John Bridges writes …Portfolio management sits above project and programme management, and is concerned with what projects and programmes an organisation should invest in and their relative priority, together with how those investments are performing in practice. It involves making decisions about project priorities, monitoring the progress of key initiatives, and then agreeing and taking any corrective actions required and communicating these well, to keep staff motivated and engaged.
In the same way that an investor will manage a portfolio or group of investments, an organisation will determine and authorise a portfolio of IT and change initiatives, to deliver the business strategy, which will then generally be established as projects and programmes. The corporate portfolio management function will then monitor and evaluate the portfolio of initiatives, and may re-prioritise them or alter the resources applied to them, to try to achieve the best result for the organisation. This may include stopping failing initiatives and re-deploying the resources involved, boosting the resources on a programme to ensure success, or even changing the leaders of some of the key initiatives if required.
An organisation’s leaders are generally concerned with both ‘running the business’ as well as ‘changing the business’, to make it more effective. Portfolio management enables them to do this, by balancing and prioritising across the ‘running’ and the ‘changing’ activities, with an organisation-wide and neutral view of the whole resource and investment picture.
Normally, an organisation will establish an Investment Committee or similar to perform the portfolio management function, staffed with experienced and cross-functional senor staff. Indeed, these people will be expected to make decisions in the best interest of the organisation, bearing in mind how the portfolio of BAU and change activities are performing. There is no room here for favouring ‘pet projects’ or functional allegiances, and the team have to take a truly corporate view on business performance.
Generally, there will be more potential projects than the resources available and so decisions will need to be made about their relative priority – based on their cost, critical resource demand and likely outcome and payback – and hence which to commit to and authorise. This will best be done taking into account an organisation’s level of project maturity and its recent level of success in delivering initiatives to plan. Many organisations are over-optimistic at the early business case stage, and the eventual project outcome can occur later and cost more than originally intended. Hence these kinds of decisions are generally best made by experienced senior managers, who understand well the organisation’s delivery capability.
Done well, this portfolio management approach enables an organisation to make the best use of all its resources, to help achieve the agreed business strategy and objectives, and to take corrective action should things go wrong with an activity or initiative.
In the UK, there is the best-practice Management of Portfolios (MoP) Practitioner qualification, for those working in this field. Indeed, portfolio management can be seen as a logical career progression for experienced programme managers who aspire to take a wider view and to contribute as business leaders.
For more details about MoP, visit the official MoP web site at: www.mop-officialsite.com
John Bridges is an Interim Portfolio Manager
Contact him via www.ippm.co.uk