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Portfolio Decisions to Maximize Strategic Benefits

SECOND EDITION

By Susan S. Bivins
Project Portfolio Management Consultant, IBM (Retired)
Missouri, USA

and

Michael J. Bible
Senior Advisor, FRONT Group AS
Trondheim, Norway

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Abstract

Success in project portfolio management depends on people, culture and governance, more than on any specific tool or technique. Even in organizations with the right culture and processes, many struggle to make portfolio decisions that maximize strategic benefit. Too often, projects are randomly identified, discussed to exhaustion, arbitrarily ranked and scored, and then finally chosen as a means to end interminable meetings, resulting in selection of the wrong projects and misallocation of organizational resources.

Even with the right foundation, managers grapple with endless dialogue or produce inaccurate portfolio priorities, often without knowing it, because the decision process lacks structure, and those participating fail to realize that program and portfolio decisions are complex enough to exceed the grasp of human cognition. This paper establishes portfolio selection as a complex decision problem and offers tools and techniques to help managers productively and accurately select the projects and programs that maximize strategic benefit.

Introduction

Success in project portfolio management depends on people, culture, governance, and often, transformational change of attitudes and processes, more than on any specific tool or technique. That said, many organizations with the right culture and processes struggle to make portfolio decisions that maximize strategic benefit. Too often, projects are randomly identified, arbitrarily ranked or scored, discussed to exhaustion, and then finally chosen as a means to end interminable meetings, resulting in selection of the wrong projects and misallocation of organizational resources.

The portfolio and its member projects and programs are the “bridge” from expectations in the strategic planning process to benefits realization after delivery, when the projects become operational. Organizations perform portfolio management to (1) select the combination of projects anticipated to deliver the greatest strategic benefit, (2) measure their performance during execution to assess the degree of continued expectation of strategic benefit, and (3) transition completed projects to operations for actual delivery of strategic benefit.

Even with the right foundation, managers grapple with endless dialogue because the decision process lacks structure, and those participating fail to realize that program and portfolio decisions are complex enough to exceed the grasp of human cognition. Selecting the right combination of programs and projects is critical; perfect metrics and great transitions don’t matter if we’ve selected the wrong ones.

This paper establishes portfolio selection as a complex decision problem and describes an approach portfolio decision makers can use to productively and accurately select the projects and programs that maximize strategic benefit. It is about how to replace fruitless discussion, ad hoc processes and even ranking and scoring models with tools and techniques that improve the quality of portfolio selection decisions; and it is about how we can borrow tools and techniques from decision sciences and psychology and apply them to selecting project portfolios.

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. Original publication acknowledged; authors retain copyright. This paper was originally published as part of the 2013 PMI Global Congress Proceedings – New Orleans, Louisiana. It is republished here with the authors’ permission.

About the Authors

pmwj34-May2015-Bivins-AUTHOR1Susan Bivins

Missouri, USA

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Susan S. Bivins, MSPM, PMP, has more than twenty-
five years of management and leadership experience dedicated to delivering successful information technology, organizational change management, and professional consulting services projects for major global corporations. She specializes in project and portfolio management; international, multi-cultural and multi-company initiatives; and business strategy integration in the private and public sectors. During her career with IBM, Sue managed multiple organizations and complex projects, including operations and support for the Olympics, and a strategic transformational change program. Since retiring from IBM, she has led multi-company joint initiatives with Hitachi, Microsoft and Sun Microsystems, and served as Director of Project Management at Habitat for Humanity International. She is co-author of the book Mastering Project Portfolio Management (J. Ross Publishing, Inc.) and several articles on project portfolio management.

Sue earned her Master of Science in Project Management from the Graduate School of Business at The George Washington University, where she received the Dean’s Award for Excellence and was admitted to the Beta Gamma Sigma business honorarium. A member of PMI, she contributed to the PMI Standard for Portfolio Management and is currently serving on the OPM3 Third Edition team. She and her husband live in Missouri. Sue can be reached via e-mail at [email protected].

 

pmwj34-May2015-Bivins-AUTHOR2Michael J. Bible

Trondheim, Norway

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Michael J. Bible, MSPM, PMP, has twenty-five years of professional and leadership experience supporting the U.S. Department of Defense (DoD), of which the last 15 years have been dedicated to project and program management of test and evaluation programs for major defense acquisition programs. He is a project management professional with a successful history applying project management best practices to the technical field of test and evaluation for portfolios of complex defense acquisition programs and projects.

Mike specializes in management of complex technical projects, and as a former co-owner of an engineering services firm, has applied strategic planning to establish organizational direction while utilizing project portfolio management to successfully grow the company in alignment with business initiatives.   A retired Marine Corps officer, Mike obtained his Master of Science in Project Management from the Graduate School of Business at The George Washington University and is a member of PMI. He lives with his wife and son in Norway. Mike can be reached via e-mail at [email protected].

Information about Mastering Project Portfolio Management – A Systems Approach to Achieving Strategic Objectives by Susan Bivins and Michael Bible, can be found at http://www.jrosspub.com/Engine/Shopping/catalog.asp?store=12&category=173&item=14262&itempage=1.