common pitfalls in portfolia management

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Common Pitfalls in Project Portfolio Management

by Scot Hanley

2 ©2016 WGroup. ThinkWGroup.com

One in six projects is a ‘black swan’, or a project that goes so badly it threatens

corporate financial stability. Now more than ever, companies must critically examine

their Project Portfolio Management processes for optimizing success.

Organizations are continually asked to do more with less. The temptation to short cut project

governance processes that are perceived as unneeded or a waste of time increases with

every additional project added to the company’s workload. Ironically, it is usually short cutting

the process that leads to manifested risks, increased costs, and additional workload.

Typically it is our experience that the problem is not the governance

process itself. It’s the perception that the process is too complex or too time

consuming. Unfortunately this leads to common pitfalls that are not accounted

for as the corporate governance system is designed or modified.

How can companies ensure

that their project portfolio

management (PPM) system

is used effectively and reaps

the expected benefits? To

explore this, let’s examine

the major components of

an effective PPM system:

corporate project and

program governance; project

analytics; and corporate

strategy and culture.

We’ll look at the problems

typically encountered and

make recommendations

that could prevent or

solve these problems.

Introduction

Elements of PPM

FORM

ALIZ

ATIO

N

Project Analytics

& Selection Criteria

2

3

1

Corporate Strategy & Culture

Project Governance

Project Portfolio(s)

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Demand management can result from numerous

sources, including corporate strategy (transformed

into objectives and projects), balancing or aligning

the current portfolio of projects as a result of

change or new directives,

and the “raw demand” of

needs that result from daily

operations and often take

the form of ad-hoc requests

from individual contributors,

teams, and others.

1. Corporate project and program governance

Developing governance bodies asynchronously

Organizations will often take the “crawl before you run” approach to project

governance for reasons that make sense during the period of transition to a new

method of governance but many times lead to a number of problems later on.

Common pitfalls

Governance bodies should be set in tandem at the division and corporate levels. Launching

a corporate-level body without a corresponding division-level body will result in a lack

of confidence by division-level managers and below in the corporate-level body. Doubts

will arise that the group has all the information it needs to make educated decisions

in forming and adjusting the project portfolio while accounting for stakeholder needs.

Similarly, corporate-level management will often doubt decision making at the division

level. As division-level management feels the pressure to deliver “everything,” corporate-

level management will begin to question priorities and financial decisions as the portfolio is

filled to capacity (and beyond) due to the division level manager’s fear of saying “no.”

• Raw demand for project resources

• Program formalization

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Failing to fully leverage project analytics and establish formal decision-making criteria

While there are hundreds of portfolio

management tools on the market today, all of

them are useless in performing project portfolio

analytics without guidance from governance

bodies. The two must go hand in hand.

We often see decision-making criteria that are

not aligned with corporate strategy. This leads to

a disjointed, complex, and (sometimes) agenda-driven approach that may benefit certain divisions,

while not necessarily delivering on corporate strategy. Decision-making criteria should be aligned

with corporate strategy goals, documented, and reviewed regularly with governance teams.

Many governance bodies do not plan for their own decision-making process, seemingly expecting

executives and directors (who have their own agendas and objectives) to make collaborative

decisions in a fact-based and objective manner. Failure to achieve governance level goals

often happens because new behaviors were not defined or planned for. Additionally, decision-

making criteria are often focused solely on demand intake, and not portfolio balancing.

Corporations that are mature in portfolio decision-making will have often adopted decision-making

tools (Expert Choice, etc.) to assist in the process. Many have even established strategy-aligned

attributes or questionnaires for evaluation in project charters, SOWs, or other project artifacts to

streamline the evaluation and portfolio balancing process through the formal governance channel.

In addition to supporting demand intake, PPM analytics should be provided (no matter the

maturity level of the tool or process) to include, at a minimum, some level of understanding

of impact to the current portfolio of projects. We often hear clients make statements such as

“we’re not good at forecasting” or “we are immature at capacity planning,” yet they conduct

these activities informally each day. We have seen clients successfully use spreadsheets at

the initiation of project portfolio management to gauge staffing bottlenecks. Using common

sense and basic understanding of the resources available, they begin changing behaviors

and focus on a more objective and fact-based approach that aligns with corporate strategy. By

doing so, clients are far more successful in growing into enterprise-level project portfolio tools

because the decision-making criteria and decision-making process have been established.

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Failing to formalize the governance process

Formalization means a number of things when it comes to project portfolio management.

Chief among them is the need to clearly identify from the top down all project governance

objectives, procedures and desired outcomes. We sometimes see clients attempt to

launch project governance bodies in a bottom up manner or with little support from the C-

Suite. Simply put, organizations that sidestep this critical item are doomed to fail.

Governance comes with a significant set of changes related to people, process, and

technology (PPM tools, Help Desk tools, etc.). Without a plan to understand current

behaviors and required future behaviors, and without consistent, visible support from

senior management, the probability of success in this endeavor will be very low.

Plan to have as a major sponsor for your initiative a significant C-Level influencer who is visible at

all corporate-level governance meetings and appears at division-level meetings from time to time.

Additionally, have a plan to reinforce new decision-making behaviors that will initially challenge

the organization. Formalization will lead to documented staffing plans, business cases, and

dependency mapping across projects; change management addendums; and more. All of these

may be new to the organization, but they are required to perform adequate, fact-based PPM.

Companies that are mature in formalizing the PPM

governance process typically employ business-

relationship management to ensure a focus on IT-business

alignment. By working with a focus on each corporate

line of business from a centralized unit, demand can

be reviewed in one “source of the truth” (typically a

combination of request management and PPM tools) to

gain further efficiencies in the governance process.

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2. Project portfolio analyticsProject portfolio analytics are the tools, algorithms, and

heuristics necessary to evaluate project-related data for

use in PPM decision-making. This data includes elements

of resource capacity, ROI, portfolio impact, value, risk,

and other elements important to the organization.

In numerous instances we have seen organizations

fall into one of the following traps.

Common pitfalls

Purchasing and implementing a PPM tool before the process is defined and accepted

PPM tools (Planview, Clarity, etc.) are expensive

and, in most instances, should be purchased after

the company has accepted the PPM function.

Poor expectation setting

Not every PPM tool is capable of

performing all analytical needs. Some

of the most well-known PPM tools don’t

even include the most basic algorithms

to conduct “what if” analysis for use in understanding impact to the current project portfolio.

The Gartner “golden quadrant” tools do not have all the capabilities many PPM functions need.

Make sure to complete a thorough tool evaluation that’s based on clear requirements.

• ROI• Portfolio impact• Value• Capacity• Risk• Demand

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Underleveraged

We’d like to see PPM tools used for more than time tracking against projects, but they are

often underleveraged for only this use. PPM tools are fully leveraged when governance teams

require PPM analytics for decision making; resource managers are using the tool proactively

as a means to better manage their resources; and team members are seeing the value, often

when decisions that impact them can be sourced

from the PPM tool and improve their work-life balance

and make a positive impact on the company.

The previous two pitfalls can become root causes

for underleveraged PPM tools. When PPM Tools are

purchased and implemented before the process is

defined and accepted, this opens the door for the tool

to become an unneeded expense if the function is not

adopted. Similarly, when incorrect expectations are set

for the tool and not reached, staff will reject its use.

Poor integration with the corporate finance function

PPM tools traditionally integrate with financial systems and/or act as a repository

for project and program financials. From time to time, we see PMO’s that fail

to plan to integrate with the finance organization as a key stakeholder.

This will more often than not lead to a disgruntled and powerful stakeholder who

also is an influencer in supporting new functions. When you consider that project

scope often changes (along with project financials), having a strong influencer from

finance will be critical in creating a smooth change-management process.

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3. Corporate strategy and cultureThe processes that drive the direction of the

company and identify markets/businesses in

which the company competes are the linchpin to

successful PPM and project success rates.

While we have touched on aligning decision-making criteria and creating a level of formalization,

it should be clear that the ability to align with a strategy is dependent upon the clarity of the

corporate strategy. Its corresponding objectives must be formally defined and measured.

For organizations that have full-time corporate strategists and may be advanced to a level

of strategy management, such as balanced scorecard or others, a key factor in successful

PPM is in place. For organizations that are informally managing strategy, we recommend you

take steps to formalize the process before getting too far down the path on PPM. A formal

strategy-management process drives the organization to provide clarity and prioritization

of corporate- and division-level objectives that are already aligned to the strategy.

Common pitfalls

“Very few organizations (9%) rate themselves as excellent on successfully executing initiatives to deliver strategic results. Consequently, only 56% of strategic initiatives meet their original goals and business intent.”

– Pulse 2014

Many times with the bottom-up

approach to PPM, clients attempt to

build strategy as a part of the PPM/

governance function. This can

work for some organizations, but

can also lead to confusion and

frustration because projects that turn

out to be out of strategic alignment

have already left the station.

• Alignment• Demand

management• Risk management• Change

management• Decision criteria

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Confusing project-selection criteria with product-selection criteria

We sometimes see project governance teams filling the gap for product assessment. Projects

to implement products should be initiated after the product assessment is completed.

Lumping project prioritization in with project sequencing

Project prioritization is the act of weighing one project against decision criteria and other projects to

determine their level of priority for execution. Project sequencing is the process of determining the

optimal fit for the project in the current portfolio.

In other words, just because the project is priority

one does not necessarily mean it gets done first

when there are other projects in the portfolio.

Unintended consequences may occur if the opposite

is true, including increased costs and potential staffing

issues. A portfolio impact assessment should be

completed in advance to guide executive decision-

making regarding the sequence of the project.

Failing to evaluate strategic risk

In many instances, obvious elements such as demand management and capacity come

into play in the management of project risks, but strategic risk is often over looked.

Strategic risk can take the form of brand tarnishing, negative impact to core products

and services, or loss of market share. Considering the number of “black swan” projects,

strategic risk should be a significant element in management of the project portfolio.

There are several other common pitfalls:

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No formalized plan to manage culture and behaviors

Technology and process don’t solve project failures. People do. Some clients step

their toes into the water as a substitute for a concrete plan to change behaviors in the

organization. We advise our clients to recognize that their people are being reinforced a

certain way (either purposely or accidentally) to perform the “current state” of their job.

Performance expectations are commonly missed when PPM is introduced into the

organization because it is seen as somebody else’s job. The fallacy of this view is seen in

the fact that project work is people work. The staff members have a stake in the project’s

outcomes and commonly work in a matrixed environment across different departments.

Therefore, PPM is everybody’s job. Yet it is easy to see how many would want to pass

PPM over the fence as it involves complex and mature practices (demand management,

resource management, etc.) and requires staff to adopt new skills and types of work.

Failing to plan to change behaviors guarantees at minimum a difficult

transition and at most failure to adopt PPM long term.

Failing to “chunk” the project work

Whether it be the use of Scrum or Waterfall, breaking projects down into manageable

chunks has been proven to increase project success rates, but it is a challenge for many

clients. Behaviors have been ingrained in executives over the years to be “pleasers”

and that often results in the executive sponsor reporting out a project finish date before

a project assessment has even been completed. Consider a whole portfolio of projects

with end dates established in this manner and you have a very inaccurate portfolio.

Conditioning away from this behavior to a set of deliberate

PPM steps, to include finish date estimates on phases of the

project work is difficult and should be considered a strategic

activity for the organization. Why? Companies that improve

project delivery (or better yet, project productivity) create a

sustainable competitive advantage over companies that do not.

Improving project success rates not only makes a company

more competitive, it improves the company’s bottom line.

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How WGroup can helpWGroup has helped numerous clients design, build, and manage the discipline of project

portfolio management. While our approach is robust in implementation, it is also pragmatic

and anticipates the common pitfalls we have seen in our extensive experience.

For clients with a PPM function in place we can help by evaluating the client’s strategy

and project governance model, project analytics, culture, and behaviors to build the

roadmap to optimize PPM benefits and ROI. And for clients just starting out, we can help by

building the strategy and roadmap for PPM implementation specific to your company.

We employ our deep expertise in constructing sophisticated financial models and bring up-to-date

insights about industry best practices and potential vendor tools to drive tangible business results.

We provide our clients with comprehensive advice down to the design and implementation of

detailed PPM processes. We leverage the rich experience in hands-on portfolio optimization from

our pool of senior consultants who are all former CIOs, IT managers, and business leaders.

Ultimately, we drive business value, which is above and beyond

establishing resource allocation or prioritization processes.

WGroup PPM Transformation Approach

Build PPM Strategy

& Roadmap

Implement PPM

Governance

Define Formalization

& Behaviors

Implement PPM

Process

Optimize PPM

Process

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Scot Hanley is a senior technology executive

with an exceptional record of success in

the development and crisp execution of IT

strategy with over 25 years of experience.

He has the proven ability to facilitate

revenue growth and market penetration by

delivering business and technology solutions

to meet business and market needs. The

foundation blocks of his career include

innovation, relationship building, and focus

in strategy & execution, including excellence

in Project & Program Management.

His passion lies in orchestrating the

transformation of companies into market

share leaders & innovators and he

has 15 years of leadership experience

specifically in strategies related to IT

Transformation and Modernization.

Scot is an innovative entrepreneur and

consultant with a demonstrated ability to

influence the C-Suite, launch new ventures

and transform organizations. He is skilled at

building and leading top performing teams

and producing enterprise level strategies

that transform capabilities, improve efficiency

and drive down costs. Named “Kerzner

International Project Manager of the Year by

PMI & IIL in 2008” he has special expertise

in PMO startups, Project Management,

leading divestitures and technology and

business process implementations. He is

a trusted consultant that harmonizes the

business and IT strategy into a winning

composition via business alignment.

He is a champion in helping companies

pioneer new ways to harness technology

and execute strategic plans to drive

differentiation in the market via delivery

excellence. He has held a wide variety of

leadership roles including start-up experience

with Hamilton-Ryker Consulting, VP level

roles with BCBS and Synovus Financial

and Executive level consulting roles with

Ernst & Young as well as CapGemini.

Author: Scot Hanley, PMP, CSM, ITIL, MCP

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Scot has experience across the Finance, Healthcare, Telecommunications, and Travel industries

with special expertise in Data Warehousing, Big Data, and Analytics including hands-on

technology experience. His patent-pending technique in project management, “Project Behavioral

Coaching” TM, has been widely acclaimed as an innovative and disruptive force in project

management that recognizes the assessment of human behavior as critical to the success of all

projects and his article on same have been featured in LinkedIn’s online “Pulse” magazine.

Scot’s market analysis of consulting firms in the southeastern US, pro-forma for a differentiated

management consultancy and plans for revenue streams, social/digital media marketing presence and

presentations convinced Hamilton-Ryker, the largest privately held staffing firm in the southeast, to

invest in his concept to launch a consulting firm with strong competencies in improving IT delivery.

He led the strategy for startup of the consulting organization and managed operations of the

company. He was responsible for ensuring the firm delivered superior results to the client,

which included everything from staffing & recruiting coordination for turn-key client projects,

to research and development for our methods, techniques, and supporting technology.

Scot’s work at Blue Cross Blue Shield of Alabama as VP of Technology, was primarily focused

on delivering strategy for the modernization of IT, development of COEs, as well as shared

responsibility with App Dev & Infrastructure to successfully deliver on systems and application

delivery projects across a $120M (annual) project portfolio. As Vice President Technology at

Synovus, Scot led the effort for the “TSYS Spin Off” – divestiture. With TSYS (largest credit

card processor world-wide) he acted as the Executive Program Manager while leading the IT

Professional Services Office at Synovus (TSYS holding company) reporting to the CIO. Additionally,

Scot has held senior positions at CapGemini and Ernst & Young where he drove success for

corporations through alignment of technology and business to achieve strategic goals.

Scot graduated with a BA in English Language and Literature from Columbus State University

as well as a Commission as a US Army Officer. He is a Desert Storm veteran and holds

certifications PMP, ITIL, and CSM. He has spoken at numerous conferences on the topics of project

management and human behavior, innovation, and successful change management in IT.

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Management and Execution Services to optimize business performance, minimize cost and create

value. Our consultants have years of experience both as industry executives and trusted advisors

to help clients think through complicated and pressing challenges to drive their business forward.

Visit us at www.thinkwgroup.com or give us a call at (610) 854-2700 to learn how we can help you.

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