Buildingthecapabilityforeffective PortfolioManagement

Author MelanieFranklin,ChiefExecutive, MavenTrainingLimited

Contents Overview................................................................................................................................3 Benefits..................................................................................................................................5 TheMavenapproach.............................................................................................................6 Conclusion............................................................................................................................12 CompanyOverview..............................................................................................................13

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 Portfoliomanagementisnotanewdisciplinebutinthecurrenteconomicclimateithasgreater resonancewithexecutiveteamswhoneedtomakesignificantbudgetcutswhilstatthesametime supportinginnovationanddevelopmentfortheorganisationtocontinuetoserviceexisting customersandfindnewones. Thedaytodayrunningoftheorganisationisknownandunderstood.Thecostsofpayingforstaff, buildings,equipmentandconsumablescanbebudgetedforandtheanticipatedrevenue,and whenitwillarrivecanbeplanned. Thechangesthatwemaketothisstructurethroughthedeliveryofprojectsandprogrammes createnewcosts,balancedagainsttheidentificationofpossiblenewrevenuestreams.Soitis fromprojectandchangemanagementactivitiesthatwehaveourdiscretionaryspendandthisis wherewemakethegreatestdifferencewhencuttingcostsintheshortterm.Weknowthat stoppingchangeisnotanoption;ourcompetitorswillcontinuetoinnovateandadapt,andour marketplacesandtheneedsofourcustomerswillcontinuetoevolve. Thepriorityofportfoliomanagementistofullyunderstandthisdiscretionaryspendandprioritise theinitiativessothattheygivethehighestpossiblereturnoninvestmentwithintheshortest possibletimeframe. Portfoliomanagementisthecoordinatedcollectionofstrategicprocessesanddecisionsthat togetherenablethemosteffectivebalanceoforganisationalchangeandbusinessasusual.
AdaptedfromanExecutiveGuidetoPortfolioManagementFirstEdition,CrownCopyright2010

Overview

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Portfoliomanagementrequires: Analysisofcurrentandplannedprojects,programmesandchangeinitiatives Prioritisationofinitiativesagainstpreagreedcriteria Deliveryofprojectsandprogrammesontimeandtobudget Effectiveimplementationofwhathasbeencreatedthroughasimple,wellunderstoodset ofstepsthatbecomeanautomaticreactiontochange Measurementofkeymetricstodemonstratethatbenefitsarebeingrealisedorproactively identifyingtheneedforcorrectiveaction Thetimeforviewingprojectdeliveryseparatefromimplementationofchangehaspassed.No organisationcanaffordtoinvestinprojectswithoutthecertaintythatwhatisdeliveredisneeded bythebusinessandwillbeusedbythebusinesstogeneraterevenueand/orreducecosts.

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Benefits

Thebenefitsofportfoliomanagementarederivedfromtheefficienciesofdoingtherightthingsat therighttime,targetingthelimitedresourcesatthoseinitiativesthatwilldeliverthegreatest businessbenefits. Whilstthebenefitsarerealisedbytheorganisationasawholeitisimportanttodefinebenefits thatwillberealisedbyindividualdepartmentsorteamswithintheorganisationasitistheywho willhavetoprovidealloftheinformationneededtocreatetheinitialportfolioand,inthelonger term,acceptthattheirautonomyindecisionmakinghasbeensupersededbytheultimate authorityofthosecontrollingtheportfolio.(Theseniormanagerswithauthorityfortheportfolio mightalwayshavehadtheultimatesaybutinourexperienceitismoreobviousunderportfolio management). Benefitsfortheorganisation Reductionincostsfromstoppingornotstartinginitiativesthatdonotcontributesufficient benefits Increaseinavailabilityofresourcestoundertakeprojectsandchangeinitiativesdeemed highpriority Increaseintheemphasisgiventorealisingbenefitsandthesubsequentincreaseintheir achievement Benefitsforindividualdepartments,divisionsorteams Fewerinitiativesmeanlessdisruptiontodaytodaybusinessactivity Fewerresourcesareinvolvedinpreparingforchange,withconsequentreducedpressure onallresourceswithinthedepartment Greatercoordinationofinitiativesbythosemanagingtheportfolioleadsto: o Areductioninthenumberofprojectsthatabsorbresourcesbutwhichare terminatedpriortodelivery o Areductioninprojectandchangeactivitythatisaduplicationofeffortorisrunning atcrosspurposes

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TheMavenapproach

Portfoliomanagementconsistsof: Portfoliodefinition Portfoliodelivery

Portfoliomanagement

Portfolioof prioritised initiatives

Methodologyfor deliveringprojects andimplementing change

Portfoliodefinitionisthecreationoftheportfoliowhichclarifiesalltheauthorisedinitiatives withintheorganisationanddrivestheinitiationofprojectsandtheplanningofchange managementactivities. Foreffectivedeliveryoftheportfoliotheorganisationneedsamethodologyorapproachforhow projectspecialistsmanageanddelivertheprojectscoupledwithanapproachforhowbusiness specialistsidentify,planandimplementthechangestotheirwaysofworkinginordertoembed thedeliverablesfromtheprojects. Inourexperiencemanyorganisationshaveawelldefinedapproachforprojectmanagementbutit stopsatthepointofdeliverywithlittleornoguidancetothebusinessonhowtoidentifythe changesthatarerequired,howtoplanfortheseandhowtoresourcethemappropriatelywhilst stillmaintainingbusinessasusual. Portfoliodefinition

Summariseall initiatives

Portfolioof prioritised initiatives

Categorisethe initiatives Prioritisethe initiatives Balancethe portfolio

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Summariseallinitiatives Thisisthecreationofasummaryofalloftheprojectsandchangeinitiativescurrentlytakingplace orplannedacrossthewholeorganisation.Therearemanysoftwarepackagesthatcancollatethis databutwebegintheassignmentbydesigningaspreadsheetofinformationthatfitsyour circumstancestogenerateanunderstandingofthescaleofworktakingplaceandthenumberof resourcesinvolvedinitsdelivery. Thisisanexampleofthebasicinformationrequired,althoughfurtherfieldscanbeadded dependingonthetypesofprojectsandchangeinitiatives:

Resources Initiative(projector changeactivity) ForecastStart Nov10 Jun10 Sep10 Dept/Office Category

Ref

Business Sponsor

Project Sponsor

Budget

Summaryofbenefits

0125 0541 0611

Salesdataconversion DisasterRecovery/BCP RetailOfficeRelocations

Strategy Maintain Business Expansion

Global London Retail

EmmaJones JackLord JeffCulver

Mark Allen Kate Lasse Sam Pinner

215,000 150,000 425,000

Rapidaccessto customerdata Regulatory 1styearrevenue 350,000

Thechallengeofportfoliodefinitionisthatitcannottakeplaceinavacuum,isolatedfromthe continuingcycleofprojectapprovals,projectdeliveriesandchangeactivities.Thecreationofthe initialportfoliowillneedtoidentifyallofthethingsthatthebusinessiscurrentlydoingorhas alreadyagreedtodo,withthestatusrecordedintheportfoliosubjecttochangeastimemoves on. Oncetheportfoliohasbeendefined,annualupdatescanbeundertakenaspartofthebusiness planningcycleoftheorganisationwhendepartmentsarebeingaskedtoreviewtheircurrent initiativesandidentifyanyotherplannedworkthattheycanforesee. Providinginformationforcreationoftheportfolioisoftengreetedwithsuspicionasthequestions thatneedtobeansweredcanappearonthesurfacelikeatimeandmotionstudy.Wehavefound thatitisimportanttobriefeachmanagerastowhomaninformationrequestwillbesent, preferablybymeetingfacetoface,anddescribingthebenefitsoftheportfoliointermsthatwill benefitspecificdepartmentsandnotjusttheorganisationasawhole.Wedevelop communicationsmaterials(presentations,newsitemsetc.)thatprovideexplanationand reassurancetoallmanagerswhoareaskedtocontributeinformationabouttheirinitiatives. Theinformationrequestsshouldbespecificandsimpletocomplete.Wehelpyoudecideonthe keymetricsthataretobegathered.Iffurtherinformationisrequireditcanbesourcedlater,once theportfoliohasbeencreatedandthevalueofitdemonstratedtothebusiness. Thekeyinformationthatshouldinitiallyberequested: Alistoftheprojectdeliverablessystems,processes,staffhires,newlocations,new equipment,neworchangedcontractswithsuppliersetc. Thenumberofresourcesinvolvedineachproject Theexpectedcostsforeachproject
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Thebenefitsexpectedfromeachinitiative,ideallyquantifiedinfinancialterms

Thevalueofthisinformationisthattheorganisationcandeveloponesinglevisionofallthe changesthataretakingplaceoftenresultingintheidentificationofduplicationofeffort, interdependenciesbetweendifferentpiecesofworkorthelikelyoverloadofvariouspartsofthe businesswherechangesfromdifferentprojectsareplannedtocomeintoeffectatthesametime. Categorisetheinitiatives Oncetheinitialidentificationofalltheinitiativeshastakenplace,itishelpfultocategorisethem sothatexpenditureandresourceusagecanbeidentifiedforeachtypeofinitiative.Categorisation alsosimplifiesreportsthataredrawnfromtheportfolio,increasingtheflowofrelevantand targetedinformationtoeachbusinessleader/departmentmanager. Inourexperiencethesinglemosteffectivecategorisationisachievedbyidentifyingeachinitiative as: 1. Maintenanceinitiative:alloftheprojectsthatmaintainthecurrentbusinessproducts, markets,customersorprocesses.Thesearenotinitiativesthataredeliveringlargescale changeandareoftendrivenbytheneedtofixaproblemorenhancesomethingthat alreadyexists 2. Strategicinitiative:thesearethepiecesofworkthat,whencompleted,willleadtothe achievementofoneormorestrategicobjectives.Forexampleifastrategicobjectiveisto growtheproductrangeofthecompany,projectstodevelopnewproductsoracquire companieswithcomplementaryproductrangeswillfallintothiscategory. Thereasonthatdivisionintothesetwocategoriesissopowerfulisthattheygiveanimmediate senseofhowmucheffortisbeingspentonincrementalchange(daytodayimprovements)rather thantransformationalchange(significantamendmenttohowbusinessisconducted). Ifthestrategicobjectivesofanorganisationareaboutthegrowthoftheproductrange,overseas expansionandincreaseinmarketsharethenaportfoliowhere80%oftheinitiativesare maintenanceisunlikelytoachieveitsgoals.Thismeansthatareprioritisationoftheprojectsis needediftheorganisationistorealiseitsstrategicambitions. Prioritisetheinitiatives Tobeabletoranktheinitiatives,seniormanagementmustagreewhatthecriteriaarefor identifyinganinitiativeasahighpriorityoralowpriority.Usuallythiswillrequirethecreationofa setofcriteriathatcanbeappliedequallyandconsistentlytoeachpieceofworksothatallworkis judgedonalikeforlikebasis. Someorganisationsconfuseprioritisationwithcategorisationinthattheyassignimportancebased onsizeofinitiativeorthedeliverablesitiscreating.Effectiveprioritisationisbasedonthelikely contributiontothegoalsoftheorganisation.Thesecriteriaaredefinedfromthestrategic objectivesoftheorganisationalongwithanagreementonhowthoseinitiativeswhichare essentialfixesorsolutionsshouldbeaddressed. Thiswillrequireinputfromseniormanagementwhowilldefinewhichobjectivesaremore importantthanothersandidentifythecriteriaagainstwhichcontributiontotheobjectiveswillbe defined.Forexample:
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 Strategic objective Growrevenue by10%inthe nextyear

Initiative No. 1

Initiative

Benefit

Importance 1

Opennewofficein Expectedrevenue AbuDhabi infirstyearof operationis 500,000(2%of annualrevenue) Opennewcall Expectedrevenue centrefortelesales infirstyearof operation operationis 250,000(1%of annualrevenue) Increasesales Expectedrevenue forcebyfive perannumonceall peopleovernext salespeoplehave twelvemonths beenhiredis 500,000(2%of anticipated revenue)

Oncethecriteriahavebeenestablishedtheyareappliedtoeachinitiativetodevisean importancescoreforeachinitiative.Theyarethenrankedinorderofimportance. Balancetheportfolio Oncetheprioritisationhasbeencompletedseniormanagementhaveasummarylistofall initiatives,fromthosethatareseenasthemostimportantandcontributingthemoststrategically tothosethatcontributeleast. Itisatthispointthatmanyofourclientsrebalancetheirportfoliotoreducethenumberof initiativesthatarecontributinglittletotheirstrategicobjectivesorthatarecostingsignificantly moretodelivertheirbenefitsthanotherinitiatives. Topreservetheintegrityoftheworkthathasbeendonetodateitisessentialthatfurther initiativesareonlyaddedtotheportfolioiftheymeettheprioritisationcriteriathathavealready beenapplied.Wehelporganisationstoclarifythesepointsandtoestablishabaselineofrequired benefitssothatwhenopportunitiesareidentifiedthosethatareunlikelytoachievethisminimum donotproceedthroughtothedetailedplanningstage.

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Methodologyfordeliveringprojectsandimplementingchange

Thisintegratedmodelshowshowthefourstepsoftheprojectlifecycle(Concept,Definition, ImplementationandHandoverandCloseout)areintegratedwiththeMavenFourStepModelfor effectiveimplementationofchange. Weknowfromworkingwiththousandsofprojectmanagersthattheirjobspecificationisto achievesuccessfuldeliveryofwhatevertheprojectisdevelopingensuringthatitisdeliveredon time,tobudget,andmeetsthequalitycriteriaofthecustomer.Howevermeetingthequality criteriaisverydifferentfromachievingsuccessfulimplementationofthesedeliverables. Implementationreliesonthesupportofthecustomersanduserstochangethewaythattheydo theirwork. Thisrequiresextraefforttolearnnewwaysofworkingcoupledwithawillingnesstotaketherisk thatastheylearntheywillmakemistakesandconsequentlybeseenaslessproductiveorless efficientduringthistransitionperiod.Thisisapsychologicalbarriertoachievingchangewhich requirespersuasion,motivationandsupport. Itisthosewhomanagetheareaofthebusinessbeingchangedthatarebestplacedtoprovidethis supportiveworkingenvironment.Whilsttheprojectisbeingplannedtheimpactofthechanges alsoneedstobeassessedandplannedfor.Changemanagementandprojectmanagementneedto betightlyalignedastheidentificationofwhatneedstochangecanimpactthescopeoftheproject andasthedetaileddeliverablesfromtheprojectbecomebetterunderstoodthe implementationofnewprocedures,systems,waysoforganisingstaffetc.becomebetter
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understood. Whilsttherewillalwaysbeatimelagbetweenprojectdeliveryandimplementationofchange, closealignmentofthesetwoactivitieswillminimisethislagandensurethatbenefitsaredelivered tothebusinessassoonaspossible.

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Conclusion

Portfoliomanagementisabusinessimperative.Itisthemechanismthroughwhichanorganisation canensurethattheprojectsandchangeinitiativesitundertakesarethosethatcollectivelymake thegreatestcontributiontostrategicobjectivesandtargets. Theskillsrequiredforeffectiveportfoliomanagementincorporatearangeofbusinessand commercialdisciplinesandunderstanding,includingprojectmanagementskillswithemphasison strongplanningabilityandexperienceofeffectingorganisationalchange. Totakethenecessarydecisiveactiontomaintaintheintegrityoftheportfolio,haltingorbarring anyactivitiesthatdonotmeettheentrycriteriarequiressignificantauthority.Thisauthoritymust beexercisedwiththesupportofallseniormanagersasdecisionsfromtheportfoliocross departments,productandserviceranges,andlocations. Effectiveportfoliomanagementistheproductofastructured,disciplinedapproachtochange withinanenvironmentofenergyandenthusiasmforinnovationandimprovement.

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CompanyOverview

Mavencanassistyoutoaddressprojectmanagementinthewidercontextoforganisational development.Wecannotfixallofyourproblemswearenot,anddonotclaimtobe,a managementconsultancy.Wearehoweverexpertsincapabilitybuildingandcanworkwithyouto alignprogramme,project,riskandchangemanagementwiththeorganisationyouwishto become.Wehavetheexpertiseandexperiencetodothealignmentforyoubutitisourethosto transfertheskillsintoourclientssotheybecomeselfsufficientgoingforward.Ourservicesare designedtotapintoinitiativesdesignatedastransformationalchangeprogrammes,talent managementstrategiesetc.inotherwords,totakeourservicesoutsideofthenarrower definitionsofprojectmanagementandoftraining. Weapplyastaged,structuredapproachtocapabilitybuildingbyaddressing: Thesituation:wegatherinformationontheobjectivesoftheorganisationandthegoalsandkey performanceindicatorsthatneedtobemet Thepeople:weusebestpracticecompetenceframeworkstoassesscurrentcapability Thestructure:weconductamaturityassessmenttodemonstratewheretheorganisationis currentlyinrelationtorunningitsprojectsand,equallyimportantly,howitcanprogresstothe nextlevelofmaturity Thediagrambelowillustratestheapproachinmoredetail: Datagathering Results ActionPlan Howdowemovefrom Situation Organisationalcontext: currenttofutureposition? Strategicobjectives Assessment Assumptions,risks,constraints 1.Summarisecurrentposition: Organisationalmaturity Staffcapability Peoplecontext: Sizeofgapwillinfluence People complexityofassignment Business&commercial Capability Context Assessment Techniques 2.Clarifydesiredfutureposition: Planningthestrategy Organisationalmaturity Executingthestrategy Staffcapability Organisationandgovernance 3.Explaintherelevant interventionforeachtheme: Structuralcontext: Workshops Managementcontrol TrainingCourses Maturity Benefitsmanagement AssuranceServices Assessment Financialmanagement MentoringandCoaching Stakeholdermanagement PerformanceSupport Riskmanagement CareerPaths Organizationalgovernance TalentManagement Resourcemanagement SuccessionPlanning ThisapproachhasbeensuccessfullyappliedwithourclientsandMavenwillbepleasedtodiscuss itsapplicabilitytoyourorganisationinmoredetail
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ForfurtherinformationaboutMavenTraininganditscapabilitybuildingservices pleasecontact: MelanieFranklin Telephone:02074037100 email:melanie.franklin@maventraining.co.ukoremail:info@maventraining.co.uk website:www.mavencapability.co.ukorwww.maventraining.co.uk