Portfolio Management: Project Portfolios
May 13, 2015 1 Comment
Projects are more like investments than any other asset class in that these provide anticipated returns. That is these are a forecast to future value. As such the projects are a more dynamic portfolio and thus require a more active curation.
Curation of a project portfolio demands balancing short term returns with long term objectives. Focusing on one attribute over the other becomes a recipe for disaster; either in the long term through the creation of enormous amounts of technical debt or short term through not creating value to sustain the corporation or business entity.
Curation is thus an exercise of management establishing multiple priorities classes and integrating these to create a consistent evaluation schema. Three areas of concern with most approaches are:
- Objective measurement of strategic alignment
- Measuring and mitigating technical dependency between components that projects interface with
- Portfolio Management of time horizon interconnected projects
If the Project Portfolio is managed as a zero based budgeting exercise there is a danger that the next project may not meet resource investment criteria in the next portfolio management action. As such interconnected projects should be justified at the Portfolio Investment Level and exist the portfolio management activities as an earmark for resources. How this manifests itself in lower levels of the portfolio management process is that resources needed for this activity are reserved and removed from the open queue.
Investment Class –type of activity (Innovation, Increasing existing performance, keeping current running)
Business Objectives –Business Strategies & Themes
Metric Alignment Strength – How strongly does the primary Portfolio Metric align to Business Strategy
- Rank priority of investment classes
- Rank Business Strategy Objective Priorities
- Identify the Primary Business Strategy the Portfolio Epic is associated with
- Identify Primary Portfolio Epic Primary Metric
- Rank alignment strength of Primary Metric
- Identify Portfolio Item Investment Class
- Identify Business Impact level (High to Low)
- These factors provide a quick proxy to Strategy Priority Alignment and Business Impact which is calculated in Business Priority Column(s): Index and Stack Ranking
- The Business Impact calculation can be used as a proxy for alignment throughout the portfolio hierarchy (Portfolio, Program, Program Increment, etc.)