Below is the question of the week. Please read all and response all the asked questions below with details and supportive references. You will find also the lecture notes and recommended books. Please use the references from this recommended books and the lecture notes. Make sure that there will be no plagiarism.
• Week 3 Discussion Question
Your response to the Discussion Question should choose examples from your own experience or ones you know well enough to discuss. You will receive credit for references to examples from real companies. Ensure that you cite and reference all your sources properly, as per the Harvard Referencing System.
All the best methods of evaluating projects/portfolios in the world will not help if these methods are not properly implemented and supported in an organisation which has been groomed to work with them. How we organise to implement and practice project portfolio management is paramount to its success. Fostering a culture which is supportive of project portfolio management and developing an enlightened and supportive executive are essential stepping stones to making project portfolio management work.
Establishing formal project portfolio management practices provides a framework within which better decisions can be made and results in numerous related benefits to the organisation. Nevertheless, it inevitably involves implementing significant changes which may be met with initial resistance. To overcome this resistance, an organisation must recognise that the success of any process change effort depends on the ability of the staff to understand the reasons for change and their willingness to support it. It has become vital to identify how project portfolio management can solve critical problems such as resource allocation.
Key to implementing formal project portfolio management practices is the alignment of senior executive decisions to the portfolio management strategy. The processes and roles related to project portfolio management may seem foreign or tedious to executives. Yet having them understand and play their role is critical to project portfolio management, so the investment of creativity and time to get them prepared reaps high returns.
For this week, discuss the following questions:
1. Consider either your current organisation or a previous organisation. Explain the common types of resistance which an individual leading a project portfolio management initiative in your organisation (current or past) might face in trying to implement this management approach.
2. Discuss the key steps your organisation (current or past) should take to implement project portfolio management. What significant benefits would your organisation receive from implementing project portfolio management? What are the principal barriers to implementing this within your organisation?
Sustainability, Programme and Portfolio Management
Week 3: Executing and implementing project portfolio management
Week 3 Introduction
Best practices for evaluating projects/portfolios will not help if the methods are not properly implemented and supported in an organisation. How an organisation implements and practices project portfolio management is paramount to its success. Fostering a culture that is supportive of project portfolio management and developing an enlightened and supportive executive team are essential stepping stones to making project portfolio management work.
Establishing formal project portfolio management practices provides a framework within which better decisions can be made and which results in numerous related benefits to the organisation. Nevertheless, it inevitably involves implementing significant changes that may be met with initial resistance. To overcome this resistance, an organisation must recognise that the success of any process change effort depends on the ability of the staff to understand the reasons for change and their willingness to support it. It has become critical to identify how project portfolio management can solve critical problems such as resource allocation questions.
Key to implementing formal project portfolio management practices is the alignment of senior executives’ decisions to the portfolio management strategy. The processes and roles related to project portfolio management may seem foreign or tedious to executives. Yet having them understand and play their role is critical to project portfolio management, so the investment of creativity and time to get them prepared reaps high returns.
Organisation of projects into programmes and then into portfolios
• Textbook reading: Kerzner: Project Management Best Practices: Achieving Global Excellence, Chapter 4
• Textbook reading: Rothman: Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, Chapter 3
• Textbook reading: Morris and Pinto: Wiley Guide to Project Program and Portfolio Management, Chapters 2 and 3
Corporate strategy is created as a means of thinking through and articulating how an organisation’s corporate goals and objectives will be pursued and achieved. This strategy is typically cascaded through several strategic business units (SBUs) and then ends up being represented as collections—portfolios—of programmes or projects. These become the vehicle for implementing the approved strategic initiatives.
To understand the way corporate strategy is translated into project strategy, it is important to start by considering the business management context and the position of
project management within it. It is then important to understand how the business management functions perceive the project management function—which may or may not occur within an organisation. Whilst project management professionals and practitioners may think their function is central to the success of a company, it has little meaning unless it is clearly established and embedded within the organisational structure and business management processes of the enterprise.
The strategy management process explicitly connects corporate and business unit strategy with project strategy. In fact, recent researchers in the field have suggested that business unit strategy should be explicitly taken into account when projects are being conceived. Several models show that strategy formulation flows from an organisation’s mission and goals through function, business, and corporate levels. It is now generally accepted that most of the components of the strategic planning process, such as internal analysis, organisational structures, and control systems, have strong links to project management processes and activities, and thereby strongly influence intended corporate and business strategies.
A hierarchy of objectives and strategies can be formed as a result of using a strategy planning process; this can be an effective means of structuring and managing strategy and communicating it to the organisation. Such a model maps out in detail the structure and relationship of objectives and strategies at the policy, strategic, operational, and project levels. Objectives and strategies are developed at each level from higher-level ones and cascaded down, thereby ensuring alignment and continuity of strategy through programmes to projects. Projects and their objectives, strategies, and plans are grouped into programmes and then portfolios.
Setting expectations for project portfolio management
• Textbook reading: Kerzner: Project Management Best Practices: Achieving Global Excellence, Chapter 4
• Textbook reading: Rothman: Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, Chapter 3
• Textbook reading: Morris and Pinto: Wiley Guide to Project Program and Portfolio Management, Chapter 6
No matter what strategy is taken to implement a project portfolio management process, the importance of having a strong executive sponsor cannot be emphasised enough. There is a difference between having an executive sponsor and having a ‘strong’ executive sponsor. This person must believe in the process and be passionate about its implementation. The manager of the initiative must set correct expectations for such an initiative and work to gain the support of the ‘strong’ executive sponsor.
The exercise of implementing project portfolio management is a re-engineering project. Re-engineering implies change. Change initiatives, in general, are difficult. Change is mostly perceived as being driven by management. If the purpose of the change and the anticipated benefits are not clearly articulated, the organisation begins to offer resistance. The symptoms are unanticipated delays and costs, and stakeholders’ just
providing lip service and not complying with the process. To avoid these, correct expectations need to be established upfront, to include such aspects as:
• The process will be uniformly applied to all projects and programmes.
• Data will be gathered and analysed in a systematic fashion to make decisions.
• Execution of the process will provide insights regarding the specific project/programme mix on issues such as financial value being created, project or programme risk, and alignment to strategy.
• Projects will be funded, terminated, or transformed.
• Leadership will implement the change.
The overall initiative manager will set these and other operational expectations so that management clearly understands why the organisation is embarking on such an initiative and what some of the expected benefits of the process will be.
Methods to gain executive support for implementing project portfolio management
• Textbook reading: Kerzner: Project Management Best Practices: Achieving Global Excellence, Chapter 4
• Textbook reading: Rothman: Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, Chapters 3 and 6
• Textbook reading: Morris and Pinto: Wiley Guide to Project Program and Portfolio Management, Chapter 6
Like any other significant corporate initiative, project portfolio management will not succeed without senior leadership support—end of discussion. Making this statement seems intuitively obvious. But taking that from an intellectual statement to management behaviour can be a challenge. If an alignment of the executives with the portfolio management strategy is not present, then new projects are being championed and interjected atop the current organisational portfolio commitments. In addition, the organisation is spending time defending a position rather than delivering on it.
‘Decision maker’ is a natural role that an executive plays in the organisation. It is a safe assumption that executives within the organisation will have an impact on the portfolio. Formally or informally, executives will make decisions on portfolio content. Informal executive decisions typically increase the risk to achieving the goals of project portfolio management. ‘Piling on’—deciding or demanding that more projects be launched than can be resourced—results in a lack of focus, a lower percentage of projects completed and related business objectives met, and an employee exodus when the economy is good.
Executives are frequently targets of those in the organisation who are seeking support for a new idea or their pet initiative. When an executive approves lobbied-for projects outside the process, it redirects investment of assets to special interests not necessarily in strongest alignment or in balance with the organisation’s strategy. When an executive
gives unilateral approval to invest in a new project, that person behaviourally reinforces the notion that project portfolio management is his or hers alone, ensuring future circumventions of any project portfolio management process. For these reasons, it is of fundamental importance to gain executive support for the implementation of a project portfolio management process.
The processes and roles related to project portfolio management may seem foreign or tedious to executives. Yet having them understand and play their role is critical to effective project portfolio management, so the investment of creativity and time to get them to support the initiative and be prepared for their roles in the process reaps high returns. Often, managers who lead such initiatives look to leverage something familiar to the executives; it can speed understanding and buy-in. They often point the executives to their personal financial portfolio. Mapping the familiar financial portfolio management elements to the project portfolio management framework helps to make the characteristics of project portfolio management much clearer.
Managers who lead these initiatives often guide senior leadership through three stages:
1. Buy-in to the portfolio strategy and process
2. Transition to a desired portfolio mix
3. Management of the portfolio to achieve strategy
These managers develop a plan to gain the understanding, buy-in, and participation of the executives in the project portfolio management process by guiding them through the process.
Understanding the steps to take to implement project portfolio management
• Textbook reading: Kerzner: Project Management Best Practices: Achieving Global Excellence, Chapter 4
• Textbook reading: Rothman: Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, Chapters 3 and 6
• Textbook reading: Morris and Pinto: Wiley Guide to Project Program and Portfolio Management, Chapter 6
It is during the implementation phase of project portfolio management that the rubber meets the road. The techniques in implementing sustainable project portfolio management are dependent on various factors, such as size of the company, organisational structure, type of incorporation, and so on. There is no one standard way to implement project portfolio management. Implementation is a combination of art and science. The project portfolio management design and the development of supporting templates and tools constitute the science portion of the equation. At the end of the day, no one can push project portfolio management without the people who participate in the process.
No matter what strategy is taken to implement the project portfolio management process, the importance of having a strong executive sponsor cannot be emphasised enough. There is a difference between having an executive sponsor and having a ‘strong’ executive sponsor. This person must believe in the process and be passionate about its implementation. He or she should be able to influence peers and be an active advocate of the process. A very active, passionate, and involved sponsor can be extremely valuable in keeping the conversations alive and in keeping the implementation activities moving forward.
To implement a portfolio management process, an organisation generally goes through the following stages:
• Stage 1: The organisation takes baby steps, letting the project portfolio management system slowly mature by giving each stage time to stabilise before moving on to the next. In this stage, the sponsor of the project portfolio management initiative creates a process recommendation committee, with membership of key profit centres, service centres, and the head of the project membership office (PMO). This team should develop a project portfolio management process framework and should also recommend membership of various committees (governance committee, executive steering committee, and project management standards committee). Once the framework has been blessed, it is time to engage the members of various committees identified by the initial executive team.
• Stage 2: Select and train meeting facilitators. Kick off the project management standards committee to agree on the main categories of work and what basic elements of any project should be tracked (e.g., state of project, milestone status, and project health). When that is complete, documenting an inventory of projects should occur next, but it should start small and then expand.
• Stage 3: Once a credible inventory of projects has been established, the governance committee can begin to meet. Though at this stage there may not be formal business case or project charter documents, the individuals in the governance committee can begin to prioritise projects based on their knowledge of the business and the value of the projects. It is to be expected that some departments or business units will not play by the rules and volunteer project information easily. In such cases, either the service organisation that oversees the process or executive leadership may be necessary to get the buy-in to provide the needed information.
• Stage 4: In this stage the business cases are built for each project. To start the process, the project management standards committee should set simple standards for the amount of detail that goes into the business cases and charters, making it commensurate with the size and the complexity of the project. At this time also, it is appropriate to introduce the project funding process with guidelines for funding and monitoring of project budgets.
• Stage 5: Projects are now evaluated, funded, and approved/disapproved on a regular basis as the organisation gains experience with the new project portfolio management process. As the process matures, continuous learning occurs. IT
tools are selected for the organisation to track the development of specific projects.
These are the general stages that the implementation of a project portfolio management process takes. Obviously, there is customisation of the organisation—depending on a number of variables such as industry, size, growth history, etc.
Developing a budgeting process consistent with project portfolio management
• Textbook reading: Kerzner: Project Management Best Practices: Achieving Global Excellence, Chapters 4 and 5
• Textbook reading: Rothman: Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, Chapter 6
• Textbook reading: Morris and Pinto: Wiley Guide to Project Program and Portfolio Management, Chapter 6
The project portfolio management process can ultimately drive the budgeting process for allocating resources to projects. More accurate information about project work helps guide the process by indicating where adjustments are needed. Enlightened companies reconcile both top-down and bottom-up information about what projects should be done and what the realistic capacity of the organisation is to do those projects. Rather than measuring everything possible, they design a few key metrics about when projects pass thresholds, achieve goals, or incur variances, and they put great effort into ensuring that full budgets support the stated goals that lead to stakeholder and shareholder value.
These companies preserve the core values and strengths within the organisation by fully funding projects that were selected based on sound criteria; they also stimulate progress by allocating a portion of the portfolio (and budget) to options, experiments, or research into potential areas for new development. This approach ensures a ‘whole product line’ approach but does not undertake every possible project, only those that show the highest promise based on thorough evaluation by key experts within the company.
Enlightened companies have integrated the budgeting process with the project portfolio management process, so that as projects go through the portfolio framework and are reviewed/approved, the budgeting process takes steps to ensure that adequate resources are present for the projects to continue.
Portfolio iteration and making needed changes to the project portfolio
• Textbook reading: Kerzner: Project Management Best Practices: Achieving Global Excellence, Chapter 4
• Textbook reading: Rothman: Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, Chapters 3 and 6
• De Reyck, B., Grushka-Cockayne, Y., Lockett, M., Calderini, S., Moura, M. & Sloper, A. (2005) ‘The impact of project portfolio management on information
technology projects’, International Journal of Project Management, 23, pp. 524–537
• Da Silveira, G., Borenstein, D. & Fogliatto, F. (2001) ‘Mass customization: Literature review and research directions’, International Journal of Production Economics, 72, pp. 1–13
• Gilmore, J. & Pine, B. (1997) ‘The four faces of mass customization’, Harvard Business Review, 97, pp. 91–101
The challenge of making needed changes to the project portfolio is often the most challenging step in any project portfolio management process. The desired end result of this process is a portfolio that meets the objectives of the organisation optimally or near-optimally, but the approach must have provisions for final judgemental adjustments. These changes may be strategic decisions, and the relevant information must be presented so it allows decision makers to evaluate the portfolio without being overloaded with unnecessary information.
The portfolio adjustment stage should provide an overall view, where the characteristics of projects of critical important in an optimised portfolio (e.g., risk, net present value, time-to-complete, etc.) can be represented, using matrix-type displays, along with the impact of any suggested changes on resources or selected projects. It is important to use only a limited number of such displays to avoid confusion (cognitive overload) whilst the final decisions are being made. Decision makers should be able to make changes at this stage of the process, and if these changes are substantially different from the optimal portfolio developed in the previous stage, it may be necessary to recycle back to recalculate portfolio parameters. In addition, sensitivity analysis should be available to predict and provide feedback to decision makers on the impact of their suggested changes (addition or deletion of projects or changes in the scope of selected projects) on resources and portfolio optimality.
During a portfolio or individual project review, different outcomes can arise. Often, organisations are hesitant about implementing the decisions that are reached, but enlightened organisations do make those decisions. The general choices that can be made include:
1. Committing to a project
2. Killing a project
3. Transforming a project to increase its chances of success
These changes need to be made for the project portfolio management process to have validity within the organisation.
When an organisation commits to a project, it is a real commitment—the organisation has determined to fund this project and it must assign the necessary people to the project—and only to this project. If the project needs something else (space, capital equipment, whatever), the commitment to the project means that those things need to
be committed as well. The organisation must understand the requirements of that commitment.
When a project is terminated, it is terminated. It is not to be resurrected under a new name or allowed to continue in the underground. People, resources, and time are to be transferred to other activities.
Transforming a project is to change the project in some way and continue the project. However, this decision to continue is not a blind decision to continue indefinitely. Generally this decision means that more information is needed. For example, because the current technical approach is too risky, the team may need to try a new technical approach to see if it is potentially feasible. It may need to collect additional market information as it examines new market applications, or it may need to develop new product designs as the current one is not commercially exciting. The team may simply need to validate already obtained information (market or technical). Finally, the team may need to adjust the project staffing (including the project manager). These are some of the representative adjustments that are made to transform a project.
One common example of making adjustments to a portfolio is in the management of IT projects. The ever-increasing penetration of projects as a way to organise work in many organisations now necessitates effective management of multiple IT projects. This has resulted in a greater interest in the processes of project portfolio management, with more and more software tools being developed to assist and automate the process. In fact, much of the early work on project portfolio management concentrated on the management of IT projects, largely from the perspective of the management of resources and risk. In the paper by De Reyck et al. (2005), the authors assess whether there is a correspondence between the use of PPM processes and techniques, and improvements in the performance of projects and portfolios of projects. On the basis of their findings, they introduce a three-stage classification scheme of PPM adoption and present a strong correlation between (1) increasing adoption of PPM processes and a reduction in project-related problems and (2) PPM adoption and project performance.
Within the IT community, there have been efforts to define a three-stage project portfolio management implementation plan which includes stages such as the three following ones:
• Stage I: Portfolio Inventory: In this stage, the following PPM processes are to be installed: o Centralised project administration
o Risk evaluation procedures
o Explicit incorporation of resource constraints
o Increasing business leaders’ accountability for project results
In studies on this topic, sufficient evidence indicates that the greatest positive impact of PPM can be observed when organisations start to (a) assess economic and technological risks at the portfolio level, (b) incorporate resource constraints in their
decision making, and (c) explicitly look for risk diversification across the portfolio. Nevertheless, such organisations still face issues in terms of lack of commitment from business leaders, lack of alignment of projects to strategy, lack of coordination between projects, and conflicting project objectives. Therefore, it was not a surprise to establish that, according to the managers of these organisations, one of the greatest challenges to advancing the implementation of PPM is the lack of a clear company strategy. They also understand that their teams typically lack relevant training and appropriate knowledge to measure project benefits, which can explain the low impact of PPM in improving their assessment of financial worth of the project portfolio.
• Stage II: Portfolio Administration: In this stage, the following PPM processes are to be installed:
o Project categorisation
o Evaluation of customer impact of the project portfolio results
Organisations at this stage have better defined objectives and are better informed about the costs and benefits of their projects. Two aspects are especially important for creating additional benefits from PPM, namely (1) processes to categorise projects and (2) better evaluation of customer impact of the project portfolio results. Many firms often lack the resources to analyse project data and have suffered from restraints on people and financial resources as well as an overload of projects. As organisations evolve from Stage I to II, they still encounter the same level of problems with excessive number of projects and people constraints. These organisations also lack resources and appropriate ways of measuring project benefits and have high staff turnover—the main challenges to further implementing PPM.
• Stage III: Portfolio Optimisation: In this stage, the following PPM processes are to be installed: o A project portfolio committee
o Assessment of the financial worth of the portfolio
o Management of project interdependencies
o Tracking project benefits
Firms in this stage generally find that PPM had significantly increased the return on investment in projects. At the top of the list is the importance of a project portfolio committee. Moreover, it is relevant to notice how strongly these organisations think about investments at the portfolio level. Firms at this stage generally devote high importance to the management of project interdependencies, alignment of the project portfolio with the organisation’s objectives, and assessment of the financial worth of the portfolio. Although the level of project-related problems for organisations in this stage is typically lower than at other stages, organisations at Stage III still have problems with people and financial constraints and late delivery of projects, which are correlated with a high number of changes in project scope and lack of cross-functional communication and work.
Another way that companies have, in theory, developed a way to manage their portfolios is through mass customisation, which is the ability to provide individually designed products and services to every customer through high process flexibility and integration. In a sense, mass customisation represents a unique way for an organisation to continually change its product portfolio mix, based on the dynamic nature of customers’ preferences. Mass customisation is a competitive strategy by an increasing number of companies to offer its customers the products they want.
The efficiency in information transfer from customers to manufacturers largely determines the success of a mass customisation programme. In these programmes, customer demands regarding a product are captured and transmitted to a production unit, where a product tailored to meet those demands is manufactured. Agents of information transfer are the manufacturer and its customers. The manufacturer determines the extent to which customers may customise their order; customers provide feedback with the information on their choice of design elements. The customer-manufacturer interface is uniquely determined according to the company developing and implementing a mass customisation programme.
An organisation that attempts to use mass customisation in its portfolio usually takes the following steps to establish a customer-manufacturer communication link:
1. Defining a catalogue of options to be ordered to customers
2. Collecting and storing information on customer choices
3. Transferring data from retailer to manufacturer
4. Translating customer choices into product design features and manufacturing instructions
The degree to which products are customised is unlikely to exclude any of the steps above; it defines, however, the volume of information transferred in each step. More specifically, in each of these steps, the organisation takes action to implement mass customisation, which effectively enables it to manage a portfolio of product options to the client. These steps are heavily information dependent, but the information enables the organisation to determine which options are more attractive to its customers than others (and, thereby, effectively manage its portfolio by adjusting the options that it offers).
• Step 1: Defining a catalogue of options to be offered to customers. The catalogue of options offered to customers defines the degree of customisation of a product. Highly customised products present an extensive catalogue of options, covering most of their relevant features. Medium- and low-customised products offer choices that are more restricted to customers. Some products are offered in models developed on the basis of the analysis of customers’ past demands. In other words, customers may choose from several pre-determined models with design features likely to match their needs. This corresponds to a very low degree of customisation, in which customer interaction in the product design is indirect. It is important to note that the offer of choices, although essentially
customer driven, must be coherent with the manufacturer’s technological development.
• Step 2: Collecting and storing information on customer choices. Approaches for data collection are developed to attend specific mass customisation situations. Data on customer choices may be gathered by a store employee or sales representative trained to guide the customer through the decision process or may be collected using a computer interface with minimum human interference. In other situations, customer and designer jointly develop a project from scratch. In any case, it is implicit that customers must be offered an easy-to-handle set of options to select from.
• Step 3: Transferring data from retailer to manufacturer. Orders are sent from a retail store or a ‘virtual Internet store’ to the manufacturer by various electronic means. The Internet has grown over the past decade or so as a primary means to link the ‘store’ to manufacturing (e.g., automobile—Fiat, Pontiac), and textile industries—Levi’s). Information on customer preferences is then entered in a computer system that generates a product ID, such as a bar code, used to track the product throughout the manufacturing stages.
• Step 4: Translating customer choices into product design features and manufacturing instructions. In most reported cases, specifications on design elements are fed into CAD and CAM systems and then converted into production instructions. It is evident that the success of mass customisation implementations is heavily dependent on the existence of a computerised manufacturing environment. Therefore, CAD and CAM systems are vital when attempting any mass customisation strategy. This is expected since, in essence, mass customisation relies on flexibility and quick responsiveness. CAD systems allow customer-driven design changes to be implemented and deployed into production instructions in due time; CAM systems handle the diversity of parts ordering whilst maximising machine use.
Mass customisation has become, in fact, an important manufacturing strategy that enables an organisation (especially, a manufacturing organisation) to readily change its product mix to incorporate those products more in demand with its customers whilst also meeting the demands of a few. Agility and quick responsiveness to changes have become mandatory for most companies in view of current levels of market globalisation, rapid technological innovations, and intense competition. Mass customisation broadly encompasses the ability to provide individually designed products and services to customers in the mass-market economy.
Termination of projects that do not meet desired goals
• Textbook reading: Kerzner: Project Management Best Practices: Achieving Global Excellence, Chapter 4
• Textbook reading: Rothman: Manage Your Project Portfolio: Increase Your Capacity and Finish More Projects, Chapter 4
• Textbook reading: Morris and Pinto: Wiley Guide to Project Program and Portfolio Management, Chapter 6
If an organisation realises that the rationale for a specific project no longer exists, it implements the termination process. This decision can be based on two different paradigms. The first is a performance paradigm in which initial expected benefits have been achieved; the cost of the programme is greater than the benefits it is bringing to the organisation; the cost-benefit ratio of the programme is greater than that of independently run projects). The second is a learning paradigm in which the environment or context has changed and the benefits that the programme was seeking to achieve are no longer required, or the implementation of the first cycle or cycles has demonstrated that the programme’s ultimate purpose cannot be achieved.
As for projects, the closing, or dissolution, of the project is not an easy task; when a decision to stop a project or a programme is made, a number of people and funds are reallocated to other ventures, and therefore there is likely to be resistance from the team to ‘let go’. For this reason, some organisations even choose to involve a team external to the project or programme in the closing phase to make it more efficient.
There will always be some uncompleted work that needs to be either completed within a reasonable period of time or transferred to other programmes. The team needs to identify and agree on uncompleted work and clarify what can be completed within a reasonable period; it must agree on and secure resources to carry out post-project or post-programme feedback, transfer residuals to other programmes, allocate outstanding work, reformulate programmes, and reallocate resources as required. The programme team estimates the resources required to deliver outstanding benefits and the value to do so (benefits/cost analysis). All of the documentation must be updated and filed and a post-project or a post-programme review conducted. The data are then fed back into the organisation through a learning/innovation loop.
Once all this has been accomplished, the project or programme dissolution team is disbanded and reassigned. Care must be taken to ensure that the project or the programme is actually terminated, as one common problem is that a remnant of the project continues underground.
Sustainability, Programme and Portfolio Management
Reading – Week 3
Textbooks
Kerzner, H. (2010) Project management best practices: achieving global excellence. 2nd ed. Hoboken, NJ: John Wiley. Chapters 4 and 5.
Rothman, J. (2009) Manage your project portfolio: increase your capacity and finish more projects. Raleigh, NC: The Pragmatic Bookshelf. Chapters 3, 4, and 6.
Morris, P. & Pinto, J. (2007) The Wiley guide to project program and portfolio management. Hoboken, NJ: John Wiley. Chapters 2, 3, and 6.
Articles
De Reyck, B., Grushka-Cockayne, Y., Lockett, M., Calderini, S., Moura, M. & Sloper, A. (2005) ‘The impact of project portfolio management on information technology projects’, International Journal of Project Management, 23, pp. 524–537.
Da Silveira, G., Borenstein, D. & Fogliatto, F. (2001) ‘Mass customization: Literature review and research directions’, International Journal of Production Economics, 72, pp. 1–13.
Gilmore, J. & Pine, B. (1997) ‘The four faces of mass customization’, Harvard Business Review, 97, pp. 91–101.
Supplemental reading
Jeffery, M. & Leliveld, I. (2004) ‘Best practices in IT portfolio management’, MIT Sloan Management Review, 45 (3), p. 41.
(Please note that the references to these readings can be found in the Lecture Notes text under the headings of the topics to which they relate.)
Organisation of projects into programmes and then into portfolios
• Chapter 4 of Kerzner’s text highlights the basic organisation of a project management methodology and discusses the grouping of projects into higher-level structures. Several of the case studies in this chapter are worth reading for their examples of real-life implementation.
• Chapter 3 of Rothman’s text discusses (pp. 21–25) the basic principles of organising the portfolio, the difference between projects and programmes, and organising projects into a phased programme.
• Chapters 2 and 3 of Morris and Pinto’s text thoroughly discuss the key structure of objectives, strategies, programmes, and projects. The authors discuss the transformation of strategy into portfolios, then into programmes and projects, as well as the reverse, starting with projects and structuring those into programmes and then portfolios.
Setting expectations for project portfolio management
• Chapter 4 of Kerzner’s book discusses the motivation for creating a project portfolio management process. As a part of the process, the author discusses setting expectations with senior leadership—including understanding what problems the new process will solve.
• In Chapter 3 of Rothman’s text, the author emphasises the need to organise the process correctly, thereby creating the stage for meeting the expectations that leadership will have for the new process. The author also discusses the need to create trust within the organisation for this new process.
• Morris and Pinto discuss in Chapter 6 the need to identify, prioritise, quantify, and deliver benefits to all stakeholders of the process. They examine the need to translate the stakeholders’ needs and/or expectations into measurable outputs, and to set correct expectations within this frame of reference.
Methods to gain executive support for implementing project portfolio management
• Chapter 4 of Kerzner’s text discusses the appropriate steps necessary to create and implement a project portfolio management system. Implicit in this discussion is the need to gain executive support. Using case studies, the author highlights the steps that specific firms have taken to gain executive support for implementing project portfolio management.
• Chapters 3 and 6 of Rothman’s text emphasise the need to gain executive support, discuss various means to gain that support, and highlight barriers to implementation which many firms have faced in their project portfolio implementation.
• Morris and Pinto discuss in Chapter 6 (pp. 119–136) key steps that must be taken to implement project portfolio management. In each case, they present detailed tasks—including gaining executive support—for the implementation to be successful.
Understanding the steps to take to Implement project portfolio management
• Chapter 4 of Kerzner presents (pp. 151—168) a list of steps needed for a project team to implement project portfolio management. The author discusses each of these steps in considerable detail, leading to a template that students can use to understand the steps that must be taken.
• Chapter 3 of Rothman’s text discusses each step, but at a higher level than the Kerzner text. However, in Chapter 6, the author presents a series of key insights—almost best practices—for individuals trying to implement project portfolio management. In addition, the author discusses (pp. 81–88) key barriers to collaboration during implementation and how to overcome those barriers.
• In Chapter 6, Morris and Pinto discuss a detailed series of steps, some of which are similar to those in Kerzner’s text, which an organisation should take to implement project portfolio management. The authors start with the linkage to strategy and continue with the implementation to the project execution level.
Developing a budgeting process consistent with project portfolio management
• In Chapter 4, Kerzner mentions the need for alignment of other processes with project portfolio management as a part of the detailed implementation activities for each step in the implementation process. In Chapter 5, he specifically discusses the need to integrate a number of business processes with project portfolio management—budgeting being one of them. The examples in both chapters are worth reviewing in detail, as several highlight aspects of project budgeting.
• In Chapter 6, Rothman discusses the funding of projects in the portfolio—with explicit implications for the budgeting process. In particular, the author discusses the funding of projects incrementally, without making substantive resource commitments.
• Morris and Pinto briefly discuss in Chapter 6 the linkage of project portfolio management with other business processes, especially resource management.
Portfolio iteration and making needed changes to the project portfolio
• Chapter 4 in Kerzner’s text explains that making changes to the portfolio is often the most difficult part of the process—an area where organisations often fail (an implementation blunder). The author also discusses the means to overcome such blunders and implementation barriers as the organisation is likely to face in its initiative.
• Rothman discusses in Chapters 3 and 6 the importance of being able to make changes in the portfolio and, more importantly, methods to make those changes with the support of the entire organisation. In Chapter 6, the author considers methods to facilitate a project portfolio meeting and, as a potential outcome of that meeting, the methods to make portfolio changes that will have the support of the organisation.
• The article by De Reyck et al. discusses the fact that the increasing use of projects as a way to organise work in many organisations now necessitates effective management of multiple projects. This has resulted in a greater interest in the processes of project portfolio management (PPM), with more and more software tools being developed to assist with and automate the process. The authors indicate that much of the early work on PPM concentrated on the management of IT projects, largely from the perspective of the management of resources and risk. In this paper, the authors assess whether there is a correspondence between the use of PPM processes and techniques and improvements in the performance of projects and portfolios of projects. Based on their findings, they introduce a three-stage classification scheme of PPM adoption and present a strong correlation between (1) increasing adoption of PPM processes and a reduction in project-related problems and (2) between PPM adoption and project performance.
• The article by Da Silveira et al. discusses mass customisation, which is the ability to provide individually designed products and services to every customer through high process flexibility and integration. In a sense, mass customisation represents a unique way for an organisation to continually change its product portfolio mix, based on the dynamic nature of customers’ preferences. The authors identify mass customisation as a competitive strategy used by a growing number of companies. In this paper, the authors survey the literature on mass customisation. They discuss at length the enablers to mass customisation and their impact on the development of production systems. In addition, the authors compile and classify approaches to implementing mass customisation.
• In the Pine and Gilmore article, the authors indicate that virtually all executives today recognise the need to provide outstanding service to customers. As the authors point out, however, focusing on the customer is both an imperative and a potential curse. Mass customisation enables firms to increase their product portfolio by offering a number of choices to their customers—customers whose preferences are dynamic and changing, especially in industries such as consumer products or the retail sector. The authors indicate that, in their desire to become customer driven, many companies have resorted to inventing new programmes and procedures to meet every customer’s request. But as customers and their needs grow more diverse, such an approach has become a certain way to add unnecessary cost and complexity to operations. The authors indicate that companies worldwide have embraced mass customisation in an attempt to avoid those pitfalls and provide unique value to their customers in an efficient manner. But, as Gilmore and Pine indicate, many managers at these companies have discovered that mass customisation, too, can produce unnecessary cost and complexity. They are realising that they did not examine thoroughly enough what kind of customisation their customers would value before they plunged ahead with this new strategy.
Termination of projects that do not meet desired goals
• In Chapter 4 of Kerzner’s book, the author alludes to project termination as a step in the overall process but does not dwell enough on this issue.
• In Chapter 4, Rothman discusses (pp. 40–43) the need to terminate or kill projects that do not meet the desired goals or objectives as originally set or the reasons the projects were started in the beginning. The author emphasises that projects sometimes continue on—despite efforts to terminate them—and go on undetected for a variety of reasons.
• Morris and Pinto, in Chapter 6, discuss the need to dissolve projects when the rationale for continued support for the programme no longer exists. The authors emphasise (p. 136) that the closing of a project is not an easy task. They point out that, when a decision to stop a project is made, a number of individuals and funds are reallocated to other ventures, which is likely to result in resistance from the team whose project is terminated.
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