Where project and program structures are temporary, portfolio management should be a permanent element of your organisation. The purpose is to ensure that your portfolio spend is aligned to your strategic objectives.
We have all been there, working on a project where the business case erodes over time as the organisation, or the world, moves on. This is why it is so important to have a group within your organisation charged with ensuring the organisation’s spend is appropriate to achieve the strategic objectives.
The diagram below is a simple representation of why you may have your projects delivering on time and budget and are not seeing the organisational improvements you expect.
Project D has money, resources and effort assigned and is not aligned to any of the organisations strategic objectives. There may be a valid reason for continuing with it, for example, it may be a regulatory initiative. It is however worth asking the question whether continuing to fund the project is the right choice.
In the same vein, strategic objective 3 has no projects supporting it, so again the question needs to be asked about where the spend is going and why it does not have any initiatives running to achieve it, despite it being an objective aligned to the organisational strategy.
In reality a portfolio team will work far more complex sets of data, yet at its core, you should be able to map your projects against your organisations priorities and constantly re-evaluate to ensure you are spending your money wisely.
MoP® (Management of Portfolios) is a best practice methodology for ensuring your organisation runs successful portfolios of work. The portfolio definition cycle is a useful tool to periodically run to ensure you are on track. The stages are:
Understand
Develop a clear view of portfolio pipeline, performance to date, forecasts, benefits and risks.
Categorise
Define your portfolio by strategic objectives, business line, geography or any other sensible category according to your business. This will help decision makers determine funding between areas.
Prioritise
Metrics are applied to help management understand which initiatives should be prioritised and funded above others, and why.
Balance
Ensure the portfolio is balanced across the organisation, i.e. no one area is over or under prioritised and that you have the highest chance of success across the portfolio.
Plan
Create a summary of the above into a plan which can be approved and tracked.
