February 12th, 2020 by inflectra
In the following article, Sriram Rajagopalan - Inflectra's Enterprise Agile Champion shares his thoughts and experience managing program and portfolios.
This blog complements Inflectra's February 7th webinar on the same topic, with the webinar recording available inside.
Organizations of all sizes understand the importance of project management. It is the effective and efficient implementation of project management principles that lead to successful project delivery. With such a rich understanding of the art and science behind project management, why are global organizations like the Project Management Institute (PMI) and International Project Management Association (IPMA) introduce program and portfolio management? For instance, if one understands the three pillars of the PDU talent triangle, PMI not only promotes technical aspects of project management but also emphasizes strategic and business orientation as well as leadership as critical supporting components of project managers. It is these supporting components that also lay the foundation for recognizing business value which is far beyond the delivery of capabilities from projects.
This is where the principle of program management focuses on the coordinated management of many related projects, program activities, and operations to deliver one or more strategic business values. These values represent a higher-level goal, objective, vision, or initiative that requires coordination among many types of business units benefiting various types of stakeholders. For example, some of these benefits may be delivered in an incremental fashion but may require to be consolidated at the end requiring the appropriate choice of project delivery framework that works in conjunction with the design and delivery of the strategy. Additionally, the program may itself may fund itself through recurrent earnings requiring integrated management of finances through a governance structure. Consequently, programs differ from projects due to an increased focus on risk management (uncertainty exposure) followed by proactive adaption (change management).
An organization does not depend on strategic value delivered by individual business units. It exists to serve a larger enterprise-level value supporting a larger mission. As a result, there may be longer-term initiatives, such as those that focus on merger and acquisition, product diversification or penetration strategy, employee welfare, and community leadership laying the foundation for creativity much beyond what programs may deliver. Such enterprise-level benefits are realized through merging projects and programs along with portfolio-level and program-level operations. Portfolio management, therefore, focuses on identifying, selecting, prioritizing, optimizing, and balancing programs and projects to meet this enterprise value. Consequently, the portfolios differ from programs in terms of longevity (time span) and the extent of interconnectedness among the portfolio components (relatedness).
According to a global study published by the Project Management Institute (2018), organizations spend a lot of financial resources that do not yield a better return on their investment. So, when programs and portfolios are involved that have increased emphasis on managing risk and change with longer timespan and degree of relationship among the components, then, it is pivotal to realize that techniques used in identifying, selecting, prioritizing, optimizing, and balancing the initiatives around time, cost, and resource constraints with an intense focus on market and customer needs require careful selection of techniques and tools. Among many such tools applicable, five important techniques emerge.
These are the roadmap, benefits register, efficient frontier, sensitivity analysis, and portfolio balance matrices. Each technique serves as a specific purpose but also integrates with the rest to bring the optimum strategic business and enterprise value. As project managers become part of the program and portfolio and emerge to become program and portfolio managers, the comprehension of these techniques is critical. In this webinar here, we will explore some of the basic foundational aspects of these five techniques.
Project Management Institute (2018). $1 Million wasted every 20 seconds by organizations around the world. Retrieved Dec 1, 2019, from https://www.pmi.org/-/media/pmi/documents/public/pdf/about/press-media/press-release/pulse-of-the-profession-2018-media-release.pdf?v=b9196dbc-dcc0-4026-9374-6ff28d8c1247&sc_lang_temp=en