The Cure Project Complexity Reduction

To build a successful financial portfolio, investors first articulate their strategic financial objectives. They weigh the relative merits of investment alternatives, characterizing the risks and benefits of each. They analyze exactly what resources are available for investment and determine how they will be allocated among alternatives. Careful measurement of the portfolio's success against the strategic yard stick is ongoing. And when returns accelerate or diminish, investors make the tough calls in order to maximize return over the long haul.

Building a project portfolio in today's organizations requires no less. A systematic method for evaluating the organization's project investments is critical. Such an approach tips the balance from the depleting effects of project proliferation to project productivity and company profit.

What might such a cure look like? In an automotive manufacturing plant, typical for its size and industry, senior executives assessed the merit of 135 projects. Project task lists, resource and staffing requirements, and other relevant information were summarized. Following a rigorous two-day decision session, where each project was evaluated against eight strategic objectives, the final "must-do" list of projects was dropped to 35. The implementation plan called for rigorous project management techniques, including monthly variance reports to the plant staff. The result? Most of the designated projects were successfully completed during the following year, leading to a jump in the division's productivity, product quality, and revenue.

Six steps are common in project portfolio initiatives:

1. Analyze the overall project environment. Before moving to remedy the situation, any organization needs to take a long, hard look at the status quo. Interviews and other assessment tools reveal the nature of the gap between the current approach to managing projects and a systematic portfolio approach. What is the universe of projects currently underway? What is the basis for our definition of projects: Regulatory compliance? Customer requirements? Market or product expansion? What strategic time frames are our projects intended to meet? And, most critical, what is the current process for project initiation, implementation, measurement of results, and closeout or termination? How does the environment support project-focused as opposed to function-based work?

2. Develop project portfolio objectives. The senior management team needs to undertake the definition of specific, strategically linked objectives for building the project portfolio. What exactly is our project portfolio expected to accomplish? What are our strategic and operational objectives, and what are their relative merits? How will long- and short-term objectives be balanced? How will we quantify the assessment of individual projects against those objectives? And have we ensured that the appropriate people are involved in these considerations? The outcome of this process is the full commitment of senior executives to clear and commonly held objectives to guide difficult decision making.

3. Analyze resource capacity. It's not uncommon to find an organization that has identified fifty thousand hours of project time needed but only fifteen thousand hours of people time available to devote to project work. A reasonable assessment of the organization's available resources must go hand-in-hand with decision objectives. What resources—people, facilities, and technology—are available for project work? What functional areas do they represent, and how will that affect their allocation? An understanding of organizational project capacity is an essential precursor of balanced decision making.

4. Gather and organize data on current and anticipated projects. Whatever the project management methods used in various parts of the organization (which may vary widely), project data needs to be collected and reported in a consistent format for evaluation. What are the major tasks of each project, and what specific resources are required for their completion? What value will be created by the project? How do the resource requirements stack up against project capacity? What unique risks or benefits must be considered? When many projects are involved, computer spreadsheets and databases are useful tools for organizing and managing project data. The key to this effort is simplicity. This information should be documented on a single page for each project. Then all projects can be fairly evaluated (see step 5), using a consistent framework for analysis.

5. Evaluate the project portfolio. Based on the objectives developed and the project data collected, senior managers evaluate each project for inclusion in the portfolio going forward. The critical decisions they are required to make, their strategic project choices, will not be easy. How do projects compare in their alignment with objectives? Which will be accelerated, delayed, or cancelled? Ultimately these decisions will redirect resources toward those critical few projects that will best advance the objectives of the organization. With the support of expert facilitation, individual members of the team will assess their personal risk tolerance, understand their contribution to the decision process, and build commitment to the portfolio plan.

6. Implement a complexity reduction system. The final key is the installation of a simple and sustainable management system to control project proliferation permanently. How will new and existing projects continue to be measured against objectives within a consistent framework? What project management skills and common practices will support the organization's ability to monitor the project portfolio? How will we recognize the value of our portfolio watchdogs and master project managers? How will computer systems—centralized project databases, spreadsheets, charts—make useful information available throughout the organization? Continuous portfolio management ensures that every project plays a part in helping the organization achieve its business objectives.3

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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