Do we still need portfolio managers

Portfolio management

A large number of new projects and programs are emerging in companies in order to drive the improvements and adjustments required in digitization projects. Their increasing number requires a holistic and effective control within the scope of a portfolio management in order to avoid bad planning.

Maintain an overview with project portfolio management

We differentiate between projects and programs: Projects are temporary projects, programs consist of several projects that are related in terms of subject matter and content. All planned, approved and ongoing projects and programs of an organization or organizational unit together form the project portfolio.

Projects and programs are usually not under the same management. Since projects and programs are continuously being completed, re-prioritized, discarded or adapted, this project portfolio changes.

In contrast to projects and programs that have a project or program end due to their uniqueness and are therefore finite, the portfolio basically lasts. This is unaffected by the fact that over time new projects are added to the portfolio while others are terminated or canceled.

Only a systematic management of the project and program landscape can bring the multitude of different projects “under one roof” and bring them to a uniform framework. This address holistically the operational tasks of the projects and programs as well as the strategic problem areas. The project portfolio supports these aspects in the sense of a "service-providing" management task for the projects. For example, it can be about using resources better, optimizing the budget distribution in terms of investment decisions, or better supporting the selection and approval of the “right” projects. Portfolio management provides valuable support for all of these concerns.

The portfolio management continuously controls and controls the sum of the projects and programs of an organization. It ensures that the organization, with a view to its strategy, carries out the optimal composition of projects and programs at the right time with the appropriate resources and the necessary financial means - with a suitable method.

Strategic and operational project portfolio management

Figure 1: Portfolio, program and project management in interaction

The project portfolio management distinguishes between the strategic and the operational component (see Figure 1).

The strategic portfolio management selects and prioritizes implementation-relevant projects with demonstrable reference to corporate strategy and their benefits. Portfolio management evaluates each project using criteria that show what contribution or value it makes to the implementation of the strategy. The projects are not viewed in isolation, but are related to each other in order to identify and address, for example, intersections or overlaps, technical or content-related and time dependencies, possible duplication of work and synergy potentials. The critical allocation of resources (skill-related personnel and financial resources) can also be part of the strategic considerations in the sense of a bottleneck-oriented allocation. Because changes in the resource situation - also through new projects - can also affect other projects and thus affect the entire portfolio.

The operational portfolio management monitors and controls the active projects and programs on an ongoing basis. In terms of regular project control, also with the help of status reports and project reviews, it can even take on an early warning function for problem detection so that measures can be taken in good time to deal with the problem. If companies implement projects with the help of agile, classic or hybrid project management approaches, the operational portfolio management must take this into account and address the specifics, without them falling out of the overarching control. Another task of operational portfolio management is to provide uniform process models for the various project management approaches, classifications and their process models and thus to support certain project types or types. These procedural models for the implementation of the projects and the project management task fields only have type-specific differences, but have a common framework.

The findings of ongoing project and program implementation that result from operational portfolio management can be fed back and form the basis for continuously improving portfolio management. This contributes to the success of the project portfolio and secures empirical values ​​from ongoing and completed projects (see Figure 2).

Figure 2: Possible project phases taking into account the specifications from the project portfolio management

Development and implementation of a project portfolio management

When setting up portfolio management, the following requirements and aspects must be taken into account:

  • Overarching governance and guidelines for portfolio, programs and projects
  • Comprehensible and uniform criteria for the selection of projects with a view to the strategy and goals of the organization and operational aspects (approval or rejection of project applications)
  • Integrated consideration of selection criteria and restrictions for projects and programs
  • Consideration of existing projects / programs
  • Project selection, categorization, prioritization and approval
  • Project approach models and methods
  • Consideration of dependencies, conflicts, redundancies and synergies between the projects
  • Resource allocation and control (external / internal personnel and finances / budgets)
  • Comprehensive risk management
  • Overall overview, (rolling) overall planning and adjustment
  • Controlling, control mechanisms and instruments
  • Transparency: overview, key figure systems and reports
  • Continuous improvement of portfolio, program and project management

However, companies should be aware that the planning and implementation of portfolio management does not take place in the green field and that projects are already underway.

The planning and implementation of a project portfolio management usually takes place as a project. This also takes into account organizational change management, stakeholder management and the necessary communication (including training, documentation) in the organization. The current situation and corporate strategy are important planning bases for the portfolio and project portfolio management. It is essential to inquire about the urgent needs of the organization and to validate the benefits of one or more project portfolios, for example with regard to the following questions:

  • Is there an overview of the projects and programs that are being planned, ongoing or about to be completed in order to obtain transparency about the overall situation of the projects?
  • Are there too many projects to start at the same time? Which projects are ongoing or will continue next year? What investments and resources are the projects associated with? Are there free capacities and resources?
  • What are the right and important projects for the organization? Are all projects urgent and necessary? Which projects bring the most (monetary) benefits? Are there objective must-projects that are linked to regulatory or legal requirements and deadlines? Which projects are required from an operational point of view?
  • How can we evaluate projects in terms of progress, results, quality, benefits, time, costs or scope? Is there an overview of all projects with their key information?
  • How are changes in the projects visible and communicated (and when or how regularly)? What effects do delays have on other projects (finances, personnel)? How can we better plan, develop and deploy our bottleneck resource personnel?
  • Who is used in which projects? For how much longer)? To what proportion? Which (planned) projects need which skills in the project and in operation and when?
  • Are there any risks involved in the number of projects? How can we set up a uniform (portfolio-wide) risk management system?
  • Does the provision of the project results work? Is the handover to the company successful? Or are there problems and negative effects particularly frequently and repeatedly because the procedures and communication between projects and operations are not carried out in a timely and structured manner? Does the company know which projects (relevant to it) want to make their results available to users in the near future?

After the goals and benefits of the project have been worked out precisely, the implementation project of a project portfolio management must address the following aspects:

  • Processes and activities in portfolio management must be planned and designed for the recording, selection, acceptance or rejection of projects, categorization, prioritization and commissioning (possibly bundling), resource allocation, controlling or steering, review and completion of the projects with information to the portfolio , rolled out and made known. The existing processes and documentation and other artifacts must be taken into account and evaluated. The issues of resources and risks must be given particular attention.
  • The inventory, the selection, the design and the provision of the tools and control means for the portfolio management must be taken into account. This includes the definition and creation of instruments and methods, for example with regard to time, resources, costs, risks, changes and progress. This includes requirements for transparency and controlling (key figures, dashboards, balanced scorecards, reports and reviews).
  • For projects and programs as part of the portfolio, the (further) development of process models based on standards (processes, roles, methods) and the project / program management methodology is planned.

These aspects are the basis for governance in portfolio management and the associated responsibilities. This also includes setting up committees and roles in the sense of institutionalization (for management, coordination, coaching) as well as guidelines of the management discipline for organizational implementation and institutionalization.

Conclusion

The successful introduction of portfolio management leads to major changes for the different hierarchical levels in an organization. Essential for a real benefit is the long-term establishment of portfolio management in the organization, its acceptance and continuous improvement in which empirical values ​​are explicitly queried, secured and used. This is the only way to successfully link project management and corporate strategy. In addition, in the age of digitization, companies can implement their innovation and transformation projects faster and more successfully on a transparent information basis.

Accompanying advice from Materna

Materna supports companies in introducing project portfolio management. The experts support you in setting up the project, provide project coaching and advise on the establishment of the portfolio management. Further activities are the further development of project and program management methods or the selection and implementation of tools to support portfolio management and the mapping of a portfolio. In addition, Materna provides communication measures for introduction and training as well as for introductory initiatives.

about the author

Nadin Ebel

Nadin Ebel works as an IT project manager, consultant for IT service management and accredited ITIL trainer at Materna. She has many years of experience, including on the topics of ITIL, ISO 20000 certification, rollout management, IT infrastructure, managed services and security. This includes operations, advice and project management at home and abroad. In recent years, she has successfully managed and supported both IT infrastructure projects and projects for the implementation and professionalization of IT processes in various industries and in public administration. In addition to her freelance work as a lecturer and lecturer, Nadin Ebel has made a name for herself as a specialist book author.