Portfolio Management

Portfolio Management

Portfolio Management usually operates above the programme level and has a very broad breadth within an organisation, if not the whole breadth of change.

What is Portfolio Management?

The OGC in the UK defines Portfolio Management as ‘the corporate, strategic-level process for Coordinating successful delivery across an organisations entire set of programmes and projects’.

The way to think about Portfolio Management in project and programme management is just the same as an investor would look at their portfolio.

Investor’s portfolio’s can vary from property, to shares, stocks and bonds… and so on; however, they all have a common objective. That is to make a return on their investment.

Projects and Programmes are no different within an organisation. Resources and Budget are finite, and therefore to make the optimum and least risky return on the investment, Portfolio Management should be implemented to decide where the best place to make the investment, and how to make the success of the return more certain (less risky), ending in tracking the actual return performance (or benefits).

Portfolio Management constantly reviews the risk and reasons for the investment. If the market of opportunity disappears during implementation of a change (or project), it is better to halt the project mid way, as opposed to carry on spending the budget delivering a solution which may no longer be required.

To initially set up Portfolio Management and help decide where to invest the resources and budget, an organisation would need to know where it is aiming for. Therefore the starting point is some form of Strategic Objectives, KPI’s (Key Performance Indicators), or alternatively a business scorecard; some of these indicators can be part of the benefits realisationstrategy. An effective Portfolio will always view change as an overall investment, and as such would want any change to be as successful as it can be. Therefore, ensuring change is co-ordinated with the ‘business as usual’ activity in a business operation is of paramount importance to ensure the most effective time to deploy change; you wouldn’t want a retailer to send an IT system live on the second or third week in December!

Once the organisation has agreed where it needs to be going, in terms of strategic direction, the next step should be to understand what budget is available and the resources to support and deliver change.

Identification and confirmation of the resource pool and budget starts of resource and demand management (see the page on Resource and Demand Management).

The process to decide where to ‘invest’ in a change, is the Prioritisation model. All potential projects should be prioritised against an agreed set of parameters and areas (e.g. cost, benefits, strategic alignment and risk). Once a project has been prioritised, this can sit on a pipeline, until resources and budget are available. Once available, this budget and resource is passed to the Programme or Project Managers to deliver the change and be held responsible for delivering the benefits.

Some people think it is this structure a portfolio offers that drives a positive behaviour of an organisation reviewing its investments from outside the hard work that goes on within the project or programme. The project or programme can be constantly reviewed from an objective stand point.

This mindset is completely different to a Project or Programme Managers, whose main objective is around delivery. It is this reason that some Programme and Project Managers find it difficult to transition across to Portfolio Management, yet an experienced PMO or Finance person finds this less so, as they are conditioned to look at data and provide objective analysis (this is not to say that some Programme Managers can make the transition extremely well).

Portfolio Management – Are we doing the right thing

Programme Management – Are we doing the thing right