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Every time I talk with a new organization these days, the conversation turns quickly to Waterfall, Agile, their project portfolio management strategies, software tools, and Excel. I hear a lot of the following statements:

  • Our Waterfall people don’t talk with our Agile people (or vice versa).
  • We can’t (or don’t) compare our project investments.
  • We really don’t know how much money we have invested in project work.
  • Some of our project managers don’t engage well with our portfolio director’s team.
  • We have a lot of project managers still using Excel.
  • We typically use Excel for our smaller projects.
  • Different departments have different strategies for selecting their projects.

The list goes on. How can project executives get a grip on their project portfolios?

Have a sound project selection policy and enforce it.

Organizations need a firm-wide policy on how project investment decisions are made and the approval levels for department heads. Are department heads allowed to spend $50k or $1M? What is the process and what are the selection criteria?

I understand the value of looking at return on investment, but not all projects constitute a true investment. Some are done to build team efficiencies. Others are done to meet regulatory requirements. And some are truly an investment in infrastructure. All too often, it is an investment in technological infrastructure that will be obsolete before long.

While I completely understand the need for long-term objectives in an organization, I question why we need so many long-term projects in 2017. There is simply too much change in our world. Most projects are not 20-mile long bridges. Find one-year projects that will help you achieve long-term goals and stay more agile. That will eliminate complications with net present value and discounted cash flows.

We need more one-year projects that will help us achieve our long-term goals, and stay more agile. Click To Tweet

Align your project investments with your organizational strategy.

To ensure that your projects are aligned with your organizational strategy, you need to know what that strategy is. Every organization is different, and some organizations will have a set of five or ten strategies. Other organizations will choose to narrowly focus on just a few big strategies.

At a minimum, most organizations will have projects that are in the category of keeping the lights on, or operational excellence projects. There might be categories of projects for achieving a competitive edge, complying with regulatory requirements, or client driven, income-producing projects. The key is to achieve a balance.

If you generate your income from client projects, that category will be much larger than your other categories. In that case, you may want to categorize your income producing projects by vendor groupings, in order to diversify your portfolio and reduce your client acquisition risk.

Have multiple matrix views of your project portfolio.

Getting a grip on your project investments means that you need to be able to balance your project investments in several different ways. Here are some examples:

  • You need to be able to look at your projects by stage of completion. Regardless of what you call these stages, projects run the gamut from those that are just beginning to those that have been closed. You need to be able to properly balance your investments in all categories.
  • Can you look at your projects by functional areas? You probably need some way to compare, within functional areas, those that are healthy versus those that have started having problems.
  • Looking at your projects by resources may give you some additional insights.

Determine what types of project metrics are needed.

It helps to understand the types of analytics that executives need in order to understand their project portfolios. Here is a proposal for the types of metrics that I believe we need.

  • Resource utilization metrics – You need to know where your people are working, who is busy, and who is available.
  • Backlog metrics – You need to understand the pipeline of work, or lack of work.
  • Project cost metrics – You need to know what your projects are costing you, whether clients are profitable, whether certain people are at risk of running a project into the red, and which people, if any, are particularly inefficient, ineffective, or unnecessarily expensive.
  • Schedule metrics – You need to know if there are any critical deadlines that are likely to be missed and make sure you can finish the project by the deadline.
  • Strategy metrics – You need to be able to ensure that projects continue to be aligned with strategy. In a rapidly changing world, you cannot assume that a project that once aligned with strategy remains aligned indefinitely.
  • Project metrics – You need to have a way to ensure that project details are properly managed. Is there a procurement contract requirement that is on the horizon or a risk that has become unacceptable?

To develop this type of data on a diverse portfolio of projects, you need to be able to compare the size of the projects. This is critical because project managers often do not track the labor costs associated with in-house projects. There are many ways that businesses can track size and many terms that you could use. But it comes down to how you break the project down. I’ve outlined a four-step process for how to do that here.

Develop a common project language across your organization.

Portfolio comparisons when you have IT, construction, R&D, marketing, HR, and a host of other projects require a common language. I believe the easiest way to develop a common language is to keep it as simple as possible.

The easiest way to develop a common language is to keep it as simple as possible. Click To Tweet

Project – Put aside official definitions. The question here is: what kinds of projects do you need or want to monitor? Are executives trying to monitor ALL of the projects in your organization, or just a subset of more important projects? Are client engagements being monitored in the same way that in-house projects are being overseen? I frequently see people in HR, marketing, compliance departments, or the office of general counsel working on projects that no one else knows a thing about. No tracking of labor costs are being done because salaried employees are doing the work. You need to know what your long-term oversight goal is first. Are you trying to track all of the project investments, or just some of them?

Activities versus tasks – There are lots of words that can be used to describe something that needs to get done on a project. User stories, activities, tasks, work packages, tickets, action items, requirements, backlog, cards, and sheets. I’m sure I’ve missed some. Definitions can vary from person to person. I recommend distinguishing between the larger work packages (I call them activities) and the smaller tasks that need to be done. You may also need a name for the major groups of activities for which you want to track budget data.

Durations or complexity – Complexity is a basic concept that allows us to compare the sizes of projects within an entire diversified portfolio of projects. It is not the same as durations, and is a much simpler concept. I outlined my thoughts on how to move from estimating durations to estimating complexity in a blog here. 

Costs – The question is not whether you call them costs or expenses. It’s what is included and measured. Are you going to track in-house labor and overhead? If you’re trying to compare two projects – one being done by independent contractors and one being done by salaried employees, you can’t do that unless you are factoring in some labor costs for the employees. So, it’s important to have a policy on what costs are being tracked and to understand whether you are comparing apples to apples, or not.

Allowing people to choose their own projects.

Resource management is a hot topic. Many project portfolio directors like to engage on the subject of how to manage resources. People today are motivated by purpose. What interests one person may or may not interest another. When you allow your people to pick their own projects, they tend to be more motivated.

There are a finite number of people in your organization. Thinking of them as a scarce resource is great if it makes you appreciate them more. But it may also be limiting your thinking.

There’s a lot of conversation about whether availability of resources should drive project selection processes. When individuals are tasked with projects they really believe in, they find the time. So, why not let executives settle on their really important projects and then put them out for consideration? Just like Kickstarter and similar programs, the most popular ideas will rise to the top. And most employees want their organizations to thrive and grow.

You still need to have some resource utilization data so you know who is doing what. Being able to reach out to underutilized people who may not be as well-known in the organization is helpful. Cost data may be important for billing clients and assessing profitability.

Clarity of roles is essential. In the days of Agile versus Waterfall, there can be conflicting job titles and expectations throughout large organizations. I recommend that we find some standard language in this area as well. There are three roles in an organization that are critical, and it helps if everyone uses the same language. In a blog on these three roles, I discuss project sponsors, project managers, and clients.

Understand what kind of follow-up you want.

Once a project is completed, there may still be follow-up. Was the project supposed to deliver benefits to a client or the firm? Were those benefits realized? We need to be careful about labeling the project a failure because long-term benefits were not realized. Here are some considerations:

Client contact – If you completed a project for a client, will there be any kind of follow-up with the client to ascertain their level of success down the road? Who is responsible for that, and what is the trigger?

Revenue or expense impact – Was the project done with the idea that the investment would reduce costs or increase revenues over a longer term? Who is going to determine whether that actually happened? What is the process for ensuring that this kind of follow-up occurs, and for not creating conflict if the planned benefits do not materialize? If that is the case, what is the plan for another project that will make up the gap?

Intangible benefits – Projects done to achieve more intangible benefits, such as operational or team efficiencies, regulatory requirements, or non-profit donor relations may or may not require any follow-up. Do you have a way to know which ones do and which ones don’t, and when?

Getting a grip on your project portfolio requires teams to communicate effectively, look for opportunities for growth, and improve efficiencies. The simpler we can make it, and the less need for financial wizards, complicated formulas, blaming and criticizing, and adversarial relationships, the better. Need some help? Schedule a free call.

Note from the author: The Smart Projex software is no longer available. The author continues to evaluate a complete software re-design using state of the art 21st-century technologies. Reach out to discuss if you are interested.

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