PIPC - Project Portfolio Optimisation

By: Pipc  06-Dec-2011
Keywords: Technical Resources

In most organisations, the demand for project work far exceeds the capacity to deliver it. Project Portfolio Optimisation is the process which establishes and maintains the optimal balance between the projects, their constraints and the overarching business strategy. It allows informed decisions to be made on the composition of a business’ portfolio of programmes, projects and initiatives.

PIPC Approach

The objectives of Project Portfolio Optimisation (PPO) are to:

  • ensure that the projects and programmes collectively meet the business’ strategic aims
  • optimise the use of resource to maximise the benefits and co-ordinate the timing of benefit delivery
  • achieve the right balance & mix of projects and the right risk profile for the organisation
  • ensure that inappropriate projects are not started and those that are no longer relevant are stopped.

At the business level, portfolio optimisation should be an integral part of annual and longer-term planning. A key output of any annual planning cycle should be an agreed baseline portfolio that balances the strategic imperatives with the available resources and sets the framework for the year’s planned project activities.

When properly executed, portfolio optimisation will ensure the maximum returns on investment for an organisation’s project spend.

The achievement of a range of strategic objectives against a background of numerous projects, with various resource constraints and stakeholder expectations, is highly complex and difficult to optimise without a structured process. We bring a systematic framework, provide a defensible decision making process and ensure the business is focussing its best people, physical resources and management energy on the right projects.

Our approach will ensure that the broad range of strategic priorities is achieved through an appropriate mix of projects and not just the few most effectively sponsored projects.

When to use PPO

Project Portfolio Optimisation is of primary benefit to any multi-project organisation that faces any of the following issues:

  • the project agenda exceeds the ability of the organisation to deliver
  • key management and technical resources are overloaded
  • a high number of projects for the organisation size, with few dedicated project resources
  • projects appear to have conflicting objectives
  • projects are stopped or have just run out of steam
  • project sponsors are of differing organisational ‘weight’ in the project bidding process
  • planning is over-optimistic when compared with the track record of delivery.
Elements of Project Portfolio Optimisation can be applied to any size of organisation. In organisations with a small number of non-business critical projects, a project register, structured approval process and consistent business case format might be all that is needed.

In more complex situations where there is also significant complexity in the choice between competing projects, significant time and effort must be focused on developing and implementing a portfolio process and the supporting modelling tools. ‘What-if’ scenarios and modelling techniques will provide an understanding of the impact of varying the portfolio to meet differing objectives. Scenarios are typically modelled against the following criteria:

  • Allocated budget
  • NPV
  • Impact on the Customer
  • Resource Demand
  • Service Quality
  • Market Share
  • Efficiency Savings, etc, etc

PIPC Proposition

Project Portfolio Optimisation is part of our core expertise. We deliver the approach, framework and supporting tools/techniques founded on our specialist project management skills. In our experience, effective Project Portfolio Optimisation will ensure:

  • high levels of management confidence that the portfolio will fully achieve the strategic objectives
  • money and critical resources are not wasted – only appropriate projects are started
  • clear, defensible decisions are communicated throughout the organisation
  • projects are initiated in a more structured and disciplined manner
  • less individual lobbying – projects are selected on merit rather than individual influence
  • the project portfolio is consolidated and visible to all.

We specialise in the optimisation and management of project portfolios and have successfully optimised project portfolios for companies around the world, across a variety of business sectors.

Keywords: Technical Resources

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