- Make strategic planning a continuous and dynamic process
- Appoint and assign a sponsor responsible for every business objective
- Provide mentoring and coaching to sponsors, in addition to some portfolio and project management training
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- Does the portfolio reflect and support the organization's business strategy?
- Is every project clearly aligned with the organization's strategic goals and objectives?
- Does resource and investment allocation reflect strategic priorities and consider objective criteria?
- Is the economic value of the organization's portfolio greater than the investment made?
- Are projects efficient in terms of scope, time and cost?
- Are the portfolio's indicators meeting stakeholders' expectations, especially regarding value and benefits?
- Define all your projects and proposals.
- Identify your resources and categorize them.
- Figure out your decision-making structure regarding selection and prioritization, and map it using a spreadsheet or enterprise project management software.
- Percentage of projects aligned with strategic objectives
- Investment targets met
- Percentage of facilities and personnel used
- Percentage of financial resource utilization
- Business value realized
- Percentage of customer/stakeholder satisfaction
- Total variances to budget and schedule
Although the film industry is a particularly challenging and unpredictable way to attain success, the process of making the film provides a lesson project professionals in any industry can learn from.
Creating this film was like any project -- it faced unique challenges. To start, the Taiwanese box office is small, and the director, Wei Te-Sheng, needed financing for the film. But how could he find sponsors when he was a "no-name" director with a low budget?
The answer was obvious: Make a simple, yet successful film to create a good reputation and attract investment.
To fulfil this goal, Mr. Te-Sheng directed "Cape No. 7" in 2008. It generated box office returns of more than NT$500 million (US$16,900,249) and won multiple awards. He was now in a position to begin producing his historical epic film. Financing opportunities came easily, and the end product was an film worthy of a submission for nomination to the Academy Awards.
Mr. Te-Sheng's progress should be recognizable to any business strategist as adhering to the principles of program management. The goal of Mr. Te-Sheng's program was to make "Seediq Bale," but he had to complete smaller projects to achieve it:
- Come up with a plan or project that generates a desired benefit.
- Ensure the benefit can be realized with little compromise.
- Balance benefit-received and cost-paid, or the outcome may be compromised.
- Consistently aim for your goal.
This example reveals a lesson in terms of organizational strategy: Always remember to ensure the benefits of programs and projects align with the company's ultimate objective. Don't be distracted.
Have you ever completed smaller projects to prove to sponsors you could make a bigger project work?
Portfolio management can help senior managers check how their products or services are performing -- and maximize benefits and opportunities to plan for next year.
PMI's Standard for Portfolio Management -- Second Edition defines a portfolio as "a collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives."
And "portfolio management is the coordinated management of portfolio components to achieve specific organizational objectives." When we use a portfolio approach, senior managers coordinate how projects and programs are managed and gain deeper understanding of what they mean to the organization.
Where I have worked, a portfolio is organized as a collection of business operations that share the same purpose. Portfolio management serves as our business map, where different business packages are laid out according to risk, profit and time.
In companies, portfolio managers address products or services according to risk and profit factors. Products or services are divided into four types:
· High-risk high-profit
· Low-risk high-profit
· High-risk low-profit
· Low-risk low-profit
Taking their payback period into consideration, benefits can be maximized by reasonably allocating resources and financial investment for each of the four types of products/business.
For example, products that are "high-risk high-profit" require time to generate high revenue.
As for businesses or products that are already generating long-term and stable profits -- those in the "low-risk low-profit" category or basic business -- careful resource allocation should lead to eventual increased revenue.
"High-risk low-profit" products should also be given appropriate resources, as long as they bring in certain benefits, such as expanding or maintaining market share, and keeping up with potential competitors.
Take computer manufacturer Acer, for example. In the past, Acer has made large profits on PC products of the "low-risk high-profit" variety. By 2008, Acer was about to surpass its main (and only) competitor, Hewlett Packard, as the world's biggest PC manufacturer. But an unexpected competitor arose: Apple.
Acer's long-term reliance on this "low-risk high-profit" strategy meant that innovative "high-risk high-profit" or "high-risk low-profit" technology products, such as those that Apple makes, were ignored. Apple topped Acer because Acer failed to plan a complete business map. It didn't manage the risks arising from a "low-risk high-profit" strategy. Acer was only focused on pursuing market share by making and selling cheap PC products.
Even when your current business is generating high revenues, you should never ignore business plans and products that are still under development. You should always allocate reasonable resources to these business elements, and never solely depend on your successful products or services.
When planning your company's products or services for the upcoming year, be sure to check if your strategic plan is well balanced. Make sure no element of your business is over-exploited and no element is ignored -- no matter how little profit it currently generates.
What do I mean by synergy? Cross-related projects benefit from efficiency and control when activities are combined rather than performed separately. The exposition is a good example of the kind of synergy that program management should bring -- an example worth considering if you want to manage projects effectively within a program.
The event had an organizing committee, which was set up like a program management office (PMO). Endorsement from the International Association of Horticultural Producers (IAHP) gave the organizing committee the freedom and authority to be effective. IAHP provided the committee with clear objectives, which allowed committee leaders to establish concrete goals for meeting stakeholder expectations.
The exposition involved 377 projects and more than 23,000 participants. With so many stakeholders involved -- all of whom were eager to stage events, exhibitions, shows and displays -- the event's success required all of their coordination and cooperation.
All of these stakeholders' concerns needed to be understood and met. This was only possible through the organizing committee, which worked closely with local tourism and cultural bureaus, as well as the government. The committee had to negotiate, mediate and monitor the projects, and assist the stakeholders to achieve their own benefits, so as to maximize the synergy effect.
But it is not just strong, centralized management that ensures a program's success. The program manger must also correctly identify clear objectives around which individual projects are organized.
As exemplified with IAHP and the committee, objectives of a program can only be defined from top to bottom, which requires a higher level of governance. Once the objectives of a program are set up, every project under the program shall be carried out in accordance with the objectives to ensure alignment between the execution and objectives.
What do you think? Does centralized management ensure a program's success?
Some organizations think cost-down should be included as a part of portfolio management, while others regard it as just another part of project management. The answer depends on whether cost-down is executed to help realize the organization's objectives.
For example, let's take a look at Foxconn Technology Group, a manufacturing giant in Taiwan that manufactures several Apple products.
During the bidding process to manufacture the iPad, for example, Foxconn provides a quote to Apple that Foxconn's competitors are unable to match or undercut. Foxconn evaluates different efficiency plans in an effort to cut the price of iPad production as much as possible.
The design and specifications of the iPad are fixed. Choice of materials and manufacturing methods, however, can be managed in the way that Foxconn feels is most efficient. Foxconn can research less costly materials, more efficient production methods, and new vendors for less expensive services or components. Foxconn will also look to vertically acquire its competitors or vendors.
All of these factors allow Foxconn to calculate from quotes how it must manage production so that manufacturing matches the quote. This is Foxconn's organizational strategy: offering the lowest price to its buyer and attaining the most competitive cost.
This example shows how a cost-down activity meets the organization's business strategy of offering the lowest price. In this situation, the cost-down activity is absolutely part of portfolio management.
Projects, programs and portfolios are all about executive power. The appropriate use of a project, program or portfolio depends on its function. When a project, operation or task can be performed to further the organization's business strategy, it should definitely be regarded as a part of portfolio management, and not a part of project management.
Does your organization treat cost-down activity as a portfolio management activity?
In the 2006 version of the James Bond film, "Casino Royale," for example, the character named M is responsible for managing military intelligence projects and programs. She has to make the best use of the resources under her governance, whether they are programs or projects. When one of her projects is out of control, she corrects the deviation by removing resources and support -- in this case, from Mr. Bond's personal revenge-oriented task -- because it may not align with the organizational objective.
In the meantime, she also has to define what each operation or action should achieve and in what way. Should it be an interception done secretly by the SWAT (special weapons and tactics) teams or a detainment in a sumptuous gambling casino? It all depends on what effects an action aims to achieve and at what costs.
The basis of portfolio management lies in its top-down logic. Depending on what objective you want to reach, you combine the resources and organize the projects and programs to move toward that direction.
When it comes to personal investments, people often combine different products and methods to gain the maximum benefit based on the risks and available financial resources.
Similarly, project portfolio managers consider the resources that should be allocated to projects and programs based on what risks and benefits they can generate for an organization.
Programs and projects sharing similar risks or benefits may be put together for better management. The grouping facilitates decisions on further investments and resource allocation, as well as adjustments amid changing market conditions and organizational strategic plans.
By following effective project portfolio management processes, you can put together a business operation that makes your investment objectives more achievable. Just like M -- but leave the SWAT team at home.
Like the 2008 Beijing Olympics, the expo is a collection of projects whose collective purpose benefited the nation and fulfilled the government's strategic objectives.
The expo and the Olympics were part of a national portfolio aimed at achieving countrywide political objectives for boosting the economy. Both were planned and executed with the intent to cultivate high-tech skills and knowledge aimed at ensuring growth and competitiveness in the future.
For example, the Chinese government required every contractor carrying out individual projects to employ Chinese workers, including certified project managers. This has ensured that enough skilled workers necessary for national development have been trained.
By the end of 2009, the number of PMI certified project managers in China was 29,414 -- the second-largest number in the world.
The physical legacy these programs left is also notable.
Unlike games or exhibitions hosted by developed countries, both the expo and the Olympics were accompanied by massive infrastructure developments -- and not just the renovation or improvement of existing facilities. The Shanghai Expo re-developed areas in decline, and brought infrastructure and facilities to previously undeveloped areas.
Apart from the huge venues, China built airports, restaurants, hotels and 11 high-speed railways. Development plans also incorporated expanding and improving the service industry of Shanghai.
These projects, combined with the outcome of other national programs and projects, help advance the government's goal of growing and developing the national economy.
"Projects produce deliverables; programs output benefits so as to sustain, advance or achieve organizational objectives; while portfolios ensure the alignment of the diverse objectives and independence of programs and projects to organizational strategic objectives," according to page six of The Standard for Portfolio Management.
And that's exactly what the Shanghai Expo 2010 did.