UNIT-I

Introduction to Project Management and Selection Criteria

Project, Program, and Portfolio Management

The relationship between project, program, and portfolio management can best be described
like this:
 A project is a temporary endeavor undertaken by a company or organization (such as
the creation of a new product, service, or result)
 A program is a group of projects that are similar or related to one another, and which
are often managed and coordinated as a group instead of independently
 A portfolio is a group of different programs and/or projects within the same
organization, which may be related or unrelated to one another

What Is a “Project” in Project Management?

So, what exactly does “project” mean in the world of project management? Generally, a
project is a temporary endeavor, with a finite start and end, that is focused on creating a
unique product, service, or result.
Nothing in this definition describes the size or the precise content of a project—there are
projects of every size imaginable in virtually every industry, and project managers supervise
them regardless of these specifics.

What Does a Project Manager Do?

As project managers, the key parts of the job are to balance the scope of work—also known
as “deliverables”—to meet the project objectives with the resources that are available within
the schedule and allotted budget. They must do this all while working to ensure the project
meets the quality guidelines required by its customers, which is not an easy task.
Learn More: What Does a Project Manager Do?
Project management is about applying the right tools, techniques, and processes, in a value-
added way, to complete the project successfully. As we know, the body of project
management knowledge is huge, and there are a number of skills, tools, and techniques
available to support project managers in the delivery of these initiatives. What’s important is
to understand the project, its goals and objectives, and what its challenges are, and to pick,
choose, and use those right parts of project management accordingly.

What Is a “Program” in Project Management?

In some cases, it’s important that a group of projects is managed in a coordinated way to
ensure that value is achieved. In project management terms, this collection of projects
becomes a program. Like a project, a program is a temporary organization, so when the
related projects are complete, the program is complete.
The Project Management Institute (PMI) describes program management in its PMBOK
Guide as:
“The application of knowledge and skills to achieve program objectives and to obtain
benefits and control not available by managing related program components individually.”

What Does a Program Manager Do?

Program management is not simply managing multiple projects—it’s a bit more strategic than
that. The program manager also doesn’t micromanage those projects; he or she is helping
ensure that the right work is moving between the right projects at the right points in time.
The program manager focuses, throughout the program, on the business benefits, starting
very early at its inception by looking at what benefits can be realized and then making that
happen.
Each project still has a project manager completing the work described above. The role of the
program manager is to ensure that the benefits intended are met by validating that the correct
projects are included in the program. Any project not providing value to the benefits is then
realigned or removed from the program.
The program manager is responsible for overseeing the dependencies between projects and
creating program-level plans to accomplish this.
For example, a master schedule is created to manage the dependencies between projects; a
program risk management plan is created to manage program-level risks; and a program
communication plan establishes how information will flow in the program. The program
manager is then not managing the projects, but rather providing the oversight needed to
ensure that the pieces of each project are completed effectively and efficiently in order to
meet the needs of the other projects.
The program manager is focused on benefits realization—rather, knowing the benefits that
can be accomplished from this collection of projects and focusing on achieving them. The
program manager is also working to manage organizational change and ensure that the
benefits are not only transitioned to operations, but that processes are in place to sustain these
benefits.
Since the role of program management is to ensure that projects are aligned to the business
strategy, as the strategy changes, the program manager also needs to communicate with the
project teams so that they are aware of the changes and what needs to be done about them.

What Is a “Portfolio” in Project Management?

A portfolio is a collection of projects and programs that are managed as a group to achieve
strategic objectives. An organization may have one portfolio, which would then consist of all
projects, programs, and operational work within the company. It may also establish several
portfolios for project selection and ongoing investment decisions.
According to PMI and its PMBOK Guide, a portfolio includes, “Projects, programs, other
portfolios, and operations managed as a group to achieve strategic objectives.”
Organizations need to decide which projects are the right ones to focus on. Often times, they
are limited by how many projects can be done based on the capacity within an organization,
begging the question, “Are we doing the right projects?”

What Does a Portfolio Manager Do?

Portfolio management is the centralized management of one or more portfolios to achieve an
organization’s strategic objectives.
Within organizations, the reality is often that resources are limited, whether it’s dollars,
people, space, or equipment. Based on the organization’s strategy, there are several projects
and programs that could be done; it just needs to be decided which are the right ones and in
what order they should be completed.
It’s critical to look not only at programs and projects at the individual level, but also
holistically to know how these align with the organization’s overarching goals.
At the same time, it’s important to consider a level of balance in the portfolio. The
organization “needs to keep the lights on,” while also developing new opportunities. Some
risk needs to be taken, but the portfolio should not be so risky that everything could be lost
within a period of time.
Beyond prioritizing and selecting projects and programs, portfolio management is balancing
the portfolio so that the right projects and programs are selected and implemented.
Monitoring and controlling is key to the process, since portfolio composition is not a one-
time decision. Evaluations should be conducted in some regular cadence. It may be decided
that a project’s priority becomes lower and others move into its place. A project could be
temporarily moved out of the portfolio or permanently moved out of what that portfolio
entails.
This is done to ensure projects align with an organization’s strategies, goals, and objectives.
It may also be the case that, as we get into performing a project or program, we find it no
longer aligns, causing a reprioritization of all projects and programs in the portfolio.
What Is a Program in Project Management?

A program is a collection of projects that are managed as a group to achieve efficiencies of

scale. Just as project management involves the coordination of individual tasks, program
management is the coordination of related projects that are grouped together.

Projects are bundled together into a program when the benefits of managing the collection
outweigh the benefits of managing them as individual units. A related concept here is project
portfolio management, a method for organizations to manage and evaluate a large number of
projects by grouping them into strategic portfolios. Portfolios are then analyzed for overall
effectiveness, how their estimates compare with actual costs, and whether they align with the
larger, strategic objectives of the organization.

So what is a program in project management? Simply put, it is a group of related projects

managed as a whole unit.

Characteristics of programs in project management

The main characteristics of a program in project management are:

 Large: Programs deal with big, overall company goals rather than smaller targets
and deliverables

 General: A project management program is general in its approach — the

specific details are outlined in the projects, tasks, and subtasks

 Strategic: Programs focus on long-term objectives and the multilayered plans to

achieve them

Examples of programs in project management

 Visionary: One example of a project management program could be the decision

to make a multinational business entirely eco-friendly. This long-term goal would
incorporate many shorter-term projects, including issuing new company
guidelines, the rollout of updates across the various offices, and a marketing
campaign to advertise the new principles.

 Mandatory: Another example of a program in project management could be a

merchant’s transition to an entirely electronic payment system. In Sweden, for
example, the goal is to become a cashless society by 2023. This means many
retail organizations have already undertaken smaller projects that contribute to the
greater program goal of digital transformation.

 Emerging: Finally, a project management program could start as a small project

but turn into a larger initiative. Various company projects could be dispersed or
even duplicated, so establishing a program will enable managers to bring them all
under one structure.
Who manages programs in project management?

A program manager’s role is to coordinate all projects within a program to align with the
strategies and long-term objectives of an organization. They oversee programs and assess
deliverables to ensure that every project goal is reached.

Program managers are not to be confused with project managers, who focus on the
individual, short-term deliverables of specific projects.

What are the benefits of programs in project management?

A successful project management program can be invaluable to a business. The benefits

include:

 Clarity: A program aligns multiple projects together towards one shared goal.
This means project managers are clear on their individual deliverables and can
plan their activities according to the program’s strategic objectives.

 Efficiency: In the program management process, a collection of projects is housed

in one place. Program managers can use project management software to oversee
progress for all projects at a glance and prioritize resources accordingly.

 Risk management: By enabling project managers to communicate pain points as

they arise, a set of best practices can be established to identify similar risks early
and avoid repeating mistakes.

What is project management?

A 'project' is a set of agreed activities with a definite start, middle and end. Together these
activities produce business products or services in line with an approved business case which
is sponsored by senior managers within the organisation.

'Project management' provides structure and control of the project environment so that the
agreed activities will produce the right products or services to meet the customer’s
expectations.

Projects are temporary structures which must be properly managed and controlled in order to
meet their stated objectives. They are usually delivered in an environment where both
funding and resources are constrained and subject to competition.

Projects may be part of overarching programmes.

Purpose of project management

A project has a lifecycle, underpinned by a plan, which is the path and sequence through the
various activities defined to produce its products. Project management is a controlled
implementation of the project plan under the direction of the organisation’s senior
management.

Traditionally, a successful project is one that has delivered its products or services according
to the project plan, meeting overall business objectives.

Project success is now seen more and more in terms of delivering projected
business benefits or the capability required for benefits delivery within the business.

A properly managed project will usually have:

 senior level sponsorship from within the organisation

 strong leadership, accountability and governance arrangements
 a dedicated project manager
 a project plan and adequate resources to implement the plan
 clear processes for the management
of risks, issues, stakeholders, communications and benefits
 effective project assurance arrangements
 well defined reporting structures and a clearly understood project scope

Some of the key documents usually associated with a properly managed project are:

 a business case justifying the investment and proposed changes

 a project initiation document setting out the project objectives and the means for
achieving them
 a project plan setting out the main products or services and all associated resources
and activities
 standards for reporting progress and highlighting issues
 registers for recording risks and issues and managing their escalation
 end project and lessons learned reports
 a post project review report, independent of the project, reporting estimates against
eventual outturns including the extent to which projected benefits have been realised

Project management roles and responsibilities

The main roles, and their associated responsibilities, in project management are:

 project board; comprising representatives from both user and supplier sides -
representatives with authority to make decisions and commit resources; the board is
chaired by the SRO and has overall accountability for project success
 senior responsible owner (SRO); chairs the board with overall accountability for the
project; the SRO is the key decision maker responsible for continuation of the
 business case, project structures and plans, controlling and monitoring progress,
problem referral and resolution, formal closure and post implementation review
 senior user; the board member responsible for providing user resources, ensuring
project products or services meet user expectations and deliver expected benefits
 senior supplier; the board member representing the interests of those designing,
developing, facilitating, procuring and implementing. Is also responsible for
the quality of products or services supplied
 project manager (PM); responsible for day-to-day project management, the PM has
been given authority by the board to run the project within agreed constraints
 project team; responsible for the production of products or services defined by the
project manager within the time, cost and quality constraints set by the board; the
team reports to the project manager
 project assurance; owned by the board but often delegated, it must be independent of
the project manager; project assurance provides assurance that the project is being
properly managed and includes frequent checking of the quality of the project’s
products or services
 project support; the role can include administrative help for the project manager and
board but may extend to administration of planning, control and configuration
systems. Depending on skills and experience the role may extend to advice, guidance
and limited support on a range of project areas.

Introduction to Project Management Life Cycle

Projects are part and parcel of our professional life. In the world of ever-changing technology
and business trends, project management is in great demand. In this Topic, we are going to
learn about the Project management life cycle.

According to PMI, a project is defined as temporary with a definite beginning and end in
time. Also, the project is unique without routine operation and meant to meet the singular
goal with a specific set of operations. PMI further defines project management as the
application of knowledge, skills, tools, and techniques to project activities to meet the project
requirements.

Whether the project is software development, or new product launch, or even a movie, its
management will progress through five life cycle phases.

Phases of Project Management Life cycle

Here are the five life cycle phases of project management:
1. Initiation Phase
This is the starting point of the project. The project gets conceptualized in this phase. In this
stage, the following steps are implemented:

 The project idea is either created or the client approaches the idea. The idea can be the
solution to an existing problem or a new opportunity in business (e.g., new
smartphone model launch)
 A business case document is created providing the solution to implement the idea
after the brainstorming sessions consisting of the team, client, and project managers.
 Project managers and concerned teams check the feasibility of implementing the
project in terms of profits, cost, timeline, resources, etc.
 Once the project has passed this feasibility test, it is proposed for approval from the
leadership team of the company/business unit.
 During approval, SOW for the project is signed, and the budget is allocated.

After the successful completion of the above steps, the project is moved to the planning
phase.

2. Planning Phase
This is the second phase of project management. During this phase, a detailed project plan is
created. This plan includes tasks, resources required, timelines, cost, etc. In addition, further
planning for prioritizing requirements is done. Gantt chart, which indicates timelines for the
various task, is one of the important documents created for planning. Different plans that are
created depending on the type of project are:

 Communication Plan: A good communication plan ensures the success of the

project. It determines how the information is to be shared amongst the various groups
involved (setting up the mail, Skype, creating a distribution list, etc.) The escalation
matrix is part of this plan that is used to escalate teams for issues.
  Resource Plan: It identifies resources required for project and consumption and
schedule to procure the resources. The mapping of human resources is outlined in this
plan.
 Quality Plan: The plan consists of a detailed description of quality standards
adopted, quality testing, and assurance used to maintain the standards.
 Deployment Plan: It includes the outline of deploying the project deliverables. The
approach towards deployment, the responsibility of team members during and after
the deployment, issue tracking, and support on project post completion of the project.

Post the completion of various plans; risk management is carried out depending on the
criticality of the project. Identifying the potential threats and analyzing the impact of such
threats occur from the part of this sub-phase. A risk management report is prepared with a
plan to mitigate future threats.

3. Execution Phase
Done with the project idea finalization and planning. Now it’s time to set to work. In this
phase, previous planning is put into action. This phase depends highly on planning. Better the
plan better will be the execution. Project managers follow the below steps in this process:

 Resource allocation and ensuring its timely delivery.

 Assigning the tasks to team members on a daily basis
 Taking daily meetings
 Creating a status report based on daily meetings and the progress of the project.

Here the entire team comes to the picture as it starts with actual work (e.g. development of
software, manufacturing). Daily targets are set; the team has to ensure to meet them; in case
of delay, they have to report to project managers.

4. Monitoring and Controlling Phase

This phase is merged with the execution phase because both occur at the same time. The
main objective here is to ensure that execution is carried out as per the plan. Timelines and
costs adhere. Below points are implemented during monitoring:

 Set the key performance indicators (KPI’s).

 Compare the progress plan or status report with the project plan to measure KPI’s.
 For any deviation from the project, reduce the deviation and redefine KPI’s.
 Update the plan for any changes to meet the deadline.
 Monitor budget utilization.
 Monitor the quality of the project.
5. Closure Phase
Now that project is completed, and it is time to deploy the project to the client or launch in
the market. This is where the collaborated efforts come to a fruitful end!! A deployment plan
created in the planning phase comes into action. The closure phase has:

 Releasing the deliverables(product/service) to the stakeholders.

 Communicating the closure to stakeholders and business partners.
 Signing off business documents.
 Releasing the team members and closing the contracts.
 Payment and documentation filing.
 Documenting lessons learned and best practices adopted during the project so that it
can be used for future reference for other projects.
 Setting up support and maintenance structure as per the requirement.

So above are the project life cycle phases. Although initiating a new project may seem a
gigantic task but by breaking it into phases ensures the achievable target. But these phases
aren’t mutually exclusive; they may overlap in practice. The execution and control phases
that we have seen above occur at the same time. Likewise, the same thing can happen in other
phases too.

What Is Project Selection?

Project selection is the process of evaluating and choosing projects that both align with an
organization’s objectives and maximize its performance.

Prioritization refers to ranking or scoring projects, based on certain criteria, to determine the
order of execution. However, the terms “prioritization” and “selection” are often used
interchangeably, as the two processes are intertwined.

Selection and prioritization are important elements of project portfolio management (PPM),
an approach that connects the execution of projects with high-level business strategy. As per
the 2017 PMI report, 37% of project failures are attributed to a lack of clearly defined
objectives and discipline when implementing strategy. This demonstrates how crucial the
PPM function is.

PPM implementation can be time consuming, which is why establishing a project

management office (PMO) that works on selection and prioritization can be extremely
beneficial.

Benefits of Project Selection and Prioritization

Project selection and prioritization are all about having a game plan that accounts for both
capacity and strategy. Let’s take a look at the benefits that companies stand to gain when
these are balanced right.
Better ROI: The fundamental outcome of any project selection process is to increase the
ROI. Several selection criteria and prioritization methods, discussed later in the article, can be
used to weigh projects against each other, based on their returns.

Increased efficiencies: By investing effort upfront to evaluate the project pool, companies
weed out inefficiencies that may creep up later due to not having enough capacity for
execution.

Strategic alignment: A project that does not cater to organizational goals, even if executed
flawlessly, is a waste of time. The right selection helps companies stay on track with their
goals.

Consistency and transparency: A standard selection approach helps the PMO benchmark
projects against well-defined criteria rather than use ad-hoc processes that lead to inconsistent
approvals. The upside of this consistent approach is transparent downstream communication,
as project managers get clarity on why a certain project was approved or rejected.

Shorter time-to-market: As companies become larger, they struggle to maintain an

aggressive time-to-market, with a sea of projects competing for attention. Prioritization of
projects gives companies the first-mover advantage, enabling them to reach customers before
competition.

Successful project delivery: When organizations have good project selection and
prioritization processes in place, it leads to the successful delivery of projects.

Project Selection Criteria for Portfolio Management

Ideally, deciding whether to go ahead with a project or not should be straightforward. But, in
reality, it’s not. The difficulty often lies in leaving projects off the table, and it takes strong
leaders with a clear vision to do that.

For example, if there are two projects—one that extends capacity or flexibility of a plant, and
another that improves efficiency and expected lifespan of that facility—which one do you
select?

The answer is not simple. It depends on which promises better ROI, the long-term goals for
the organization, etc. If there is an aim to expand the plant,, the former is a sensible option.
However, if the goal is to cut costs and increase longevity, the latter option may be preferred.

A few examples of project selection criteria are:

 What is the payback or break-even point?

 What is the impact to the organization’s growth (e.g., customer volumes)?
 Does the project contribute to innovation?
 How much risk is involved?
  Are there sufficient resources in terms of time, budget, infrastructure, and people with
relevant expertise?
 What is the cost/benefit ratio?

Defining selection criteria is an important function of project portfolio management that’s

done in collaboration with various stakeholders, such as customers, leadership team, and
project managers. Feedback from projects executed in the past is also useful to pick the right
criteria.

Project Prioritization/Selection Methods

Project prioritization is easier to manage with a small list of say, five projects. However, as
this number grows significantly, the complexity can be difficult to handle, requiring more
concrete methods.

Here are three useful methods for project prioritization:

1. Ranking Method

The ranking method is a simple approach that arranges the projects on a scale of, say, one to
ten, based on their importance. Before assigning the rank, it’s important to ask the right
questions.

Some ranking method example questions are:

 What is the project’s rate of return?

 What are the quantitative and qualitative benefits to the stakeholders?
 How do efficiencies improve if we go ahead with the project?
 Do we have the capacity and capability to execute the project? If not, how long would
it take onboard new resources?

The advantage of this method is its quick approach that enables identification of top
priorities. It works effectively when there are limited criteria to evaluate and it’s easy to
assess the factors involved.

However, since it considers only one or two selection criteria, it could work out to be too
simplistic for complex project evaluations. In such cases, the scoring model may be a better
fit.

2. Scoring Model

The scoring model works when there are many selection criteria to consider and projects
being compared are significantly different, making the process harder. Rather than selecting
one or two criteria as in the ranking method, the scoring model considers one or two groups
of factors, such as strategic alignment, benefits, ROI, risk, etc.
In addition to assigning a rating to each criterion, every group is given a weight. For example,
benefits may have a factor of 1.5, whereas risk may have 0.75. The weighted average score is
then computed to arrive at the final project score.

The challenge with the scoring model is that its attempt to accommodate a long catalog of
criteria not only makes it more work for the PMO team, but it can also blur scoring. Along
with that, the chance of biases and guesswork in the rating and weight criteria assignments
makes it debatable whether the final score aptly reflects the project’s priority. One way to
design the model is to test against existing projects and see how accurate the score is.

Usually, the PMO tends to take a middle ground by applying the scoring model on a shorter
list of weighted criteria.

3. Analytic Hierarchy Process (AHP) Technique

AHP combines subjective elements with mathematical models to provide a more holistic
technique than the ranking or scoring methods. Used commonly in many decision-making
scenarios, it lends particularly well to complex project evaluations.

Similar to the scoring model, AHP works with a long list of selection criteria. However, it
does a pairwise comparison, pitting every two criteria against each other, which reduces the
possibility of errors and biases. After this apples-to-apples type of comparison, values are
normalized, and the weighted score is computed. (For more details on this approach, review
this detailed example from PMI).

Analytic hierarchy process’ strong reliance on quantitative techniques is its strength, as it

translates an abstract problem into numbers and makes the reason behind a decision
transparent. As the number of criteria increase, the math can get clunky. But, this isn’t
something that the right PPM tool can’t solve.

AHP is definitely a more mature and recommended approach for complex decisions than the
other two methods—it aims to understand the relative importance between two criteria rather
than rank everything in absolute terms.

There is the possibility of guesswork in this technique, though. Factoring in multiple expert
opinions and testing against existing projects for accuracy helps improve the model.

Continuous Monitoring in Project Prioritization and Selection

Project prioritization is usually perceived as an initial step, a decision point that leads to the
actual execution of the project. However, many variables may impact the selection criteria as
the project progresses. Project prioritization should instead be an ongoing process where
project scores are reviewed and updated during project development and at designated stage
gates. As project definition increases, the scoring becomes more accurate and definite.
Even after a project has begun, a new industry regulation may impact resources, processes,
etc. All dynamic factors need to be continuously monitored by the PMO to re-prioritize as
needed.

Ultimately, the goal is to strike a balance between constant disruption in schedules and
adapting to stay aligned to the business objectives by having PPM tools and processes in
place to manage the project portfolio.
 UNIT-II

ESTIMATING TIME AND COST