How Project Portfolio Management leads to Project Success

The IT PMO of a large organization was suffering from failing projects.  The issues facing the organization were:

  • Continuous mergers and acquisitions resulted in stove-piped, independent businesses with no incentive to work toward common goals,
  • Division between Business and IT,
  • Resistance to change,
  • No application/ systems standards (multiple solutions for the same capability),
  • No view of resource capacity/ demand,
  • No single view of all projects,
  • Failing projects.

The problem:

Important projects were not getting done.  With no prioritization and no view of true resource demand/ capacity, low-value projects were gobbling up resources needed by high-value projects. This caused the more valuable projects to be stalled or stopped in mid-implementation. This also resulted in corners being cut when project managers tried to shotgun projects through the lifecycle to ensure they did not lose precious resources. Project planning was one key phase that was shortened or skipped altogether , leading to a higher rate of project failure.

Projects under a certain budget limit could be submitted and were automatically put in the project queue to be resourced within a week. Anyone could submit a project request and provide very minimal supporting information.

What didn’t work:

The organization had tried different methods for prioritizing (such as having the head of finance label projects as high-, medium-, or low-priority). However, these methods yielded only top-priority rankings for virtually all projects.

For higher cost projects, IT Governance did exist. In the fall of each year, the IT site directors would provide business case information for projects they wanted to implement in the coming year. The regional leader would review and accept the projects he or she deemed priority for the site; and an oversight committee eliminated additional projects from the plan to lower the total site budget to match what they could allocate. The results of these meetings determined each site’s budget. In the following year, the sites were free to substitute other projects for those that had been approved, making this an exercise in obtaining funding, not in proper portfolio planning.

The Fix:

The PMO leaders determined that the two main issues to be resolved were lack of resource management and prioritization. They concluded that implementing project portfolio management could resolve both issues and result in successful planning and project management.

The goals for the Portfolio Management implementation were as follows:

  • Tie projects to the corporate strategy,
  • Develop business cases for all proposed projects,
  • View projects across all sites to determine opportunities to combine efforts,
  • Improve project planning,
  • Develop solutions standards:
    • Catalog accepted applications for specific capabilities.

They developed a model for scoring project requests which would serve as the basis for prioritization. The model was based on research of best practices in the industry and tied to the organization’s strategy. Once the model was in place, it was used to prioritize the projects submitted for the yearly budget to demonstrate to the decision makers why they should fund the proposed projects. They now had clear insight into what should be done (prioritization) and what could be done (resource management). Including portfolio management in the project lifecycle greatly improved the organization’s ability to successfully implement projects. It is well known that Portfolio Management is intended to maximize the benefit from an organization’s portfolio of projects; but it also helps ensure project success by “sizing” the portfolio to fit the available resources.

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