
Structure
& Metrics
Measure
Project
Performance

Evaluate
Strategic
Performance
Determine
Portfolio
Adjustments

Implem
Implement
ent
Changes
Correcti
ve
Action
Portfolio
Portfolio
Governance
Metrics and
and Project
Adjustments
Metrics
Monitor, Evaluate & Control

Mastering Project Portfolio Management -Chapter 10

Portfolio Performance
Reporting Structure
PPM Decision making is influenced by organizational
context
Goal is to institute governance appropriate to both the
structure of the organization & maturity of the PPM
process
Expansive
management
structure
creates
unnecessary bureaucracy
Too limited a structure may inhibit effective
management
PPM structure congruent with the organizations
governance structure
Some firms separate PMOs and PPMOs for each
portfolio while others with multiple portfolios have one
Mastering
Management
PPMO responsible
for Project
PPMPortfolio
across
the-- organization 5
Chapter 10

Portfolio Performance
Reporting Structure (continued)

Project Manager manages one or more projects and is

responsible for achieving the scope, cost, and schedule
performance for the project

Program manger manages one or more programs that is

commonly a collection of related projects

Program Management Office (PgMO) manages one or more

programs where a program is a collection of related projects

Project Management Office (PMO) manages the information,

systems and processes required to report on project and program
performance (focus on monitoring & controlling)

Project Portfolio Management Office (PPMO) manages the

selection, implementation, and evaluation of project portfolios

6
Chapter
10
Executive Review Board (ERB)
establish
and drive firm mission,

Mastering Project Portfolio Management --

Portfolio Performance
Reporting Structure (continued)

Figure 10-2. Sample Portfolio Management

Structure
Mastering Project Portfolio Management -Chapter 10

Portfolio Performance
Reporting Structure (continued)

Figure 103. Sample Structure for PPM in Organizations

with Multiple Portfolios
Mastering Project Portfolio Management -Chapter 10

PPM Governance
During Implementation
Governance helps to:
Identify roles, responsibilities and limits of
authority
Drive portfolio selection, monitoring,
controlling, and adjustments within the
organizations PPM system
Define expectations, grants power or
verifies performance
Specifies the process of decision-making
Empowers decision makers within the PPM
Portfolio Management -hierarchy Mastering ProjectChapter
9
10

PPM Governance
During Implementation (continued)
Governance helps to:
Make managers (project, portfolio, etc.)
understand that they are bound by
decision-making limitations
Ensure the right information is relayed at
the right time to support PPM decisions
Ensure that appropriate people are
involved in critical PPM decisions
Enable
the
organization
to
take
appropriate corrective action at the lowest
levels first & elevate as dictated by
Portfolio Management -10
guidance Mastering ProjectChapter
10

Evolving PPM Roles &

Responsibilities

As PPM progresses
through evaluation:

from

strategic

phase

PPM roles and responsibilities continue to evolve

Focus and intensity of effort changes among the
groups during implementation

Effort shifts from Executives to PMB and ERB

who now have to identify, select, and
implement the project portfolio
PMB & ERB also have to provide oversight,
monitor
portfolio
performance
against
baseline,
and
monitor
changes
to
organizational strategy
During implementation,
and program
Mastering Project Portfolio project
Management -11
Chapter 10

Evolving PPM Roles & Responsibilities

(continued)

Figure 104. Sample Portfolio Management Structure with High Level

Roles and Responsibilities
Mastering
Project
Portfolio
Management
-- of sample
Same structure as Figure
10.2
with
the
addition
Chapter 10
responsibilities of each group involved in PPM

12

Evolving PPM Roles & Responsibilities

(continued)

Figure 105. Sample Structure with Directional Information and

Deliverable Flows
Mastering Project Portfolio Management --

Same structure as Figure 10.4 with

the
Chapter
10 addition of annotations and

13

Evolving PPM Roles & Responsibilities

(continued)

Figure 106. Sample Portfolio Management Structure with

Roles and Decision Flow
Combines Figures Mastering
10.4 and
10.5 and shows the roles and
Project Portfolio Management -responsibilities as well as the
flow
Chapter
10 of information and

14

Types of Portfolio Performance

Monitoring and Control
Purpose of monitoring and controlling
Ensure that projects and portfolios are
performing to plan
Identify
and
correct
performance
problems before they become severe

In general, PPM decisions are derived

from
examining
2
forms
of
performance information
Bottom up
Top down
Mastering Project Portfolio Management -Chapter 10

15

Types of Portfolio Performance

Monitoring and Control (continued)
In bottom up reporting:
Performance information flows up from
individual projects PMO PMB/ERB
Adjustments are made at each level that are
not expected to affect performance at the
next higher level
A project manager can make decisions to
baseline or resources provided they do not
affect another project
A portfolio manager can make decisions to
reallocate resources from a project that is
ahead of schedule to one that is behind
schedule but cannot change portfolio
Mastering Project Portfolio Management -16
baselines
Chapter 10

Types of Portfolio Performance

Monitoring and Control (continued)
In top down reporting:
Portfolio adjustments are based on factors
that influence the firms strategic plan (e.g. a
new product offered by a competitor,
changes in financial conditions, M&A, and
natural disasters)
Executives
discuss
underperforming
projects / portfolios, whether they support
strategic objectives, and whether objectives
need to be reprioritized

Regardless of whether monitoring and

controlling is bottom up or top down,
decisions depend
on accurate,
complete,17
Mastering Project Portfolio
Management -Chapter 10

Foundation for Monitoring &

Controlling Portfolio

Sound project portfolio decision-making is

predicated on an infrastructure that
facilitates transfer and exchange of
accurate information
Necessary elements for PPM decision
making include:
Project Portfolio Management Plan (PPMP)
Project Portfolio Management Information
System (PPMIS)

The central goal of implementation is to

complete projects by effectively monitoring
and controlling their performance in order
Mastering Project Portfolio Management -18
to achieve expected
benefits
Chapter
10

Foundation for Monitoring &

Controlling Portfolio (continued)
Project Portfolio Management Plan
(PPMP)
Document to guide the portfolio management
staff in the establishment of portfolio
management as well as its operation
Defines
governance,
including
roles,
responsibilities and levels of authority
Specifies what information and metrics are
needed and when
Foundation for PPMIS requirements
Increases clarity and uniformity while
reducing ambiguity and inconsistency for
portfolio decisions
Mastering Project Portfolio Management -19
Chapter 10

Foundation for Monitoring &

Controlling Portfolio (continued)
Project
Portfolio
Management
Information System (PPMIS)
Provides the infrastructure to facilitate
effective documentation and management of
the portfolio
It is the tool necessary to consistently store
and report project and portfolio performance
information consistently
Provides mechanism to disseminate project
and portfolio data and information among
stakeholders
Common examples of software: Microsofts
Mastering Project Portfolio Management -20
Chapter 10
EPM, Oracles Primavera,
and PlanView

Iterative Nature of PPM

Effective PPM is characterized by flexibility to
iterate and respond rapidly to new information
or strategic changes
Organizations can rapidly adjust portfolios as
conditions warrant
Although the book presents the process as
being linear, in reality PPM activities overlap
and are often concurrent
Iteration is necessary due to changes in
conditions, uncertainty about the future, in
response to realized risks, and to exploit
emerging opportunities
Mastering Project Portfolio Management -21
How frequently
an organization
should review
Chapter 10

Iterative Nature of PPM

(continued)

Table 101. Representative Review Cycles for PPM Activities

It shows how the Review Cycles can be integrated with the Stage Gate
process (i.e. where Go/Kill decisions are made on individual new product
projects). This helps to build confidence the continuing or terminating a
project is in the best interest of the organization.
Mastering Project Portfolio Management -Chapter 10

22

This table shows the process firms use to drive a new product project from

Responding
Change

to

Strategic

Organizational strategy is reviewed

and updated on a regular basis, often
annually
However, it can change at any time
because of internal or external
factors such as:

Merger / acquisition, new competitor in

market, government regulations, etc.

Changes to goals and objectives

requires PPM to be responsive and
iterative more precisely, it needs to
Mastering Project Portfolio Management -Chapter 10

23

Responding to Strategic Change

(continued)
Priorities of objectives and alternatives
are
meaningful
as
long
as
the
organizational strategy remains the same
or the change is small enough that
reprioritizing is unnecessary
When change is significant OR when new
objectives are introduced, reprioritization
is required as it can impact the relative
priorities of alternatives
Need to maintain project portfolio
relevance to most current strategy
Project Portfolio Management - Changes inMastering
strategy
require new24
Chapter 10 may

Responding to Strategic Change

(continued)

Organizations
can
improve
the
responsiveness
of
the
portfolio
optimization process by anticipating likely
strategic changes
Portfolio scenarios can be developed to
account for:
Different amounts of funding
Changing competitive positioning
Recent regulatory rulings

Proactive
versus
organization
with

reactive

disciplined

Mastering Project Portfolio Management -Chapter 10

an
PPM
25

Summary

This chapter discussed:

Requirements
for
effective
portfolio
implementation
Importance of monitoring and controlling projects
Governance and roles of key stakeholders
Which projects are within the authority delegated
to project and portfolio managers and which are
beyond their authority (e.g. termination of a
project or restructuring of a portfolio)

The
identification
and
collection
of
performance measurements allows deviations
to be identified and corrected in a timely
manner
Portfolio Management
- Bottom line: Mastering
PPMProject
process
is iterative
26
Chapter 10