Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 1 Project Portfolio Management

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 2 Project Portfolio Management Project Portfolio Management is often compared to Financial Portfolio Management which is based on the work of Professor Harry Markowitz from the early 1950’s and which provides insight into the efficient allocation of financial resources among financial investment opportunities such as stocks and other financial assets. There are similarities – diversification and the pursuit of selecting the “best” collection of stocks or projects – but there are differences too. A financial portfolio manager can select stocks across industries but a project portfolio manager is limited to selecting projects which lie within the capabilities of the organization.

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 3 What is Project Portfolio Management? Project Portfolio Management (PPM) is a management process designed to help an organization identify new project opportunities, acquire information about these opportunities, and rank and prioritize them against a specified set of criteria such as strategic fit, cost, risk, expected return etc. PPM is also about periodically and carefully reviewing all the projects which have been selected for inclusion in the portfolio and which are in various stages of initiation, planning and implementation, with a view to determining which projects should move up on the priority scale (and thus get preference for available resources), which ones should move down and which projects should be considered for modification and/or premature termination.

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 4 Goals of Project Portfolio Management Ensure that all new and existing projects are aligned with the organization’s mission, goals and objectives Produce and maintain a comprehensive listing of all projects which the organization is undertaking Develop a “bigger picture view” and a deep understanding of the project collection as a whole Create an “objective” methodology for identifying, ranking, prioritizing and selecting new projects Enable the removal of low value projects from the portfolio Help the organization make the best use of resources which it has available for its projects Ensure that a healthy balance across different types of projects with different cost, schedule, complexity and risk profiles is maintained

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 5 There is a recognition that resources are being misspent Many projects are not adding “strategic value” to the organization Too many small projects underway Excessive project delays are experienced due to lack of resources Frequent difficulty getting people to build project teams Project staff are involved in too many projects and putting in too much overtime work Intense competition (versus cooperation) between areas of the organization with regard to financing and staffing projects Frequent change of status of projects (active – on-hold – priority – on-hold) When Is There A Need for Project Portfolio Management?

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 6 Ensures that all projects selected are properly aligned with the organization’s mission, goals and objectives Utilizes a tested and effective process which has been acknowled- ged and accepted by the organization’s key stakeholders Project selection and prioritization takes all relevant project assessment criteria and information into consideration Targets the best projects from the available pool of projects Prevents duplication of projects and consequent waste of resources Is integrated in a comprehensive information framework which permits the periodic performance monitoring of the projects in the portfolio and reevaluation of their relative priority Facilitates organizational learning Benefits of Project Portfolio Management

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 7 Tendency to rely too heavily on PPM tools/software for decisions Adds another layer of bureaucracy to organizations May cause conflict, confusion and stress (for e.g. due to shifting priorities and resources) Could require a “cultural change” in the organization (overcoming resistance by some managers and getting sustained commitment by senior management) Good project selection requires large amounts of quality information which is often not always available at the beginning of pre-selection stage Cannot be effective without well-documented project plans, accu- rate estimates of resource requirements and resources consumed Difficult to perform in environments marked by frequent change Limitations of Project Portfolio Management

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 8 Project Management & Portfolio Management Project Management is about “doing projects right” after the projects have been accepted for inclusion in the project portfolio. Project Portfolio Management is about “doing the right projects”, namely, ensuring that only those projects are selected for subsequent inclusion in the project portfolio which will add value to the organization. while

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 9 Project Portfolio (Example of a Non-Governmental Organization) An NGO seeks to contribute towards poverty reduction of womenfolk living in deprived rural areas of provice P by providing them with “opportu- nities” to earn income independently or through collective effort Mission, Goals, Objectives Training Courses for Making Embroidered Dresses Knitting Workshops Subsidized Credit Scheme Equipment Leasing Locate Sellers of cheap Raw Materials Database of Prospective Buyers

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 10 Project Portfolio (Example of a Commercial Organization) Depending on its size, a commercial organization may have hundreds (or even thousands) of pro- jects in its project and programme portfolios at any given point in time! A huge amount of its financial, human and material resources will be tied up over time in these portfolios. Creation of a New Product Manufacturing Facilities Techn. Upgradation or expansion of Existing Manufacturing Facilities New Product Development Substantive Modification of Existing Products Training of Managers and Employees in TQM Redesign of Some Existing Process Assets

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 11 Project Portfolios: ‘Good’ and ‘Bad’ Bad Project Portfolio Many projects included in the portfolio are of high risk with low expected returns spread over a long period of time and several projects do not align well with organization’s mission, goals and objectives Good Project Portfolio All projects in the portfolio are aligned with the organization’s mission, goals and objectives, and there is a healthy mix of high and low risk projects with comparatively high rates of return over the short, medium and long-term. Projects will not add value to the organization to the extent they could have if a PPM Process was in place. The organization’s growth and (possibly) its survival may be jeopardized. Projects will add maximum value to the organization for the resources made available for the projects in its portfolio. This organization is in a better position to face internal and external challenges.

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 12 The Project Portfolio Process Framework (Example: Commercial Organization) New Product Development Process Modification /Reengineering IT-Systems Capacity Expansion Mainenance and Renovation Compliance System of Project Classification and Categorization Organization’s Mission, Goals & Objectives, Structure, Cul- ture, Priorities and Support Infrastructure (e.g. PMO, Information Databases) PPM Process

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 13 Criteria Which Determine Project Selection Project Portfolios are dynamic entities whose composition changes over time as completed projects exit it, new projects are added and some projects are modified or prematurely terminated because they will no longer add value to the organization. Each project must be assessed according to the same criteria relevant for its category Project Portfolios are heavily in- fluenced both by the internal organizational factors (e.g. mission, goals, objectives, structure, processes, information systems, available resources etc.) as well as by external considera- tions (competition pressure, tech- nological innovation, changing demands etc.).

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 14 Some Asessment Criteria for Project Selection Estimated Cost and Time Complexity and Risk Expected Benefits (Quantitative & Qualitative) Impact on Organization’s Image Size and Composition of Existing Programme & Project Portfolio Organization’s Competencies Environmental Factors (Economic, Market, Social, Legal, Political etc.) Human and Physical Resource Requirements Organization’s Experience With Similar Projects Organization’s Institutional Informational and Process assets Impact on Organization’s Employees and their Motivation & Performance Environmental Impact Ethical Considerations and CSR Strategic Partnership Building Temporal Distribution of Quantitative Returns Project’s “Strategic Fit”

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 15 The Project Portfolio Management Process Context of Organization Inventorization Analysis & Assessment Determination of Portfolio Implementation Mission, Goals, Objectives, Culture, Structure and Infrastructure, Pro- cesses, Environment etc. Comprehensive listing of all active, on-hold and proposed projects at all levels of the organization. Multiple Assessment Criteria, Quali- tative & Quantitative Tools, Software Applications etc. Maintain “balance” of projects to create “optimal mix” based on their cost, return, risk, schedule etc.. Periodically review and modify port- folio by retaining, modifying and (when necessary) killing projects.

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 16 A Simple Scoring Model for Project Proposals Criteria (0-10) Strategic Fit Core Compe- tencies UrgencyRoI Weighted Total Weightage 3223 Project A Project B Project C Project N …………… x3 = 24 x3 = 6 x3 = 15 x2 = 18 x2 = 14 x2 = 6 x2 = 10 x2 = 2 x2 = 12 x2 = 10 x2 = 12

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 17 Projects and Project Portfolio Management ProjectsProject Portfolios Cause change beneficial for the organization Focus on project goal, budget, schedule, requirements and stakeholders Use a process- and tool-based methodology Compete with other projects for resources Are defined by their com- plexity, risk, cost, schedule, expected return and other factors May fail or be prematurely terminated Must add maximum value to organization for the resources provided Must be consistent with the organization’s mission, goals and objectives Are based on a robust and consistently applied process for selecting and managing projects Need to be periodically monitored for performance and revamped if necessary Are holistic in outlook and aid senior mgt. decision-making

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 18 A Thing to Remember About Project Portfolio Management Project Portolio Management is an iterative process. The performance of the projects selected for inclusion in the portfolio must be periodically monitored after they have been initiated in order to determine whether in a changing internal and external environment they are still aligned with the organization’s mission, goals and objectives and, if this is no longer the case, either modified accordingly or prematurely terminated so that resources can be redirected towards other (high value-adding) projects.

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 19 Project Management Software Solutions A large number of vendors, including Microsoft and Primvera, offer advanced software programmes not only for project management as stand-alone solutions, but also as enterprise or organization-wide packages which cater to the needs of project portfolio managers. Project portfolio software programmes offer various levels of functionality and are very useful tools. At the same time, they are simply a means to an end and not intended as an end in themselves!

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 20 Gartner Quadrant for Portfolio Management Software Solutions in the IT-Sector The Gartner Group is a large US-based consulting organization whose focus is primarily the IT-field. The Gartner Group periodically reviews the Project Portfolio Management software solutions which are available on the market and ranks these in its acclaimed “Magic Quadrant for IT Project and Portfolio Management”.

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 21 Project Portfolio Management Software (Selected Vendor Overview)

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 22 Project Portfolio Management Software (Screenshots: Primavera 6)

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 23 Project Portfolio Management Software (Screenshots: Primavera 6)

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 24 Project Portfolio Management Software (Video Case Study: Primavera ProSight)

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 25 Literature on Project Portfolio Management

Assistant Professor Dr. Aurangzeb Zulfiqar Khan Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan 26 Literature on Project Portfolio Management