In the business arena, now more than ever, delivery of business improvement through change (programmes and projects) is not just vital to remaining lean and competitive, but vital for maximising value from taxpayers and shareholders money. A mechanism for selecting the right projects to provide best value is as crucial as an efficient delivery process, lean infrastructure and an effective support and leadership environment.
Organisations need the appropriate strategy and a supportive organisational environment for programmes and projects to be identified, prioritised and executed as portfolios. In other words, they need a ‘P3 organisation’. To be managed effectively, change requires a sensibly structured approach to portfolios of programmes and individual projects.
So, how do typical programme / project management / support offices stack up against the desirable elements of a ‘P3 organisation’?
What’s the context?
The Office of Government Commerce (OGC) has two established standards for project and programme management:
- PRINCE2 – delivering projects – these create outputs;
- managing successful programmes (MSP) – delivering programmes – these create outcomes.
More recently, a new standard has been released for organisational structures in support of the portfolio, as well as a draft public consultation document for portfolio management:
- portfolio programme and project offices (P3O) – support structures to ensure definition and delivery of the portfolio;
- portfolio management (PfM) guide (final public consultation draft) – selecting the ‘right’ projects and programmes aligned to the organisation’s strategy.
With the release of the OGC’s P3O guidance and PfM, there is now a framework within which MSP and PRINCE2 can be operated on a common and collaborative organisational basis.
What’s the problem?
Not every organisation manages it’s portfolio of programmes and projects using portfolio management processes or roles, or has set up its ‘P3 organisation’ through design; it is possibly through evolution and sometimes a roller coaster of build up and cut back cycles. The ‘P3 organisation’ may be limited to a project support office, focused on delivering at the project or, at best, a programme support office focussed on delivering at programme level, rather than being a senior corporate body to manage the portfolio, own the intellectual high ground about how to manage projects and programmes, or to flexibly resource the management support needs of all projects and programmes. This leads to:
- a gap between the strategies the organisation is pursuing in order to bring about change, and the execution of the change at the programme/project level;
- inconsistent, unaccepted standards and processes;
- over staffing or inappropriate staffing of support functions, or the view that there is too much bureaucracy.
What is portfolio management?
The P3O standard defines a portfolio as follows:
‘A portfolio is the investment in the changes required to meet strategic objectives.’
Portfolio management is not simply scaled-up programme or project management – it is instead a set of coordinated strategic processes and decisions that balance organisational change and business as usual. This means that it is quite complex, but by no means impossible to implement.
The portfolio management guide states: ‘It is shocking that some organisations continue to waste effort and resources by delivering the wrong projects and programmes.’ This reinforces the importance of organisations introducing scrutiny and oversight of the portfolio, in order to maintain the balance between a sensible level of change and business as usual.
Unlike project or programme management, portfolio management is therefore an ongoing, cyclic activity rather than having a defined start and end. Portfolio management is underpinned by the importance of organisational strategy. Organisations may have wishes or mission statements, and individual functions within the organisation may have what they consider to be their own strategic objectives. However, work cannot be truly aligned to the objectives and goals of the organisation unless they have been debated, agreed and prioritised, then subjected to control/management.
Assessment of strategic alignment is just one consideration. The selection and prioritising of projects should also balance strategic alignment with risk and return on investment. projects should consider the risk associated with implementation (technology, complexity, delivery, etc.) as well as operational risks (compliance, productivity, etc.) when compared against the ROI.
Measurable benefits are what link changes brought about by programmes to the strategic objectives of the organisation. Change delivers benefits and benefits bring about the realisation of objectives that form part of the organisation’s strategy. There must be a realistic chain from a project or programme to either a locally approved objective, or (through that) a corporate objective. Organisations must remain focused on delivering change by having accountability for benefits realisation. And if benefits are not measured, or even measurable, then why should anyone be realistic in planning the benefits prior to delivery of the project or programme?
What are the typical PMO/PSO issues?
The typical issues associated with PMOs tend to be:
History and origination
- there are many different types of PMO, lots of definitions, many, many models;
- was it ‘designed’ or has it ‘emerged’?;
- is it carrying out the right service level?
Staffing level and competence
- are the services it carries out ‘sold’, agreed and respected?;
- is the level of skill and experience able to carry out the service level?;
- are people landing here because there is nowhere else to go?
Perception in the organisation
- is the PMO staffed with a few less experienced people so its ‘cheap’?;
- is the PMO always a target for overhead cutting? (roller coaster effect?);
- is the value of a PMO understood / promoted?;
- is the PMO in the right place in the organisation?;
- are the benefits of the PMO quantifiable / measured / reported?
This is not intended as a criticism of PMOs, but typically the PMO misses some of the key portfolio management activities, not because of the failing of its staff, but potentially because of the failing of the organisation to expect of it the appropriate service level. Organisation wide there is a lack of understanding of the need for:
- portfolio management – a business role to challenge, align, scrutinise and review the portfolio;
- centre of excellence – thought leadership, focus for learning, internal consulting for project and programme management;
- coordinated delivery support – i.e. finite secondment of support staff from a central support resource pool. A PMO is a temporary function, not a permanent one;
- governance – what happens if there is non-compliance within the portfolio?
So now the typical PMO issues can be compared with the three functional elements of a ‘P3 organisation’:
- portfolio management / support / strategic planning
- it’s just not done by or with the PMO – It’s in the wrong level in the organisation to help, staffed with the wrong skills;
- “we don’t want portfolio management”
- is the organisation maturity level so low and the technology not present such that the manpower required is too great to realise the benefits?;
- is it that leaders don’t want decision making interfered with?;
- is the organisation too large to be portfolio managed in one place?;
- is it that the current state is so embarrassing it should not be made transparent?
Centre of excellence
- emergence of multiple entrenched standards, methods and processes;
- multiple tools / no tools;
- training – is there a training department to which portfolio, programme or project management matters?;
- competency measurement – who is ensuring organisation competencies are moving in the right direction? – does HR have a remit for this?;
- learning and knowledge management – is there anyone within the organisation to advance the profession?
- what is the service level for a programme or project support function?;
- how is it carried out? ‘islands of automation’ or through an organised ‘hub and spoke’ structure?;
- is it centralised / coordinated or are powerful programmes / projects their own masters?;
- are there performance measures / benefits to enable the project organisation to continually show its worth?
Governance – does anybody care?
What do I need to make a change?
The successful adoption of portfolio management consists of five elements:
- organisation – will, expectation to improve, resources, governance and compliance wish;
- processes – common ways for people to collaborate around projects and programmes with;
- people – a focus on skills, competencies and growing ability to carry out a maturing process;
- technology – the right level for the right reasons at the appropriate moment in an organisations maturity advancement;
- strategy – to take the drivers for change, the vision of a future state, and plot a path there which is feasible, sensible and affordable.
Initiate implementation by following a programme management approach:
- establish ‘organisational will’ at the right level;
- appoint a senior responsible owner;
- devise a problem statement;
- appoint a capable programme manager;
- set the capability / benefit expectations;
- assess the current state of strategy management and 'P3 organisation’ provision;
- map out the vision for how the objectives can be met;
- prepare benefit profiles, a business case, programme brief, programme preparation plan and vision statement.
There are many very competent project and programme management support professionals out there in organisations. They are typically geared to help projects and programmes.
They may have ownership of standards and processes, but in larger organisations this can lead to duplication or competition where there are many PSOs in place.
Generally, what they are not, though, are facilitators to help make the connection between strategy and delivery.
If organisations wish to benefit from more effective use of resources and greater selectivity over how it spends its valuable resources, a portfolio management function needs to be established. To realise these benefits, a realistic ‘P3 organisation’ needs to be defined and implemented, in a sensible way within budgetary constraints. If the right approach to this change is taken, and the right expertise is on hand, it should not be difficult to make a business case, manage the business change and realise the benefits.