“Fear, greed and hope have destroyed more portfolio value than any recession or depression we have ever been through.” James O'Shaughnessy
“We have a powerful portfolio of brands that are well-positioned for future growth, both domestically and internationally.” Nancy Dubuc
I like to start my articles with a couple of quotes on the topic of the day, but I was unable to find any that were meaningful in discussing Portfolio Management as a project management methodology. That is a problem for organizations because a Project Management Office (the traditional PMO construct) is not always the best choice. Couple that with the fact that many organizations don’t treat the discipline of “project management” like they do other specialties, and you can end up with people that don’t understand project management trying to administer the wrong process!
Is it any wonder that so many projects are over budget, behind schedule and fail to deliver customer value?
Remember that a portfolio is a collection of several different things, including other portfolios. The portfolio can also include individual projects as well as programs and these programs can include other sub-programs, projects and even operational activities that are all related to this portfolio.
Once the decision is made to stand up a Portfolio Management Office (PfMO), you need to determine what kind of office you want. Here are your choices, and they apply to both PMO’s and PfMO’s:
Supportive - these provide a reference function. They have the templates, lessons learned, policies, process, etc.
Controlling - the above plus they provide human support. They may have experts to assist you in navigating the organizations governance processes, serve as documentation reviewers, and even determine if a work stream has met the requirements to move forward within the established milestones. They may also have to approve your plan, determine if you can deviate from templates within the plan and work with you to determine the overall schedule.
This is the default choice for the majority of organizations.
They provide assistance, and assess if the work is going as planned. If the work in the portfolio falls behind schedule, goes over budget or experiences significant problems with scope, they dutifully report it.
However, no one is holding the Portfolio Management Office accountable if the portfolio doesn't perform as expected.
This leads us to the third type of PfMO:
Directive - A Directive PfMO is responsible for the overall performance of the portfolio. This has profound implications for the organization as the responsibility for delivery has shifted from the organization doing the work to the PfMO. This also has implications for resource allocation (how much are we spending on each work stream), activity selection (do we have resources to deliver it?), portfolio performance (is the work delivering as expected) and C Suite politics.
I provide a more detailed explanation of these types of organizations here:
As previously stated, most organizations default to a “controlling” model for both PfMO’s and PMO’s.
I believe they do so because the organizational implications are significant. For the “directive” model to work, functional and project managers need to be completely transparent in their reporting, do an excellent job of estimating and must ruthlessly identify work that isn’t performing as expected. Work that isn't performing as expected should be removed from the portfolio and those resources immediately diverted to higher value work. While this model actual frees up functional managers to focus on the core work, it is often perceived as giving up significant control to the PfMO office.
Next, we will do a sidestep to an interesting idea that PMI described in a 2013 article, the Results Management Office. This will inform the discussion on what type of PfMO to stand up, and will provide additional insight into the topic.
Coda
A couple of unrelated topics.
My view differs from PMI in some instances. This is based 15 years personal experience delivering large and complex projects in an international environment, so don't use these articles to prep for any exams!
I moved this blog to an updated version at my hosting service. I did this because of you! I have gotten so many subscribers and the site is generating much traffic that I began to get complaints about performance. The new site has a nicer look and is more technologically robust. Thanks to my many subscribers! A lot of traffic is a great problem to have!
I also invite you to take a look at my other site, www.seaclutch.com. My wife and I are bringing a product to market, and I am blogging about that journey. You might find it interesting.
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