Anthony Gayter 10 November 2015 The Role of the PMO in Enabling Effective Portfolio Management.
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Transcript of Anthony Gayter 10 November 2015 The Role of the PMO in Enabling Effective Portfolio Management.
Anthony Gayter10 November 2015
The Role of the PMO in Enabling Effective Portfolio Management
The financial performance of any one year represents the combined results from project investments in preceding years.
2014201320122011 2018201720162015
Historical Projected
A Company Can Be Seen As A Collection Of Projects
Balance Sheet(Working Capital)
Income Statement
Balance Sheet(Gross Assets)
Traditional Project Portfolios• “ cc
The Role of the PMO in Enabling Effective Portfolio Management
Typically, when companies undertake a specific project such as an acquisition or an expansion into a new business line, they prepare an economic profile that factors in the forecast amounts and timing of all cash outflows and inflows over the estimated project life. An internal rate of return can then be calculated, which is simply compared to the firm’s hurdle rate to decide whether or not to proceed with the project. At this point all governance/analysis/reporting is usually only “Cost”
Traditional Project Portfolios
• A big problem for many PMOs is that all they get to talk about are costs. Many companies have no consistent, company-wide way to value what Project investments deliver.
• “Every business has revenue”, but Projects typically do not … because Project/PMO owners don’t have the discipline to capture the benefit in a way that can be shown to the CEO or executive committee and have numbers that are real.
The Role of the PMO in Enabling Effective Portfolio Management
Traditional Project Portfolios
• “ These are my 10 things, but I don’t want to do cost/Benefit” I’ve been doing this business for X years.’ I know these are the right things – Real quote
• There’s no substitute for CEO support.
• The next point of tension comes in forcing business unit leaders to rank the projects they want.
• Often Business units stack rank 1, 1, 1, 1,
The Role of the PMO in Enabling Effective Portfolio Management
Fund Managers
CEO/Board
SBUs
BusinessOpportunities
How do I influenceShare Price?
What is the best wayto allocate my capital?
How do I improveexecution?
Questions
Project Delivery
Portfolio Delivery
Strategy Delivery through Project Portfolio Management
PfMO
PgMO
Business Outcome Driven Project Portfolios
The Role of the PMO in Enabling Effective Portfolio Management
• PMO Seat at the Corporate Strategy Table• Portfolio Leaders ensure Projects outcome deliver to strategy • Clear standards definitions for prioritization within a portfolio
Not Everybody’s “pet” project makes the cut
• Constant delivery practices• Accountability for outcomes (Revenue, Cost, Brand, M&A)
Continuous measurement (beyond Project delivery timeline)
• CEO & CIO• Total Project Spend
• Executive Council – “C” Suite• Decide on which innovation/projects will be done and in what order within
pre-determined spend….• Draw the line on what is in and what is out and then hold the line!
• CIO• Overall IT Strategy
• Program/Portfolio Management Office• Delivery of Projects that align with the strategy• Track & Report KPIs (KISS) – Pick 6
The Role of the PMO in Enabling Effective Portfolio Management
The Roles within Effective Portfolio Management
5 Key Drivers of Effective Portfolio Management 78% Senior Management Receptivity
66% Competent portfolio governance
62% Standardized metrics and criteria
59% Consistency and logic of organizational strategic objectives
58% Mature PMO
The Role of the PMO in Enabling Effective Portfolio Management
PMI’s Pulse of the Profession – In-Depth Report (Portfolio Management)
Our Journey to Effective Portfolio Management
The Role of the PMO in Enabling Effective Portfolio Management
Our Journey to Effective Portfolio Management• Measurable value on the project(s) “revenue” of
Projects.” • The sum of all the benefits, both hard dollar and intangibles, that a project
delivers in the 12 months following full implementation.
• Captured the benefit in a way that showed the CEO and executive committee numbers that are real • figures had credibility with execs because they’re based on cost-benefit analysis
agreed to by business unit leaders and their controllers,• Finance numbers, not Project Manager numbers. “These groups are very
comfortable acting to data.
The Role of the PMO in Enabling Effective Portfolio Management
Establish KPIs & continuously Measure Cost & Benefits
The Role of the PMO in Enabling Effective Portfolio Management
PMO driven Portfolio Management
The Role of the PMO in Enabling Effective Portfolio Management
New
Candidate
Estimated
Recommended
Interlocked
In Planning
Active
In Closing
Complete
On Hold
Cancelled
Obsolete
“The Line”
“The Portfolio”
Below the Line
14
HP IT Transformation
AfterBefore
• Active Projects: 1240
• Teams: 2 to 10 person teams
• CBA Analysis: 3+ years
• Project Delivery prior 3 Years: 1,200
• Innovation vs. Support: 30 / 70
Portfolio Management
• Active Projects: 500
• Teams: 10 to 30 person teams
• CBA Analysis: 6 months
• Projected Project Delivery: 3,000+ over 3 years
• Innovation vs. Support: 80 / 20
15
Numbers