Portfolio management – the next frontier?

Earlier this month I was speaking at the “Passion for Projects” conference in Sweden. I must say it was a really well organised event and I was delighted to have been invited to speak there. The topic I chose to talk about covered portfolios, project, projects, matrices and maturity. I’ll go into it more in some later blogs. I’ll assume you know a little about portfolio management. Just to recap, portfolio management is all about making sure you pick the right projects to do.¬† In “The Project Workout” i call them “business programmes” as at the time I wrote the book, the term “portfolio” hadn’t really settled down in the way it has now.¬† So, in portfolio management you have to make decisions on what to do and which meet the following criteria:

  1. It is aligned to your strategy
  2. You have the resources to undertake it and operate its outcome
  3. The risks are acceptable  (i.e. robust business case)
  4. The portfolo, as whole is still balance if you take this on
  5. The organisation can absorb the change.

So, the decision makers need to bbe able to make those decisions and have the data available to verify the criteria.

I was asked a question about this: “If a programme has been approved as part of a portfolio, has the programme sponsor the authority to authorise the project within the programme, or do they all have to be referred to the decision maker at portfolio level?”

My instincts were that if the programme as a whole has been approved, then the programme sponsor should be able to make the decisions . . . however it is not that simple. It all comes down to shared impact. For example, if the programme team has all their own “ring-fenced” resources, then they can make decisions relating to criteria 2. If they share resources with other programmes or components of the portfolio, then they can’t. Similarly, if they are the only ones impacting a “target user group” (change absorbtion) then they can verify criteria 5. If niot, then the decision has been elevated.

Further, the degree of to which there is knowledge of the programme, its resources and impacts at the time it was approved also matters. It may be that the first chunks of work are pretty weel known and as long as these stay in the bounds expected, decision making can be at programme level.

As you see, what appears to be a simple question is actually very complex. The more you ring-fence resources, the greater you can delegate decisions to programme sponsors but, you lose potential efficiencies for using those resources on other work. It’s a balance. Whatever you choose, remember:

  1. What ever you do must align with your strategy
  2. There is little point in authorising work that cannot be undertaken – in fact it is really damaging
  3. You need to ensure the risks of adding this to your work-stack are acceptable
  4. You nee to ensure your portfolio remains balanced, when you add the new work in
  5. There is little point in doing work, which the operational teams, customer etc cannot accommodate in terms of change.

You’ll find a lot more about this in The Project Workout, section 3. Many organisations are only just starting to “get it”; it’s all applied common sense.