How Does Project Portfolio Management (PPM) Deliver Value to the Business – An EPM Live Editorial

I’m not an IT person! My focus, over 5 decades of discovery and practice in the fields of Project & Portfolio Management, has been applied across every possible discipline where projects are expected to contribute to business success. And, yes, I did mean to use the plural in “fields” because Project Management (PM) and PPM are distinctly different. I’ll get to that in a moment.

But first, what has always troubled me, when I work with my IT clients, is the use of the term IT Spend. Sure, I realize that it’s just jargon for the budget for IT. But it leaves me with a negative connotation, and it’s misleading. No business (perhaps governments and charities excepted) is run with the purpose of spending money. The IT Spend, in reality, is an investment – aimed at directly or indirectly contributing to the firm’s bottom line.

If this is true, which I certainly hope, shouldn’t we be talking about the IT Investment? And in doing so, shouldn’t we be looking at IT projects not from a cost perspective, but from a benefits perspective?

Of course we should! Projects should be expected to deliver benefits to the firm and such projects should be scoped and managed with that in mind. But traditional PM doesn’t look at it that way. I know that, intimately, as I have practiced and written profusely, for 50 years, about the project Holy Grail. But this project Triple Constraint, of schedule, cost, and scope, does not address the wider consideration of benefits.

To my IT colleagues, let me pose a few questions. Are you frequently challenged to justify your IT Spend? How do you plead your case against other competing projects? What do you use to argue for limited funds and resources? Are your projects being selected on the basis of the power or politics of the project sponsor? Do “bad” projects find their way into the mix because risks are understated, or ignored? Are critical resources diverted to projects that will not contribute acceptable returns? What about projects that do not support published strategies and tactical initiatives? What is the impact when a project is abandoned in mid-stream (assuming that someone discovers the problems and actually does something about it)? Is money going down the drain? Are resources marginalized, frustrated, and not seeing the fruits of their labor?

This is not uniquely an IT issue. It’s universal – and the losses are astronomical. Unless the firm applies a structured PPM process, to build and manage portfolios of properly evaluated projects, there will be enormous waste of time, money and resources, often leading to business failure. Yes! It’s that important!

So just what is this magic solution – the one we call PPM?

Well, far from being snake oil, it’s actually just a set of simple and pragmatic practices – practices that build upon the PM core to assure that the firm is working on the right projects. This involves selection evaluation practices on the front end – to help build portfolios of projects most likely to deliver the greatest benefits to the firm. And it involves tracking and management practices to assure that the projects in the portfolio are meeting expectations – not only against the project success factors, but against the business success factors as well.

What are these Business Success Criteria?

We look for projects to meet certain standards in three areas. These are (1) alignment with the business strategies, (2) value – in terms of cost/benefits criteria, and considering risk as a modifier of benefits, and (3) effective utilization of resources. We evaluate proposed projects against these criteria. Those candidates that meet the minimum standards are passed through to the prioritization phase where their business case is further developed and evaluated and the project is ranked. Using software-based solutions, different scenarios (combinations of high-priority projects – proposed and current) are tested for maximizing potential benefits.

Managing the Portfolio

Of course, “potential benefits” do not guarantee business success. So the continual oversight of the projects in the portfolio is required – aided by PPM-oriented, robust tools. These tools best serve the PPM community when they cover the broadest range of PM and PPM needs – containing and processing all of the pertinent information regarding planned and actual data for time, cost, performance, issues, changes, etc. This data system should integrate all aspects of the project work and portfolio management, and serves the firm best when all work elements are factored in. The system should utilize the latest technology for communicating, in pragmatic and comprehensible ways, among a vast community of stakeholders.

The objectives: To facilitate the management of projects so that they fulfill their promises to meet project and business targets. Robust oversight, communicated to the proper individuals, in a timely manner, helps to right the ship in a storm. But more important, it helps to recognize when the ship is in danger of going down – when to terminate or salvage a foundering project. Because, in a healthy PPM environment, only projects that continue to support their promised benefits are allowed to sail onward (and have access to the limited cash and human resources).

Think about how this type of culture and capability will help projects contribute to business success. How valuable will it be to your firm?

* Author’s note: There was only enough space here to squeeze the essence out of the kernel of PPM knowledge. To delve further into the details of PPM and how it delivers business value, look for blogs and papers on the EPM Live website or watch their most recent webinar, “Realizing the Business Value of PPM.”

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Harvey A. Levine, with 50 years of service to the project management industry, is a pioneer in the field of Project Portfolio Management (PPM). Mr. Levine is the author of three books, and over 275 articles, whitepapers and videos on Project Management. His 2002 book, “Practical Project Management: Tips, Tactics, and Tools”, is still available from John Wiley & Sons. Mr. Levine’s 2005 book, “Project Portfolio Management, A Practical Guide to Selecting Projects, Managing Portfolios, and Maximizing Benefits”, Jossey-Bass, is a Wiley best-seller. Mr. Levine is past president and chair of the Project Management Institute (PMI®) and a PMI Fellow. For more information on Harvey please visithttp://theprojectknowledgegroup.sharepoint.com.