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Maturity Levels of Project Portfolio Management (PPM) and how to set your Own Target Level

SECOND EDITION

By Matti Haukka

Finland
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Introduction

The degree of using personnel resources for program and project type work processes is increasing in all organizations.  It is a fact and a problem that the organizations’ Governance models are not considering this yet. One reason is that management is not even recognizing the changed situation. Even though it is recognized, the challenge is to set the targets regarding the maturity on a reasonable and realistic level.

This presentation is based on several years’ experiences when consulting organizations representing different industries and service business fields as well as the public sector. As a framework for assessing maturity levels this presentation refers to Five Step and Maturity Level Model developed by Project Institute Finland.  The model has already been presented in many IPMA Conference papers.

It has also been used as the framework and flowchart of IPMA Advanced training course “Managing Corporate Portfolios” instructed by the Author and  CEO of Projects of Schiphol Airport Mr. Gerard Geurtjens.

 

The paper is also launching a new term –Project Allocation Percentage (PAP). PAP is very good indicator to most organizations to define the target level for PPM maturity. Finally, the paper presents an approach how the maturity target is related to PAP.

Different types of projects and portfolios and the need of PPM

The principles of this presentation can be applied to any kind of project portfolio. But in case of a delivery project portfolio where the majority of projects are delivered to external customers, some of the ideas and principles are not so relevant.  Therefore, the following questions and the story are highly relevant whenever you have a portfolio of internal projects:

You can ask the question: which is the most critical resource when implementing your strategy: money or personnel resources? I have set this question hundreds of times to management boards and finally, their answer has always been “personnel resources”. That is because you can always get money for good business ideas but if you have a lack of competent resources, that is a more complex problem.

Then I continue with a question: If your old laptop is not functioning properly anymore , and you need a new one (let’s say that the price of this new laptop would be 1 k€), are you allowed just to go and buy one and take the invoice to your book keeper? The answer is always “no”.  You have to fill certain documents and get an approval through a certain governance model.

Then I ask: If you have a good development idea and you want to get together a meeting with four of your colleagues (let’s say that the duration of this meeting is two hours, it means that the labour cost of the meeting is app. 1 k€), are you allowed to do this? The answer is “yes, of course”.

The main point of this story is not say that buying e.g. a new laptop should be allowed without any control, or to say that getting together any meeting should get an official permission. Most of the readers have already got my point: The use of real money is always controlled by our governance systems, but the use of personnel resources are not.

Even if personnel resources were just said to be more critical.

So what is the conclusion of my story? Typical governance models are controlling the use of money but not the use of personnel resources. If most of the projects are implemented using external resources, you do not have such a big challenge. But if a huge amount of your own personnel resources are needed to implement your projects, you have a big challenge. This challenge can be solved only by Project Portfolio Management of a reasonable maturity level (See figure 1).

More…

To read entire paper (click here)

Editor’s note:  Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English. This paper was originally presented at the 26th IPMA World Congress, Greece, published in the Congress Proceedings and video recorded (http://pmgreece.gr/video.pdf).  Paper  republished here with permission of the author and PM Greece, organizers of the 26th IPMA World Congress

About the Author                                                                                                                              

matti-haukkaflag-finlandMatti Haukka

Helsinki, Finland 

Mr. Matti Haukka is a Partner and Senior Consultant at Project Institute Finland ltd. and a board member of Project Management Association of Finland.  He has a M.S. degreee in Engineering from Helsinki University of Technology (1985).  His professional experience includes: Operations Planning Engineer, Project Engineer and Project Manager, Valmet Shipbuilding Division and Wärtsilä Marine Engineering 1985-1988; Project and Design Manager responsible for international projects and project business development, Wärtsilä Marine Contracting 1988-1989; Project and Product Manager in charge of project management training and consulting, Dativo 1990; Partner and Managing Director, Project Institute Finland ltd, 1990-2002; Partner and Senior Consultant, Project Institute Finland ltd, 2002 – present; Secretary of the Board, Project Management Association of Finland, 1992-1998; Member of the Board, Project Management Association of Finland, 1998-2001 and 2011- present; and member of the Board, PMI Chapter Finland, 2008-2010.

Matti Haukka has provided tailored project management training for various companies and worked as a consultant for several organizations of different fields since 1989. At Project Institute Finland he has been in charge of developing the ABC Project model™ and held numerous presentations about the topic in international project management conferences. Today he mainly trains experienced project managers, members of steering groups and board of directors and provides consulting services for clients who want to develop their project management cultures. His specialty is project management models and portfolio management. He has been the main instructor of yearly IPMA Advanced Course “Managing Corporate Project Portfolios” since 2006. He also functions as the leader of “Portfolio Management and Program Management – SIG team” in Project Management Association Finland.

Matti can be contacted at [email protected].  For information about Projekt Institute Finland, visit website:  http://www.projekti-instituutti.fi/