How to Protect High Value Project Resources

Improving a PMO with Project Portfolio Management 
The IT PMO of a large organization was suffering from failing projects. The issues facing the organization were:

• Continuous mergers and acquisitions resulted in stove-piped, independent businesses with no incentive to work toward common goals, 
• Division between Business and IT, 
• Resistance to change, 
• No application/ systems standards (multiple solutions for the same capability), 
• No view of resource capacity/ demand, 
• No single view of all projects, 
• Failing projects. 

The Problem
Important projects were not getting done. With no prioritization and no view of true resource demand/ capacity, low-value projects were gobbling up resources needed by high-value projects. This caused the more valuable projects to be stalled or stopped in mid-implementation. This also resulted in corners being cut when project managers tried to shotgun projects through the lifecycle to ensure they did not lose precious resources. Project planning was one key phase that was shortened or skipped altogether, leading to a higher rate of project failure.

Projects under a certain budget limit could be submitted and were automatically put in the project queue to be resourced within a week. Anyone could submit a project request and provide very minimal supporting information.

What Didn’t Work
The organization had tried different methods for prioritizing (such as having the head of finance label projects as high-, medium-, or low-priority). However, these methods yielded only top-priority rankings for virtually all projects.

For higher cost projects, IT Governance did exist. In the fall of each year, the IT site directors would provide business case information for projects they wanted to implement in the coming year. The regional leader would review and accept the projects he or she deemed priority for the site; and an oversight committee eliminated additional projects from the plan to lower the total site budget to match what they could allocate. The results of these meetings determined each site’s budget. In the following year, the sites were free to substitute other projects for those that had been approved, making this an exercise in obtaining funding, not in proper portfolio planning.

The Fix
The PMO leaders determined that the two main issues to be resolved were lack of resource management and prioritization. They concluded that implementing project portfolio management could resolve both issues and result in successful planning and project management.

The goals for the Portfolio Management implementation were as follows:

• Tie projects to the corporate strategy,
• Develop business cases for all proposed projects, 
• View projects across all sites to determine opportunities to combine efforts,
• Improve project planning, 
• Develop solutions standards: 
• Catalog accepted applications for specific capabilities. 

They developed a model for scoring project requests which would serve as the basis for prioritization. The model was based on research of best practices in the industry and tied to the organization’s strategy. Once the model was in place, it was used to prioritize the projects submitted for the yearly budget to demonstrate to the decision makers why they should fund the proposed projects. They now had clear insight into what should be done (prioritization) ) and what could be done (resource management). Including portfolio management in the project lifecycle greatly improved the organization’s ability to successfully implement projects. It is well known that Portfolio Management is intended to maximize the benefit from an organization’s portfolio of projects; but it also helps ensure project success by “sizing” the portfolio to fit the available resources.

With Guident’s scoring model development and our portfolio management best practices, we can help you improve your Project Management success rate. Your portfolio of projects will also be better aligned to achieve your strategy and provide maximum return.

Why are there so many definitions of Project Portfolio Management?

Several years ago when Project Portfolio Management was starting to get more attention and recognition, I worked for a Project Management software company. Those of us in the industry recognized the need to offer a Portfolio Management solution. So we claimed we had that because we gave organizations a view of their projects across the organization. This was a great capability but missed the major value of Portfolio Management. Portfolio Management (PfM) should bring maximum ROI from the organization's investments. Project Portfolio Management is focused on aligning projects to corporate strategic to achieve the business goals. So Project Portfolio Management does look across all the projects of an organization (so does the PMO) but the definition doesn't stop there, the key is the value that the PPM process brings to the business.

Optimizing the Portfolio of Investments with Scoring Models

The Business Need for Prioritizing Investments
How can your business maximize return on its investment? How can you balance resource capacity and demand? How can you ensure you are achieving your strategic goals? Can you provide clear justification for your portfolio of investments? These major business concerns drive the need for organizations to develop Portfolio Management to ensure the business is making the best investments.

The Solution: A Scoring Model for your Investments
Portfolio Management is a structured and disciplined process for selecting the portfolio of investments that best meet the strategic goals of the organization, delivering true competitive benefit to the business. This process requires evaluating each requested investment against specific criteria, the scoring model, which reflect the business’ definition of value. The investments are prioritized based on these evaluations and analyzed against budget and resource constraints and other factors.
Formulating the scoring model that reflects the organization’s view of value is the key to ensuring optimized prioritization of investments. For this reason, the task of developing the scoring model should not be taken lightly. Leadership can work with scoring model subject matter experts to determine the requirements for the model.

Scoring Model Benefits
· Provides objective and quantifiable criteria for evaluating and selecting investments
· Provides quantifiable information for optimized investment decisions
· Funding decisions no longer based on intuition, politics or the concept that all ideas are acceptable
· Ties investments to strategic objectives to help ensure strategic goals are achieved
· Balances short and long term gain
· Maintains benefit to risk ratio that best fits the business
· Takes into account the health of projects and programs to lower the loss from failing projects
· Maximizes return on investment



Developing a Scoring Model
Developing a scoring model for investment prioritization ensures the portfolio of investments provides maximum value to the business. Because each organization is unique, every scoring model should be different; however, there are common elements to be addressed across organizations. Guident has developed a basic scoring framework that can be adapted and modified as needed. The model looks at six areas for scoring: Strategic Alignment, Value/ Benefit, Compliance, Capability, Health/ Performance and Risk. Establishing the scoring model that works for an organization begins with defining value for the business based on review and analysis of these six areas.

Scoring model development process:
1. Define specific business drivers in each of the six areas based on the definition of value for the business.
2. Prioritize the business drivers and weight them.
3. Determine survey questions and answers to make up the model based on these drivers.
4. Assign numeric values to each possible answer.
5. Sum the weight multiplied by the value for each answer to provide the total score.
The organization evaluates the new and existing investment candidates using the defined scoring model, basing prioritization and funding decisions on the final scores.

The Six Elements
The Strategic Alignment element addresses how the investment aligns to the overall strategy of the organization. Strategic Alignment is measured against the strategic objectives defined by the leadership of the organization. This establishes a clear view of how the investments contribute to achieving corporate strategy thus identifying the portfolio of investments to enable the organization to meet its objectives. This also provides a view of the level of investment for each objective.

The Compliance element addresses how an investment aligns to the corporate governance requirements. This includes compliance with internal and external mandated regulations, initiatives, and architecture. Initiatives tied to federal and corporate mandates receive highest priority.

The Capability dimension addresses how the investment supports the mission of the organization. The mission provides the course of action that the organization needs to take in order to meet its operational requirements. The mission breaks down further into capabilities or competencies focused on the required systems, products and processes to meet customer needs and provide competitive advantage. Capabilities should be documented and prioritized so that the capability dimension returns the highest scores for investments aligned to the most important capabilities. Gap analysis can determine which capabilities already exist and which are still needed. An investment’s Capability score rewards investments that provide new capabilities required by the organization. If an investment offers a redundant capability, its capability score will be lower unless it is determined to be the most effective in providing the capability.

The Risk element addresses the likelihood of a risk event and the impact if that risk event were to occur. Defined risk categories can significantly improve the identification of risk events. The Risk dimension seeks to establish measurable data that focuses on factors that can adversely affect an investment’s ability to deliver its intended result.

The Value/ Benefit element addresses either the qualitative or quantitative value of the investment. Quantitative Values are financial calculations such as Return on Investment (ROI), or Cost Benefit Analysis (CBA) etc. Qualitative Value relates to intangible benefits that are meaningful to the organization. These values might classify projects as maintenance, transformation or regulatory. Further examples include efficiency improvement, cost savings, cost avoidance etc.

The Performance/Health element can be qualitative or quantitative as well. Health information is typically pulled from project management or operations data to indicate whether the investment is on schedule and on budget. Performance/ Health can be measured using standard earned value calculations for cost and schedule indicators in a strict quantitative approach or simpler variances from plan to highlight trouble areas. Performance analysis also needs to include benefits realization metrics and measures against requirements.

To read the full article, click on the following link:
http://www.guident.com/index.php?page=download&target=Investment_Scoring_Model.pdf

From Concept to Benefit: Achieving Corporate Strategy

The Business Need
Sound strategic planning is fundamental to achieving business objectives. Execution of the strategy is difficult and the complexities created by out of sync and competing activities, processes, functional groups and systems across the organization create many obstacles on the road to success. Constant change, corporate politics, functional silos and many other factors affect progress toward business objectives.

A sound business plan and clearly defined goals are essential, but the key to successful execution is understanding how to accomplish those goals. This paper looks at process relationships and
information flow across the business from strategic planning to achievement of the strategy, from great ideas to benefits realization. To ensure the business efficiently and effectively achieves its strategy, the organization must optimize the outcomes from their processes across the entire lifecycle.



While organizations put emphasis on improvement of individual processes, improvement across
processes and systems is often neglected. This big picture transformation is more difficult to tackle.

Over time, standalone systems, functional stovepipes and constant change cause issues around
data, communication, processes, systems and performance. While this task of analyzing and
improving the full lifecycle is difficult, the results are very valuable to the organization.

The Business Issues
Virtually every organization has information fragmented in multiple repositories and enterprise
applications. Many obstacles keep organizations from meeting their basic needs for efficient operations, strategic alignment and profitability. Common business issues include:
Process Issues:
o Inefficient
o Duplication of effort and disconnected
processes
o No standardization, documentation or understanding of process
o Poor metrics and poor performance
Data Issues:
o Insufficient or bad data
o Difficulty in obtaining data
o No authoritative source of data, duplicate entry
Technical Issues:
o Insufficient applications and infrastructure to support best practice processes
o Disparate applications and systems

Strategic Planning, Portfolio Management, Project Management
and Operations processes contribute to achievement of strategy, thus are critical to
business success.

Weaknesses in Strategic Planning, Portfolio Management, Project Management or Operations will result in problems in the other areas as there are information feeds and dependencies between these functions. In addition, the processes in each of these major areas must be efficient and must provide quality information to the other areas.

The strategic goals are meaningless to the organization unless they are clear, understood by all and interpreted into the activities required to achieve the goals. This means that executives should not throw high‐level strategic goals out to the organization with the directive to make it happen. Instead, they should have a clear idea of the major activities designed to meet the strategic objectives to ensure the organization is headed in the right direction. Leaders in Strategic Planning and Portfolio Management can work together to clearly connect the strategy with the required tactical activity.

Portfolio Management will determine the optimized Portfolio of investments based on
analysis, valuation and prioritization of the business needs. To prioritize investments, a
scoring model is developed based on the organization’s definition of value. The model will provide
strategic alignment and will represent the benefit provided by the investment.

Portfolio reviews and analysis require up‐to‐date information from Strategic Planning, Finance, Enterprise Architecture, IT Governance and Project Management. Finance provides available budget information to be used in determining how many items in the portfolio can be funded. Enterprise Architecture provides capabilities and Enterprise Architect requirements used in Portfolio Management selection process while Portfolio Management provides portfolio performance to capabilities and requirements to Enterprise Architecture. In some organizations, IT Governance will utilize the investment scores to prioritize and grant funding to investments.

When funding decisions are complete, approved projects move to the Project Management process in the lifecycle. Project Management is complex and key to achievement of the business needs. Therefore, best practice processes are key to achievement of the corporate plans.

Performance Management
Performance Management is an element in each of the processes as metrics and analysis are required to ensure each area is achieving its goals and to ensure benefits realization from the system as a whole. For decision makers, Portfolio Management will provide benefits realization metrics including financial benefits. Portfolio Management measures progress toward corporate goals based on the metrics for each goal and reports this information to Strategic Planning/Executives. For each Project, metrics will be established to ensure the project team is meeting the project goals. Project Performance is measured and analyzed to develop corrective actions and ensure risks are managed. This Performance information is reviewed in Project and Program reviews to ensure Project Management performance is optimized. Performance information is fed from the Project Management system to the Portfolio Management system (and/ or the Program Management system) to allow decision making for the portfolio and programs. In Portfolio reviews, project performance is taken into consideration and failing projects may be stopped.

Where Has This Solution Been Applied and What Were the Results?
A division of a government agency required an analysis of all applications, systems, processes and data across lifecycle management. The analysis showed they had legacy systems that were no longer supported, high maintenance homemade tools (requiring frequent coding), applications that only had a handful of users, standalone applications for each process, data entered manually in more than one application and manual processes. The analysis led to corrective actions to
eliminate or retire systems, automate and streamline processes and data feeds and implement a
more robust infrastructure. An IT/ Process Roadmap was developed to provide the needed solution concept and plan. A large company had merged many other companies into the organization. There were many scattered databases, duplication of effort, re‐packaging of information for different levels of the organization, different databases, processes, and reports across the same functions. Excessive time was spent manually generating reports in preparation for management decision‐making meetings. There were no standard project performance metrics across the enterprise. Portfolio management had been developed using a very complex process involving numerous Excel spreadsheets. A new lifecycle was designed to standardize and automate Project Management, Portfolio Management, IT Governance and Financial Management across the merged businesses. This solution brought all the data for these processes into a centralized database, providing greatly improved efficiency, improved data accuracy, cost and labor savings and elimination of non‐value added work.

Building the Holistic Lifecycle Solution
How do you build the holistic lifecycle process to optimize sharing information across processes,
eliminate duplication of tasks, and improve each process while optimizing across all processes?
To see the full article, click on the link. http://www.guident.com/index.php?page=download&target=Achieving_Corporate_Strategy.pdfpage=download&target=Achieving_Corporate_Strategy.pdf

Scoring Models: Optimizing the Portfolio

The Need for Performance and Portfolio Management

For more information on this topic, refer to:

http://www.guident.com/ or contact the author directly at mailto:info@guident.com.


With ever-increasing scrutiny of Federal IT initiatives’ performance (e.g., Federal CIO, Federal IT Dashboard, TechStat Sessions, Financial Systems Advisory Board, GAO reports, cancelled projects, etc.), the need for sound Portfolio Management and Performance Management is quickly coming to the forefront. Unfortunately, these disciplines often suffer from ill-defined processes, disjointed tools and inconsistent education. At the same time, agencies are banking on the success of their IT initiatives with large investments of time and resources. A cohesive solution of processes, tools and education is needed to bring the focus back to mission objectives and performance relative to those objectives.

What else do you believe are symptoms, contributors to this problem, and possible solutions?

Also, see the below Guident and Oracle webinar on our Project Performance Portfolio Management (PPFM) Solution.

http://www.guident.com/index.php?page=download&target=Managing_Projects_and_Budget_with_OBIEE_and_Primavera.pdf

For more information on this topic, refer to:

http://www.guident.com/ or contact the author directly at mailto:info@guident.com.