International Defense Security & Technology Your trusted Source for News, Research and Analysis
In today’s rapidly evolving business landscape, organizations are increasingly turning to Agile methodologies to stay competitive and drive innovation. Agile Project Portfolio Management (PPM) has emerged as a strategic approach to effectively prioritize, plan, and execute projects, enabling companies to navigate the complexities of the modern business environment. In this article, we will explore the concept of Agile PPM and discuss key strategies to master this approach for unlocking success in the ever-changing business world.
A project portfolio is a collection of projects, programs and processes that are managed together and optimized for the financial and strategic goals of an organization. A portfolio can be managed at either the functional or the organizational level. Unlike a project, which has a defined end goal or deliverable, a portfolio represents a more structural commitment to continuously optimizing the allocation, prioritization and scheduling of resources across many projects.
Project portfolio managers oversee the management of the project portfolio. They are responsible for getting a return on investment and meeting the goals and objectives of their organization. PPfM is fundamentally different from project and program management. Project and program management are about execution and delivery—doing projects right. In contrast, PPfM focuses on doing the right projects at the right time by selecting and managing projects as a portfolio of investments.
Project portfolio management (PPfM) enables organizations focus their limited resources on the best projects. The resulting collection of projects is a focused, coordinated, and executable portfolio of projects that will achieve the goals of the organization. The selected projects are turned over to program and project management, which is the engine that initiates and completes them successfully.
PPM combines three disciplines of organizational management:
1. Business management (maintaining that projects are in line with the overall portfolio strategy)
2. General management (understanding of risks; awareness of resources)
3. Project management (collecting, viewing, analyzing, prioritizing projects and ensuring that they meet or beat the overall goals of the company’s portfolio)
Tasks of Project Portfolio Management
Project portfolio management (PPM) is the analysis and optimization of the costs, resources, technologies and processes for all the projects within a portfolio.
Good portfolio management increases business value by aligning projects with an organization’s strategic direction, making the best use of limited resources, and building synergies between projects. However, applying PPM effectively requires proper techniques for selecting, prioritizing, and coordinating projects as a portfolio to deliver strategic results by increasing the value to an organization.
- Project Selection: PPM involves identifying potential projects that align with the organization’s strategic objectives. Projects are evaluated based on their potential benefits, risks, and resource requirements. Selection criteria may include financial viability, strategic fit, market demand, resource availability, and alignment with the organization’s capabilities.
- Prioritization: Once a portfolio of projects is established, the projects need to be prioritized based on their relative importance and potential impact. Prioritization criteria may include strategic alignment, expected returns, time sensitivity, risk factors, and dependencies. By prioritizing projects, resources can be allocated effectively to those initiatives that will deliver the greatest value.
- Resource Allocation: PPM involves determining the allocation of resources such as budget, personnel, equipment, and time across the portfolio of projects. Resource allocation decisions need to consider project priorities, resource availability, and capacity constraints. Effective resource allocation ensures that projects are adequately supported and that resources are utilized optimally.
- Risk Management: PPM includes assessing and managing risks associated with the portfolio of projects. Risks may include technical challenges, market uncertainties, regulatory changes, resource constraints, or project dependencies. Risk management involves identifying potential risks, developing mitigation strategies, and monitoring risk levels throughout the project lifecycle.
- Performance Monitoring: PPM requires monitoring the progress and performance of individual projects within the portfolio. Key performance indicators (KPIs) are established to measure project success and alignment with strategic goals. Regular reporting and evaluation allow for proactive decision-making, identifying issues or opportunities, and making adjustments as necessary.
- Portfolio Optimization: PPM involves regularly reviewing and optimizing the project portfolio. This includes reassessing project priorities, evaluating the portfolio’s balance and alignment with strategic objectives, and making adjustments based on changing market conditions or organizational priorities. By optimizing the portfolio, organizations can ensure that resources are allocated to projects that provide the greatest value and contribute to long-term success.
For a deeper understanding of Portfolio Management please visit: Portfolio Management: Optimizing Investments and Resources
Define and Initiate New projects to achieve strategic company goals
Evaluate, prioritize, Approve or reject Project proposals on the basis of opportunities, risks and strategic importance for the organization.
This process identifies the most important differentiators between projects, such as Return On Investment, risk, efficiency, or strategic alignment. Then it uses these differentiators to select the high-impact projects, clear out the clutter, and set priorities.
The process of calculating costs and benefits is also called calculating return on investment, or ROI. There are many ways to determine a project’s ROI, but the easiest way is to compare the upfront and ongoing costs to its benefits over time.
ROI = (G-C) / C
G represents the financial gains you expect from the project, and C represents the upfront and ongoing costs of your investment in the project. For example, imagine your project costs $6,000 upfront plus $25 per month for 12 months. This equals $300 per year, but you estimate that the project will bring in $10,000 in revenue over the course of that year. Using the formula above, you calculate the ROI as: ($10,000 – $6,300) ÷ $6,300 = 0.58 = 58%
Measuring project benefits also validates how well the portfolio governance team selected the right projects. Too often, the assumption is made that if we finish the project we will get the benefits that were identified at project initiation. It would be like making an investment without ever being notified on the financial return on that investment.
Control Current Projects in terms of risks, use of resources, increase in business value
Project portfolio management requires a balance of time, skills, budgets, risk mitigation and running the projects in the portfolio frugally and expediently without sacrificing quality. Managers do this through the use of five key processes.
- Change Control Management: Identifying and prioritizing change requests. These can be feature requests, operational constraints, regulatory, etc., based on demand, financial and operational constraints.
- Risk Management: Identifying risks in projects that make up the portfolio, and developing contingencies and risk response plans in order to mitigate uncertainty within the project portfolio.
- Financial Management: Managing financial resources related to the projects in the portfolio and demonstrating financial value of the portfolio in relation to organizational strategy, goals and objectives.
- Pipeline Management: Ensuring project proposals are in the pipeline and determining if they’re worth executing.
- Resource Management: Efficiently and effectively using an organization’s resources, from materials and equipment to people and technical skills.
Coordinate Ongoing Projects regarding resources, synergies, and conflicts
Enterprise or functional leaders often make project prioritization decisions without considering or understanding all the resource demands. If the demand for resource support is greater than the availability, projects won’t get done or will take much longer to complete. And forcing extended work hours for a long period will likely lead to frustration, mistakes, and turnover.
Resource Planning
Resource planning plays a crucial role in portfolio management, ensuring that projects within a portfolio are adequately staffed and resourced. By having a clear understanding of the supply and demand of resources, organizations can make informed decisions regarding staffing, resource allocation, and project timelines.
Accurate estimation of supply and demand is essential to make effective staffing decisions. It involves analyzing the resource requirements of projects and evaluating the availability of resources within the organization. This assessment helps answer critical questions: Do we need to hire additional resources? Can we reallocate specific resources from lower to higher priority initiatives? Should we consider temporary support for day-to-day work or specific projects? Are there projects that need to be delayed until resources become available?
Starting projects that cannot be properly resourced poses a significant risk. If the data indicates a shortage of resources, and functional managers confirm it, there is a higher likelihood of project failure. Therefore, it is imperative to align project initiation with resource availability.
To implement effective resource planning within portfolio management, organizations can follow these steps:
Develop Parameters for Resource Demand:
Identify the type of resources required to support the project portfolio. Most organizations evaluate resource needs based on departments or roles. Additionally, determine the level of detail required for project resource requests. Requests may range from simple, such as an IT resource for a few hours per week throughout the project, to more sophisticated models that include resource estimates by project phase or milestone. Lastly, establish a timeframe or incremental breakdown for resource demand requests, ensuring that it aligns with project timelines and resource availability.
Define Supply Capacity:
Once demand parameters are established, it is essential to assess the organization’s resource supply capacity. Identify the key project resources that are critical for successful project execution. Determine how resource availability is calculated. This can be as basic as the number of dedicated people available for project work or may require more detailed analysis if individuals are also balancing project work with their regular day-to-day responsibilities.
Establish a Review Cycle:
Determining how often resource planning data should be refreshed or updated is crucial. Dynamic and fast-moving project portfolios may require frequent adjustments to resource allocation and staffing on a weekly basis. On the other hand, portfolios with longer-term projects may opt for a quarterly review cycle to monitor resource status and make necessary adjustments.
By effectively planning and managing resources within a project portfolio, organizations can optimize resource utilization, ensure projects are staffed appropriately, and mitigate the risks associated with resource shortages or overallocation. Resource planning serves as a valuable tool in portfolio management, enabling organizations to align their projects with available resources and increase the likelihood of successful project outcomes.
Benefits Realization
Benefits realization is a critical process in portfolio management that focuses on capturing and maximizing the actual benefits derived from projects or programs. While benefits realization primarily occurs at the project and program levels, it must align with an overarching value framework at the portfolio level.
At its core, benefits realization entails assessing and capturing the tangible and intangible benefits that result from completed projects or programs. This involves tracking and evaluating the quantitative benefits, such as financial gains, operational improvements, increased efficiency, or strategic advantages. The objective is to determine whether the expected benefits have been achieved.
By tracking and measuring the actual benefits, organizations can evaluate the success and impact of their projects. This information enables senior leadership to answer crucial questions like, “Did we obtain the anticipated benefits from the project?” or “Have the desired outcomes been realized?”
Benefits realization serves as an accountability framework, ensuring that organizations are accountable for delivering the intended benefits outlined in their project objectives. It emphasizes the importance of not only completing projects successfully but also reaping the expected value from them.
Through effective benefits realization, organizations can optimize their investment in projects, improve decision-making for future initiatives, and enhance overall portfolio performance. It provides valuable insights into the effectiveness of project execution, identifies areas for improvement, and helps align projects with strategic goals.
Successful benefits realization requires clear identification of expected benefits at the outset of a project, establishing appropriate metrics and tracking mechanisms, and ongoing monitoring and evaluation throughout the project lifecycle. It is an essential component of portfolio management, enabling organizations to assess the value delivered by their projects and make informed decisions to maximize benefits and drive organizational success.
Reduction of redundant and/or low-value projects; increasing the portfolio value
It requires completely different techniques and perspectives. In order to have the most profitable project portfolio, use PPM tools to rank and evaluate projects based on their ROI, scalability, estimated costs, expected timelines, and other variables that score how valuable a project is. Executives can then make an informed decision on which projects to select as a priority, valuable endeavors, which to put on the back burner or schedule for later, and which to entirely delete from the portfolio.
Shorter project completion time
Implementing Project Portfolio Management (PPM) technology can significantly reduce project completion time. PPM allows for efficient task scheduling and assignment, eliminating guesswork and ensuring clear direction for team members. Standardizing workflows and governance through PPM saves time spent on project planning and preparation. PPM enables resource optimization, streamlines collaboration, and improves decision-making, all of which contribute to faster project delivery. Overall, PPM technology offers features and capabilities that enhance productivity, efficiency, and enable organizations to expedite project completion.
Collaborative project decision making
PPM provides advanced collaboration when each member is able to communicate seamlessly with each other team member. When all projects are consolidated into a single cloud-based PM software database, all parties of the project team have transparency into each other’s work. This allows executives and project managers to not only see the bigger picture but inspect whether there is any overlapping projects or projects that are low-value compared to others. Because of PPO’s insistence on clean data storage and availability, future decision-making is performed easily based on past project data, which can be accessed by all and shared in the decision-making process.
Agile Portfolio Management
Agile applies the “test, learn and adapt” principles and decentralized control concept on the portfolio level. Agile portfolio management means proceeding with iterations and increments even at the portfolio level.
For example, through rapid feedback loops, portfolio managers regularly review a particular set of projects and how they align with strategic initiatives. They also frequently engage in collaborative discussions with project managers or different team leaders to identify small experiments to evaluate projects or improve a given product/service delivery. This allows them to gather fast feedback and make data-driven decisions.
Moreover, instead of preparing highly detailed project roadmaps to apply for budgets, Agile portfolio management entails planning on multiple levels and cascading power downwards. In turn, financial resources are allocated towards experiments and value streams within the organization rather than separate projects.
Agile project management operates on three levels: operational, tactical, and strategic. Each level follows an iterative approach, guided by the PDCA (Plan – Do – Check – Act) cycle and the Objectives and Key Results (OKR) principle. Minimum Viable Products (MVPs) are utilized for market evaluation. Continuous coordination of goals at all levels is essential. Measurement of throughput is done using tools like a company Kanban board with different flight levels. Variables such as NPV (Net Present Value), CoD (Cost of Delay), and WSJF (Weighted Shortest Job First) are used to prioritize backlogs. Additionally, the approach assumes that work is brought to the teams rather than the other way around.
-
Understanding Agile Project Portfolio Management:
Agile PPM is a framework that combines the principles of Agile project management with strategic portfolio management. It focuses on aligning project objectives with organizational goals, fostering collaboration, and continuously adapting to change. Unlike traditional PPM, Agile PPM emphasizes flexibility, iterative planning, and frequent feedback loops, enabling businesses to respond quickly to market dynamics and optimize resource allocation.
-
Adopting an Agile Mindset:
Embracing an Agile mindset is fundamental to the success of Agile PPM. This mindset promotes adaptability, collaboration, and continuous improvement. It requires a shift from a top-down, command-and-control approach to a more decentralized, empowered decision-making structure. Encourage cross-functional teams, promote open communication, and foster a culture that embraces change, transparency, and learning from failures.
-
Prioritizing Projects based on Value:
In Agile PPM, the focus is on delivering value to the organization and its stakeholders. Prioritize projects based on their potential impact, aligning them with strategic objectives and customer needs. Implement techniques like value stream mapping and cost of delay analysis to identify high-value initiatives and allocate resources accordingly. Continuously reassess project priorities to ensure alignment with changing market conditions and business goals.
-
Embracing Agile Project Management Frameworks:
To effectively implement Agile PPM, organizations can leverage established Agile project management frameworks such as Scrum or Kanban. These frameworks provide structured approaches to manage project execution, foster collaboration, and facilitate continuous improvement. Adopting Agile practices like iterative planning, backlog management, and regular retrospectives can enhance project delivery, promote accountability, and enable teams to adapt to evolving requirements.
-
Leveraging Agile Tools and Technologies:
Agile PPM can benefit greatly from leveraging digital tools and technologies designed to support Agile practices. Project management software, collaboration platforms, and visualization tools can enhance transparency, facilitate real-time communication, and enable efficient project tracking and reporting. Select tools that align with your organization’s specific needs and promote seamless collaboration across teams and stakeholders.
-
Ensuring Continuous Monitoring and Adaptation:
Agile PPM requires continuous monitoring and adaptation to ensure project success. Implement regular project reviews and portfolio health assessments to track progress, identify bottlenecks, and make informed decisions. Encourage feedback loops at various levels to facilitate learning and improvement. Use key performance indicators (KPIs) to measure project outcomes, team performance, and customer satisfaction, allowing for data-driven decision-making.
-
Encouraging Collaboration and Knowledge Sharing:
Effective collaboration and knowledge sharing are crucial for Agile PPM. Encourage cross-functional teams to work collaboratively, share insights, and learn from one another. Foster a culture of open communication and knowledge exchange, both within project teams and across the organization. Encourage the use of Agile ceremonies such as daily stand-ups, sprint reviews, and retrospectives to promote transparency, alignment, and continuous learning.
Scaled Agile Framework (SAFe)
The Scaled Agile Framework (SAFe) is a widely adopted framework designed to implement Agile, DevOps, and Lean practices at scale. It offers flexibility and sustainability while guiding organizations in implementing agile strategies in various business contexts. SAFe is built on ten agile principles that provide guidance for solving complex problems and driving continuous improvement.
At the portfolio level, SAFe focuses on aligning business strategy with portfolio execution through the use of development value streams. These value streams operate under a shared governance model and offer one or more solutions to fulfill the strategic objectives of a business domain.
Within the SAFe portfolio, there are three core competencies:
- Lean Portfolio Management: This competency aims to align business strategy with portfolio execution by applying lean-thinking principles to planning and investment funding. It helps organizations optimize the allocation of resources and investments to maximize value delivery.
- Continuous Learning Culture: SAFe emphasizes the importance of fostering a culture of continuous learning within an organization. This involves promoting practices and values that encourage individuals and enterprises to improve their performance, knowledge, innovation, and competence. By nurturing a learning culture, organizations can adapt and innovate more effectively in a rapidly changing business environment.
- Organizational Agility: Organizational agility is a key aspect of SAFe, emphasizing the ability of disciplined agile teams and individuals with a lean mindset to create new strategies and optimize business processes. It encourages organizations to be adaptable, responsive, and quick to seize new opportunities in order to stay competitive.
By leveraging these core competencies, organizations can effectively implement SAFe and achieve improved agility, value delivery, and overall organizational performance. SAFe provides a comprehensive framework that integrates agile practices across different levels of the organization, enabling teams and individuals to collaborate, innovate, and deliver customer value in a scaled agile environment.
Scaling Agile and the Team-of-Teams
Scaling Agile involves organizing the portfolio into programs, which can consist of various projects, products, or applications delivered to customers. These programs are executed by a team-of-teams, working collaboratively and planning together to ensure alignment and synchronization. Scaled Agile Planning methods facilitate this collaborative planning process, usually conducted in a multi-day meeting.
Teams within the programs are responsible for managing their individual work products while also focusing on developing an integrated solution for product integration. This integration could involve hardware-software integration or the integration of different layers within an application. The aim is to deliver an integrated solution that meets customer requirements and undergoes thorough testing and validation.
DevOps teams play a crucial role in the continuous integration, delivery, and testing of the product. They combine development and operations practices to enable the continuous improvement and growth of the product. Continuous integration and delivery allow for regular feature releases and ongoing testing to ensure both new and existing features function correctly.
Shared services teams provide specialized support, such as security, that can be shared among multiple teams within the program. These teams address common needs and ensure consistent standards and practices.
Support organizations, including the Agile Program Management Office (APMO), Agile Center of Excellence, and Agile Community of Practice, are essential for establishing and sustaining Agile practices across the entire enterprise. These support organizations help roll out Agile methodologies, provide guidance and expertise, and foster an Agile culture throughout the organization.
By implementing these elements, organizations can create an Agile enterprise that extends beyond individual teams or programs, promoting collaboration, efficiency, and continuous improvement at a larger scale
Lean Portfolio Management
Lean Portfolio Management (LPM) is a modern approach to portfolio management that emphasizes agile, iterative working methods and lean management principles. It is a key component of the Scaled Agile Framework (SAFe) and focuses on delivering value and fostering continuous improvement.
In contrast to traditional project portfolio management, LPM takes a different approach to resource allocation. Rather than assigning work to staff, resources are allocated to fixed teams, known as the “team of teams.” These teams have the autonomy to implement initiatives and create solutions that are continuously evaluated for their value creation.
In LPM, the emphasis is on defining desired results rather than the quantity of results. The concept of “value” is clearly defined and regularly redefined based on feedback and customer needs. Value creation takes precedence over cost control, emphasizing the importance of delivering outcomes that align with strategic objectives.
Decision-making in LPM is retrospective and occurs at fixed intervals, allowing for course corrections based on new feedback and insights. Budgets and financing are adjusted flexibly in short cycles rather than being fixed annually, enabling a more responsive and adaptive approach to resource allocation.
Decentralized decision-making is another characteristic of LPM, with self-organizing teams empowered to make decisions within their scope of responsibility. This encourages collaboration, autonomy, and ownership at all levels of the organization.
By adopting Lean Portfolio Management, organizations can navigate the increasing complexity of managing projects in today’s fast-paced business landscape. It enables them to prioritize value, embrace iterative practices, and continuously improve their portfolio management processes to deliver meaningful outcomes for their customers and stakeholders.
Digitization
One of the ways to manage this complexity and the need of changing world, is using digitization. The digitization of Project Development phases will provide all synchronized database available to each stakeholders appropriately and same can be used for Managerial decision making. Building Analytics on this database, Risks affecting Project Performance Parameters – Time, Cost, and Quality can be effectively predicted and controlled.
In addition, status will be available for each project to individual project teams whereas Portfolio Dashboard will provide bigger picture for managerial decisions on Strategies & Organizational Priorities. Because of its real-time nature, it can be available across the world at the same time providing a common platform to network and common language to interact
PPM Tools
PPM allows for organizations to minimize the risks of project delays, breaks in team communication, lack of team cohesion, lack of access to tools and data, muddied understanding of project and organizational goals, and mismanagement of company resources.
PPM tools allow for metrics that measure risk, and demonstrate that while a project may be honorable in merit, it needs to be put on hold and sent back to the drawing board, while a less risk-ridden project can be prioritized. Organizations that use PM software for PPM have a 60% higher project success rate than those that don’t use PPM, and are able to accomplish 30% more projects in general.
More often than not, projects fall victim to overspending due to poor cost estimation, which are swiftly mitigated by using PPM estimation tools. There are other factors that can cause project overspending, such as mismanaged resource allocation or miscommunicated project scheduling, but the most common spending monkey-wrench is estimation during project planning. PPM tools have estimation metric tools that factor in past project successes and the scope of the current project, helping make overspending on projects a headache of the past.
Project Analytics
Analytics can be defined as the systematic quantitative analysis of data to obtain meaningful information for better decision making. It involves the collective use of various analytical methodologies such as statistical and operational research methodologies, Lean Six Sigma, and software programming. Though Analysis and Analytics terms sounds similar but they do have some differences.
Analytics: Analytics can be defined as a method to use the results of the analysis to better predict customer or stakeholder behaviors. Analytics look forward to project the future or predict an outcome based on past performance. Tools Predictive Analytics
Analysis: Analysis can be defined as the process of dissecting past gathered data into pieces so that the current (prevailing) situation can be understood. The analysis presents a historical view of the project performance.
Using analytics, project managers have the ability to go beyond simply capturing data and completing tasks as they are completed. Now, they can find out a multitude of information, including exactly how projects are performing, and whether or not they are in line with the overall objectives. Analytics provides project managers the ability to make strategic decisions and improve project success rate
Project Portfolio Management Software
Project portfolio management software is a tool that’s designed to centralize the management and maintenance of a portfolio. With the increasingly large amount of data now associated with a single project, let alone a portfolio, use of software has become a necessity for project managers.
Portfolio managers and project management offices (PMOs) use software to gather data, analyze information and use the results to better manage the portfolio and achieve the goals of their organization. Typical PPM software offerings are also used to optimize resources across the portfolio to better achieve the financial goals of the organization. Managers or PMOs use them to find complementary processes, methods and technologies that will help each project succeed and the portfolio flourish.
Desktop vs. Online Project Portfolio Management Software
The major differences are price, security and speed. For example, desktop software tends to cost more and require a license for each team member to use. This can add up.
Pros of Desktop PPM Software
Security on a desktop, even one linked to an office intranet, is likely better than many online services. Performance for a cloud-based software depends on your internet connection, and if your service goes out you’re out of luck. This, obviously, is not a concern for desktop apps.
Pros of Cloud-Based PPM Software
Online apps are monopolizing the project management sector, and for good reason; they excel at connectivity, collaboration and real-time data. So long as your team has an internet connection, they can use the tool—no matter where they are. This creates a platform where even distributed teams can work together anywhere and at any time. As teams update their status, you get live data that is more accurate and timely to help make effective decisions.
References and resources also include:
https://www.microtool.de/en/knowledge-base/what-is-project-portfolio-management-ppm/
