Strategic Elements of the Portfolio


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A portfolio can include multiple programs, and/or the projects within a single program can be a portfolio. A portfolio is just a logical grouping of projects under a common leadership structure.

Project Portfolio Management (PPM) solutions, like WorkOtter, are inputs to a decision maker’s judgment process. Any solution should ensure thoroughness and structure the information in a way that allows a decision maker to make a decision. This includes helping the decision maker know what information is firm, what information is fuzzy, how the information was processed, what information was excluded, and what the solution recommends. The decision maker then must assess all the input before factoring in his or her experience or intuition and making the actual decision.

This 7 part Guide to Portfolio Management Essentials walks a decision maker through the different factors of portfolio creating and planning.

Part 1 of 7: Regulate Capacity Utilization
Part 2 of 7: Prioritize the Portfolio
Part 3 of 7: Assess Where Your Program Has Been
Part 4 of 7: Understand Where Your Program Is Today
Part 5 of 7: Drive Where Your Program Is Going
Part 6 of 7: Business Cases
Part 7 of 7: Strategic Elements of the Portfolio

Part 7 of 7: Strategic Elements of the Portfolio

Does the amount of capital investment available dictate strategy, or does your strategy dictate the amount of capital investment? From a developmental perspective, purists would say that when you are identifying strategy or strategic alternatives, you should not restrict or inhibit your thinking. This process of developing strategies with no boundaries is valid, but the resulting strategies will have to be matched with the budget. The strategy may be so good that you’ll want to seek out alternative funding; however, in the absence of alternative funding this will necessitate difficult choices.

Some organizations even set targets or establish percentages for what has to be spent on new or out of the box initiatives because they want to make sure the organization is looking ahead at new and different opportunities or ways of doing business. Setting aside a percentage of the portfolio for this is a good strategy.

Set-asides are nothing but target percentages or resource levels for certain aspects of the portfolio. A portfolio analysis or sanity check will show the portfolio allocations across a number of perspectives. A sanity check involves answering questions such as the following:

  • How are our projects allocated in dollar value and number of projects?
  • Small projects to large projects?
  • Maintenance projects to new development projects?
  • Across the organization?
  • Geographically?
  • Across the supplier base?
  • Across technologies?
  • Across technology readiness levels?
  • Across the customer base?
  • High risk to low risk?

A common set-aside opportunity for large programs is for small projects because it may be difficult for small projects that make sense to go through the approval cycle that exists in some large programs. These small projects often have a difficult time competing with projects that are 10, 100, or 10,000 times their value.

Good portfolio management includes accounting for regulatory or mandated projects and expenditures separately. It is also important to keep a history of the percentage of the portfolio dollars that are spent on regulated activities.

Once your team has decided on their plan and process, PPM software can help you execute that process. WorkOtter helps you successfully execute your program process strategy for project success. Get a demo of WorkOtter and see how we can make your program management effective.

“The Handbook of Program Management: How to Facilitate Project Success with Optimal Program Management, Second Edition” by James T. Brown is a copyrighted work of McGraw-Hill and McGraw-Hill reserves all rights in and to the Content. ©2014 by McGraw-Hill Education. Purchase the book on Amazon.