The challenges of project portfolio management
Project portfolio management helps to ensure that organisational projects are implemented in a coordinated way, making optimal use of resources. But implementing this is not always easy. In this post, we try to highlight the challenges that are likely to be encountered during implementation.
What is a project portfolio?
A Project Portfolio Management (PPM) is a group of projects, programmes and other project-like tasks that are designed to support the achievement of an organisational strategy (Project Management Institute, A Guide to the Project Management Body of Knowledge 6th edition, 2017).This generally accepted definition, while it highlights that we are talking about a group of tasks, does not fully describe its purpose.
Perhaps we can say that the biggest challenge is to deliver a lot of tasks and demands within a given resource capacity. In line with this, one of the - if not the most important - objectives of developing project portfolios is to use the resources available in the organisation to deliver tasks as efficiently as possible.
For example, we want to avoid the situations that we all know about, where important milestones in several projects are scheduled at the same time and project staff have to work on several projects at the same time, often with overtime. Our aim with project portfolios is therefore to start and schedule projects taking into account resources and possible interdependencies.
When is portfolio management needed?
Along the lines described above, it makes sense that the goal of project portfolio management can be achieved if the organisation is running several projects in parallel. In addition to this, our clients often ask: when does an organisation reach the point in its life where the lack of project portfolio management leads to a deterioration in results?
In our experience, due to the diversity of organisations and tasks, it is not possible to define a specific indicator for this, but if, as an organisational leader or subordinate, we perceive the following, it is worth considering the introduction and development of a conscious, organised project portfolio management:
- Too many parallel projects, we don't know which one to deal with
- We do not see the links and connections between projects
- Resource planning is not done at the organisational level, but at the project level, so we plan resources for the project "invisibly".
- There are a lot of ideas and needs within the organisation, but it's not clear which ones to start a project on or which ones to postpone.
- Organisational leaders make decisions to launch projects "by feel", based on any objective, transparent criteria.
What are the tasks included in project portfolio management?
Before going into the tasks, it is worth noting that no two project portfolio processes are the same (and work well), and should be tailored to the organisation and its environment. The project portfolio process or the decision criteria within it may be different for an internal service provider or an open, purely market-based organisation. Regardless of this, the following tasks will usually be part of the process:
- Demand management - The receipt, preparation and processing of claims are often run as a separate process (even under a different host from the project management), but they still fundamentally affect the portfolio processes. In order for PPM to achieve its purpose, it is necessary to have well-defined needs with clear objectives where possible (even for agile projects!!!).
- Categorising and grouping tasks - Tasks of different complexity or requiring different technology may require different approaches and management processes. We can think here of documentation within the traditional project management approach, project management operations, or the question of application between agile and traditional approaches. Either way, we need processes and working methods that are known and accepted by the people involved.
- Prioritisation - In order to ensure that projects or other tasks are started and completed in a thoughtful way that delivers the highest organisational results, prioritisation is necessary. This process should consider aspects such as business return, support for strategy delivery, realisation of other non-business benefits and what is very often forgotten by managers, alignment with resource capacity. Even if there are 10 very good ideas within an organisation, if there are not enough resources to implement them, it is not at all certain that the "best" idea is the one to launch first.
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- Aligning plans and resource allocation– As we want to ensure that projects do not "clash" during implementation, either because of the workload of colleagues or because of their professional relationship (these can be called programmes), it is advisable to align plans at organisational level.
- Continuous and transparent information provision, portfolio performance monitoring - We know that decisions require the right quantity and quality of information. This is no different in PPM, where (typically) managerial decisions (grouping, prioritisation, etc.) require continuous information. This is also the purpose of effectively built reporting systems and processes, dashboards, designed to support appropriate decision making.
- Change management at portfolio level - One thing has become a constant in projects: change. An accelerated, dynamically changing environment can induce very frequent and significant changes in projects, which need to be considered along the lines of the resource capacity and other types of relationships described earlier. The fact that a change may at first glance be implemented in a particular project is not at all clear at the organisational level, and may 'bog down' or 'slip' several projects.
- Continuity of operations - Project portfolio management is not a linear series of given process steps that are implemented once. It is an ongoing activity, as new ideas, needs and projects can emerge continuously at any point in the financial year.
What are the most common pitfalls in project portfolio management today?
The implementation and development of project portfolio management is a complex task, which can contain many pitfalls and difficulties. To overcome them, you need both considerable experience in operational development on the one hand, and industry and organisational knowledge on the other.
In our experience, it is better to be prepared for the following pitfalls, which require specific solutions and responses in each case:
Not all tasks are best done with the same approach.
Anyone who has encountered different needs and projects knows that project management is not an explicit, identical process in all cases. We should not try to manage all projects in the same way, if we do, we can easily run into the problem that a project will take more time to plan than to implement.
Difficulties in building mixed project portfolios
As the agile approach spreads, more and more organisations are focusing on projects delivered according to agile principles. If this means not only a "doing agile" based process, but also an agile approach in its values, the integration of these projects and tasks (if necessary) into the same portfolio raises a number of practical issues.
This could be, for example, how to prioritise a traditional project with already detailed requirements specifications against an agile project with a fixed time or budget, where the detailed requirements are not yet clear or are likely to change along the way, based on the same criteria.
Resource capacity definition and measurement should only be done for projects!
In many cases, the organisation is not just working on projects, but for example, operations, BAU (Business As Usual) tasks and projects are carried out by the same people. How much capacity can we plan for one type of task or another? How much time is left for projects? The answer to this question is not clear.
Inappropriate decision-making, prioritisation criteria
The prioritisation described above should typically be carried out according to several criteria, which are optimally aligned with the organisational strategy. What is the goal of the organisation, what are the key metrics, where does the organisation want to be in 3-5-10 years? Do we want to enter new markets? These can all be important questions alongside business return on investment indicators.
Lack of KPIs related to needs, ideas, expected results cannot be estimated
In many cases, we find that when ideas and needs arise, it is difficult for applicants to quantify the return on investment and the expected results. This is often due to low project maturity or a lack of business analytical skills.
Early year prioritisation and one-off PPM process
In more than one organisation, we have seen that the portfolio for the following year was planned once, at one point in time. When we use the term CAPEX planning, many people working in large or multinational companies get chills, because they know that it is very difficult, almost impossible, to predict in September what projects we will want to start next year and what resource requirements we will have. Let's ask ourselves, could this planning process not be done on a continuous basis, even with a rolling planning approach?
Inadequate competences at project leader and portfolio manager level
The roles and responsibilities of the actors involved in PPM and those who carry out PPM are different, and strong, well-defined competences and skills are needed. It is useless to have a strong portfolio manager if project managers cannot manage their projects. In the short term, this even requires project manager mentoring, training courses or even external, black-belt project managers may also require the involvement of.
Unclear processes, responsibilities and terminology
In order for a process to work in practice, it needs to be accepted and understood by all stakeholders and a common language needs to be spoken. The established process must be educated and the implementation supported!
Lack of or too many support tools
In most cases, PPM cannot be managed from excel, and appropriate supporting tool(s) are needed. This can be one or more systems, but be aware that too many tools and interfaces can be a disadvantage in the long run.
Slow process and decisions, lack of automation
In most cases, the problem or pitfall is that the PPM process looks good on paper, but in practice it will be slow. You can't wait weeks for decisions, senior management committees to meet, automation, often virtual decision making may be required.
Low proactivity, task culture, high managerial micro-management
Closely related to the first point is that there is often no time to escalate every decision, it is not good to take every decision to the leaders. This requires proactive, responsible colleagues and leaders who are not lost in micro-management.
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Do you want to increase your organisation's project management capacity or need support with project portfolio management? Do you have other project management related questions or are you looking for an experienced project manager to lead your project? Contact us for a free consultation!
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