Are you affected by perpetual projects? You know…projects that never end…yet continue to consume resources? How about projects that ever get off the ground? Do you have a backlog of projects? Are there never enough resources available to get everything accomplished?
There is a solution. The answer…manage your project portfolio.
What is a project portfolio?
We all have financial portfolios at some level. You may own real estate, automobiles, and/or other tangible assets. You may have a 401k and or IRAs where your hard earned money is invested in stock, bonds, mutual funds. You may own stock in a company, have cash savings, and the list goes on. This combination of investments and assets is your financial portfolio.
You (and possibly a financial advisor) manage your portfolio of investments. To determine what to personally invest in, your goals, risk tolerance, current and potential future earning potential and accumulation of financial assets are considered, and decisions are made, based on those factors to direct your financial portfolio.
Investments usually serve us for a period of time. We hope to obtain our desired outcome from them. We want a different outcome or result in our lives, or receive more money, than our initial investment.
No one wants to lose hard earned money in an investment.
Most of us would never jump into buying a home without knowing the market, knowing what features we want, choosing locations we desire; ensuring that house will deliver on our needs. While providing shelter and security for your family now, a smart investment will likely assure your home value will increase over time. You may invest in an improvement project to further increase your home value for your family while you are living there, and for future return on investment.
Any project is an investment, and projects consume resources to produce a desired outcome. Therefore, choose your projects wisely – like you would in buying a home.
How does your organization determine what projects to run?
- Are they brainstormed by the leadership team annually during budget season?
- Are there “pet” projects – someone’s great unproven idea?
- Regulatory or Customer Mandates?
- Issues creating enough pain in the organization that the first solution suggested becomes a project?
- Do you need new equipment or systems? You may not – and won’t know – unless you perform adequate process analysis – another important subject not to be addressed here. Visit www.3DValueGroup.com for information and case studies.
Capital expenditure projects get attention because they hit the P&L directly and a financial (accounting) governance process (although weak compared to what is presented here) exists in every organization. But, if projects are investments, then shouldn’t we care about all investments? Big and Small? Capital expenditures or not? Don’t we want a great return on all of our investments?
3 Steps to assure great Return on Investment – Implement Project Portfolio Management (PPM)
We use significant resources on projects – one time efforts that typically take time from other operational needs. How do we best use those resources wisely?
- A proven way to identify low effort / high positive impact projects is to value stream map your business. A professional value stream map utilizes real data to uncover hidden, holistic opportunities in your business such as
- Inefficiency (productivity, getting it right the first time)
- Ineffectiveness (improve on-time, reduce errors, improve quality) as well as compliance, employee and customer satisfaction issues.
- Regulatory changes are often considered mandatory by a business. With strong process and business acumen, you can choose not to comply or prioritize is the risk is low and the cost high.
- Develop the governance structure and selection criteria to prioritize and resource the project portfolio.
- Governance is best owned by the executive team and drives accountability across the enterprise to choose the best utilization of resources.
- Everyone understands the basic process to submit a project idea and have it vetted.
- No one circumvents this process.
- Selection includes consideration of organizational risk tolerance, alignment with strategic direction, cost savings, revenue generation, and any other factors important to your business and is evaluated for every project.
- Developing a business case format that fits your business needs and culture is paramount for creating a baseline and defining intended outcomes for a project.
- The level of effort (amount of resource: time, money, assets, talent) vs benefit (improved performance / sales, regulatory compliance, etc.) needs serious consideration.
- Launch projects in order of priority and based on available resources.
The Benefits of Project Portfolio Management
- The most necessary / impactful projects given priority with unnecessary / unproven projects rejected
- Resources appropriately identified and planned for each project
- Some organizations learn that their current resource models stifle project completion
- Acceleration of project completion and results
- This will increase in number of projects completed annually
- Team satisfaction improves with willingness and buy-in as wins are made
- Visible, well thought out and fully supported efforts goes a long way in boosting morale.
In tandem with Project Portfolio Management it is imperative to develop sound project management practices to see projects through to completion (yet another subject to be addressed in our next post).
PPM drives accountability starting with leadership to select the right things to work on at the right time with the right resources.
With a track records of implementing PPM in many organizations all benefits listed above have been realized. The practice becomes easily adopted when folks know leadership has done their due diligence, know their time and other resources are meaningfully applied, and that there is completion and tangible results every time!