Organizations with sound project portfolio management frameworks in place have more than a competitive edge in their industries. These organizations consistently outperform others: Their projects are more successful, and their projects deliver higher value. Over time, these organizations benefit from a rich-get-richer dynamic.
Jamal Moustafaev, president and founder of Thinktank Consulting, breaks this dynamic down. In reviewing a study of 205 global organizations, Moustafaev demonstrates that companies with the best project outcomes overwhelmingly report having systems in place to:
- manage project portfolios,
- align resource allocation to company strategies,
- and prioritize projects.
In other words, they practice and adhere to the principles of PPM.
The problem with many lower-performing companies, however, isn’t that they lack a PPM framework (or elements of it, at least). It’s that they struggle to implement PPM in a way that’s truly beneficial to their organizations.
Here are five common ways PPM implementations fall apart, even within smart organizations.
1. They Try Implementing PPM by Decree
Project portfolio management is a philosophy, a paradigm, that asks organizations to think differently about the projects they undertake. For most organizations, adopting the mindset and understanding that projects represent a portfolio of investments is a big mental leap to make.
And because each organization has its own strategy, its own structure, its own collection of people and resources, and its own industry-specific challenges, each implementation of PPM will be unique.
“Organizations in different industries conduct different kinds of projects that create value in different ways,” says consultant Dr. Lee Merkhofer. “Also, an organization that conducts hundreds of projects each year has different needs than one that conducts a half dozen. A decentralized organization requires a different structure for decision support than one where decisions are centralized.
“A key function of PPM is to measure and account for risk, but the nature and magnitude of the relevant risks differ greatly, as does the willingness and ability of organizations to accept risk.”
As such, an organization cannot decide to simply start doing PPM one day. Executives have to understand its mechanisms then build a vision for how it will fit in with their organizations. Otherwise, misalignment begins to trickle down into every project and task undertaken.
2. They Don’t Know Their Own Capacities For Implementing PPM
This is a corollary to Dr. Merkhofer’s argument that PPM isn’t a “one-size-fits-all” solution, in which he points out that each organization has its own level of project-management maturity to consider.
This accounts for the organization’s own ability to identify the scope of a project, to create an estimate for time and budget, and to manage the project to completion, Moustafaev writes in his article about successful PPM implementation.
But capacity auditing isn’t through at this stage. Next, Moustafaev says an organization must understand its “throughput capacity,” or how many projects it can handle given the resources available.
Those calculations are more difficult than they might seem at first glance. “Resources available” can refer to:
- financial capital available to finance a project,
- physical assets (for which different project teams must contend, something to take into account when prioritizing),
- and human resources (which, at the project level, Moustafaev points out is important to measure not simply in terms of the number of people available, but in terms of how many hours of each person’s time will be necessary, and at what cost).
It’s important for company executives and upper management to have a firm understanding of this throughput capacity because there are so many moving pieces, each of which has a ripple effect on other projects within the portfolio.
That’s why having an executive-level understanding of capacity is so important. “Effective portfolio management requires a careful alignment of strategic goals, funding sources and well-managed projects,” writes Angela Bunner, director of product strategy and sales engineering at Clarizen.
“Companies must ensure that adequate money is available for their important initiatives, but they also must be able to identify projects and programs that are losing money or are failing to deliver the expected benefit.”
Unfortunately, executive-level understanding and buy-in come with challenges of their own.
3. They Experience Ambiguity From the Executive Team
For a company-wide implementation, you must have clear support from your CEO, other top executives and managers down the chain of command.
But even at the level of individual business units, Cirrus Networks’ Rick Ktorides writes, you might find some resistance because their directors might perceive PPM as a threat to the way they run things.
Here are some of those potential objections, in Ktorides’ words:
- “Improved resource utilization means we will now have to compete for resources to get the job done; my budget may be cut and there may even be potential job losses.”
- “Time and effort to learn something new.”
- “Having to deal with all the complexities and issues of instituting new processes.”
- “Extra ongoing work to input quality data into the system for resources that are already stretched.”
This is one reason why unambiguous top-level support for PPM is necessary.
On top of that, PPM creates frameworks in which executive consensus is necessary to prioritize and approve projects. “Because PPM involves instituting a strategic, value-focused, decision-making perspective throughout the organization, it must start at the top in order to successfully spread below,” Dr. Merkhofer writes. “Ideally, the CEO, president, or CFO should be your main champion.”
4. They Lack a Clear Framework For Evaluating PPM Software
Each organization has its own business needs, so just as there is no universally applicable PPM framework, there is no universally applicable tool for every company. You must align the software’s capabilities with your own business needs.
Hewlett Packard Enterprise has an excellent white paper on four common starting points for organizations looking to implement PPM, and understanding where your own organization falls on this list will go a long way toward helping you select the right software for your company.
Those starting points reflect unique business challenges:
- Your organization needs to understand the demand being placed on it by its various projects.
- Your organization has trouble visualizing the big-picture business value of your project portfolio.
- Your organization struggles to execute projects or identify points of failure in a given project.
- Your organization struggles to manage its resources, which makes project prioritization especially difficult.
So, first you must fully assess your need for PPM and your capacity to implement it. From there, it’s a matter of understanding what processes are in place and which need to be built out. Only then can you begin to identify which enterprise software options make the most sense for your organization.
If you focus on the software first, you let the tail wag the dog and risk having your entire PPM rollout fail. “This is surprisingly common today,” entrepreneur Niladri Choudhuri writes. “This is because only after the software is acquired and finances are burned out that projects start crumbling and you realize that you did it wrong in the beginning.
“The software will only do its job when everything else is in place. When you have all your process[es] in place you can go ahead with software implementation without concerns.”
5. They Leave No Room For Decision-Making Outside of the PPM Framework
PPM, however, mustn’t usurp the power of executives to make decisions — even if those decisions seem to color outside the lines a little bit. That’s why organizations hire people to make decisions, after all, and not leave everything to process.
Or, as PM consultant Giana Rosetti puts it: “Remember who the boss is.”
“There will come times when the business intuition and market instinct of the CEO and the top tier executives will seemingly compromise the portfolio management process and available metrics,” she writes. “Hence, there always needs to be a certain degree of flexibility and understanding that no matter how regimented the process is made to be, certain data points and judgments might very well fall outside of the process to no discredit of all those involved.”
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