1. Dr. Alan C. Maltz Howe School of Technology Management Stevens Institute of Technology Alan.Maltz@stevens.edu Mgt 613 - Project Portfolio Management and the PMO Module 1 – Fundamentals of Project Portfolio Management (PPM) © Alan C. Maltz, Ph.D, 2014 1

2. Design of Mgt 613… CULTURE ROLES, COMPETENCIES & RESPONSIBILITIES PROCESSES & METHODOLOGIES FUNDAMENTAL PRINCIPLES DEFINITIONS © Alan C. Maltz, Ph.D, 2014 2

3. What do you know about project management? What is a project? What is project management? © Alan C. Maltz, Ph.D, 2014 3

4. A project..  Temporary endeavor to create a unique product or service. Temporary = discrete start and stop dates.  Unique = a need to progressively elaborate the characteristics of the product or service. Progressively = sequence of steps Elaborated = careful details PMBOK p 5-6 © Alan C. Maltz, Ph.D, 2014 4

5. Project Management.. Application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder requirements and expectations. It balances competing demands among: Stakeholder segments with different needs and expectations Scope, cost, time, and quality (and other success measures) © Alan C. Maltz, Ph.D, 2014 5

6. What is a program? A group of related projects or subprograms that are managed in a coordinated way to obtain benefits not available from managing them individually. (PMI 2013) © Alan C. Maltz, Ph.D, 2014 6

7. How important is project management to the organization? What are typical project success measures? © Alan C. Maltz, Ph.D, 2014 7

8. What are the areas that most executives are interested in? Are project and program management enough for an organization to survive in its competitive environments? © Alan C. Maltz, Ph.D, 2014 8

9. What is a portfolio? Projects, programs, sub-portfolios, and operations managed as a group to achieve strategic objectives ( PMI, 2013) © Alan C. Maltz, Ph.D, 2014 9

10. Organizational Strategy… The plan of goals, policies, and actions that provide the overall direction and focus of the organization (PMI, p.7) © Alan C. Maltz, Ph.D, 2014 10

11. Definitions of Project, Program, and Portfolio PROJECT A temporary endeavor undertaken to create a desired outcome e.g. capability, service, Product; a Project sometimes has technical and commercial dependencies with other Projects within a Program or Portfolio PROGRAM A group of related Projects whose interdependencies dictate how they are resourced in alignment with the organization’s objectives; A Program is comprised of Projects that often have technical and commercial dependencies between each other within the Portfolio PORTFOLIO A collection of Projects and/or Programs that are grouped together to facilitate their effective management to meet the organization’s objectives on an ongoing basis; A Portfolio is actively managed to meet short- and long-term goals through the addition to and termination of assets from the Portfolio © Alan C. Maltz, Ph.D, 2014 11

12. PROJECTPROGRAMSPORTFOLIOS Project managers manage technicians, specialists, etc. Program managers manage project managers Portfolio managers may manage or coordinate portfolio management staff. Project managers are team players who motivate using their knowledge and skills. Program managers are leaders providing vision and leadership. Portfolio managers are leaders providing insight and synthesis. Project managers conduct detailed planning to manage the delivery of products of the project. Program managers create high-level plans providing guidance to projects where detailed plans are created Portfolio managers create and maintain necessary process and communication relative to the aggregate portfolio. Project managers monitor and controls tasks and the work of producing the projects products. Program managers monitor projects and ongoing work through governance structures. Portfolio managers monitor aggregate performance and value indicators. Project-Program-Portfolio (from Table 1.1, PMI 2013) © Alan C. Maltz, Ph.D, 2014 12

13. What is project portfolio management? The centralized management of one or more portfolios to achieve strategic objectives.. (PMI, 2013) PPM resource allocation to achieve corporate new product objective (Cooper, p.1) © Alan C. Maltz, Ph.D, 2014 13

14. PPM at Apple.. Cook is labeled as more of a manager and less of a visionary, causing current and former Apple employees to worry that without Steve Jobs, Apple is losing its "frenetic pace and focus" on new products. Employees also worry that the company may be working on too many projects at once. Under Mr. Cook, current and former employees say Apple may be spreading itself too thin, pursuing too many ideas and compromising the "laser focus" that Mr. Jobs used to create the iMac, iPhone and iPad. "It was Steve's job to say no," one of these people said. “Tim is not as comfortable doing that.” WSJ 7/7/2014 © Alan C. Maltz, Ph.D, 2014 14

15. VALUECOST RISKTIME The value drivers of PPM…. © Alan C. Maltz, Ph.D, 2014 15

16. Reluctant to kill projects New projects added No focus No strategic criteria for project selection No rigorous criteria Selection based on emotion, politics Weak decision points Poor ‘Go/kill/hold/fix’ decisions Too many projects Resources spread Execution suffers Projects lack strategic direction and alignment Wrong projects are selected Too many mediocre, low value projects Good projects starved Increased time to market High failure rates Diluted effort New products don’t support strategy Many failures Too few top product winners Chaotic launches No PPM means.. Immediate ResultEnd result: poor NP performance Because of…? Cooper p.5 What happens when you lack effective PPM? © Alan C. Maltz, Ph.D, 2014 16

17. Vision Mission Organizational Strategy and Objectives High-Level Operations Planning and Management Project Portfolio Planning and Management Management of On- Going Operations (recurring activities) Producing Value Management of Authorized Programs and Projects (projectized activities) Increasing Value Production Capability Organizational Resources Fig. 1-3. PMI 2013 The Organizational Context of PPM © Alan C. Maltz, Ph.D, 2014 17

18. Is portfolio management a bridge between operations management and project management? © Alan C. Maltz, Ph.D, 2014 18

19. The Bridge.. In traditional organizations, responsibility for determining and achieving the organization’s goals is assigned to the operations function. A problem common to many organizations is that there is no connection between the operations and projects functions and no structured, consistent, and meaningful flow of information. The organization’s objectives (enterprise-level goals) are hardly ever communicated to the project office, and the periodic measurements made by the projects group cannot be related to these objectives. P.19 (Levine 2005) © Alan C. Maltz, Ph.D, 2014 19

20. Portfolio management and organizational governance Organizational governance Strategic Planning Management of Operations Management by Projects Portfolio Management Program Management Project Management Processes, Tools, Metrics © Alan C. Maltz, Ph.D, 2014 20

21. Aligning Process Group: How components will be categorized, evaluated, and selected for inclusion, and managed in the portfolio (PMI 2013). Monitoring and Controlling Process Group: Performance indicators are reviewed periodically for alignment with strategic objectives (PMI 2013). Portfolio management process groups © Alan C. Maltz, Ph.D, 2014 21

22. Portfolio management process (PMI 2013) Portfolio Management Processes Strategic Planning Process Output: Current Strategic Plan Aligning Process Group (3.2.1) Monitoring and Controlling Process Group (3.2.2) Component Processes Current Strategic Plan Goals Definitions & Categories Key Performance Criteria Capacity Definition Identification (3.2.1.1) Categorization (3.2.1.2) Evaluation (3.2.1.3) Selection (3.2.1.4) Prioritization (3.2.1.5) Portfolio Balancing (3.2.1.6) Authorization (3.2.1.7) Component Execution and Reporting Portfolio Reporting and Review (3.2.2.1) Strategic Change (3.2.2.2) Yes No  PPM is a continuous business process  PPM links with strategy © Alan C. Maltz, Ph.D, 2014 22

23. Who are portfolio stakeholders? © Alan C. Maltz, Ph.D, 2014 23

24. PROJECTPROGRAMSPORTFOLIOS Projects have a narrow scope with specific deliverables. Programs have a wide scope that may have to change to meet the benefit expectations of the organization. Portfolios have a business scope that changes with the strategic goals of the organization. The project manager tries to keep change to a minimum. Program managers have to expect change and even embrace it. Portfolio managers continually monitor changes in the broad environment. Success is measured by budget, on time, and products delivered to specification. Success is measured in terms of Return On Investment (ROI), new capabilities, and benefit delivery. Success is measured in terms of aggregate performance of portfolio components. Leadership style focuses on task delivery and directive in order to meet the success criteria. Leadership style focuses on managing relationships, and conflict resolution. Program manager’s need to facilitate and manage the political aspects of the stakeholder management. Leadership style focuses on adding value to portfolio decision-making. Project-Program-Portfolio (from Table 1-1, PMI 2013) © Alan C. Maltz, Ph.D, 2014 24

25. What are the requirements for effective PPM? Corporate goals, objectives & strategies must be basis for NP portfolio selection Senior management must drive strategy and involved in NP portfolio selections Effective communications © Alan C. Maltz, Ph.D, 2014 25

26. Maximization of Value: Long-term profitability, return on investment, etc. Balance: to develop a balanced portfolio: long-term projects VS short, fast ones; high-risk long shot vs. lower- risk sure bets; the various markets; different technologies of technology types; different project types- new products, improvements, cost reductions, fundamental research Strategic Alignment: to ensure that, regardless of all other considerations, the final portfolio of projects is strategically aligned and truly reflects the business’s strategy What leaders do: three goals of PPM (Cooper, Edgett et al. 2001) © Alan C. Maltz, Ph.D, 2014 26

27. 27 Alan C. Maltz, Ph.D. Howe School of Technology Management Stevens Institute of Technology Castle Point on the Hudson Hoboken, NJ 07030 Phone: +1 (561) 632-4848 E-mail:alan.maltz@stevens.edu Web:http://www.stevens.edu/@stevens.edu Thank You - Questions? © Alan C. Maltz, Ph.D, 2014