3-1 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e C HAPTER 3 Organisational Strategy and Project Selection

3-2 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Learning Elements 3.1Further develop and understand the importance of the methods that define and align an organisation’s project activity. 3.2Understand the features of portfolio management systems and the role of a typical Project Management Office (PMO).

3-3 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Learning Elements (cont) 3.3Be able to identify what information and support a PMO should be providing to your project environment. 3.4Understand the project manager’s responsibilities in relation to supplying information to a PMO.

3-4 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Why Project Managers Need to Understand Strategy Project managers must respond to changes with appropriate decisions about future projects and adjustments to current projects. Project managers who understand their organisation’s strategy can become effective advocates of projects aligned with the firm’s mission.

3-5 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Common Mistakes Focusing on problems or solutions with low strategic priority. Focusing on the immediate customer rather than the whole market place and value chain. Overemphasising technology that results in projects that do not fit the strategy or customer need. Trying to solve customer issues with a product or service rather than focusing on the 20% with 80% of the value. Engaging in a never-ending search for perfection only the project team really cares about.

3-6 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e The Strategic Management Process: An Overview

3-7 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Key stages 1.Define and review the organisational mission, vision and values. 2.Set the organisation’s strategic objectives. 3.Analyse the strategic objectives and identify the ‘ideal’ investment mix. 4.Implement strategies through portfolios, programs and projects.

3-8 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Stage 1 Define and review the organisational mission, vision and values The mission identifies ‘what we want to become’ or the raison d’être. A written mission statement provides focus for decision making when shared by organisational managers and employees.

3-9 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Stage 1 Tools SWOT PESTEL Porter’s 5 Forces Blue Ocean Strategy Strategy Maps Balanced Scorecard 2–92–9

3-10 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Stage 2 Set the organisation’s strategic objectives Strategic objectives translate the organisation’s mission and vision into specific, concrete, measurable terms. Strategic objectives set targets for all levels of the organisation. Remember SMARTA!

3-11 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Stage 2 (cont)

3-12 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Stage 3 Analyse the strategic objectives and identify the ‘ideal’ investment mix The portfolio of investments identified in support of the strategic objectives is a result of a complex process. This potentially involves business managers, program managers and other subject-matter experts.

3-13 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Stage 3 (cont) The business case includes: Strategic alignment criteria Definition of the business problem Benefits identification and analysis Options analysis, do-nothing option, deferred option and three other options Business risk analysis Funding summary Milestone summary

3-14 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Stage 4 Implement strategies through portfolios, programs and projects Implementation answers the question of how strategies will be realised, given available resources, equipment, change tolerance and a host of other factors.

3-15 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Stage 4 (cont) These factors include: 1. Completing tasks requires allocation of resources 2. Authority, responsibility and performance – the organisation’s structure 3. Planning and control systems must be in place 4. Motivating project contributors will be a major factor for achieving project success 5. Prioritising projects

3-16 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e The Need for an Effective Portfolio Management System Problems in implementing include: The implementation gap The organisation’s politics Resource conflicts and multitasking.

3-17 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Benefits of Portfolio Management Systems

3-18 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e A Portfolio Management System

3-19 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Selection Criteria Financial BCR NPV Payback Non financial To make it difficult for competitors to enter the market To develop an enabler product, which by its introduction will increase sales in more profitable products

3-20 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Selection Criteria (cont.) Checklist models The most frequently used method in selecting projects has been the checklist. This approach basically uses a list of questions to review potential projects and to determine their acceptance or rejection.

3-21 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Selection Criteria (cont.) Multi-weighted scoring models A weighted scoring model typically uses several weighted selection criteria to evaluate project proposals. Weighted scoring models will generally include qualitative and/or quantitative criteria.

3-22 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Multi-weighted Scoring Models (cont.)

3-23 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Selection Criteria (cont.) Pair-wise criterion (Analytic Hierarchy Process) Nominal Group Technique (NGT)

3-24 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Applying a Selection Model Continued on next slide

3-25 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Applying a Selection Model (cont)

3-26 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Project Portfolio Management (PPM) Benefits include: Strategic alignment across project portfolios Better collaboration across organisational silos Improved decision making and accountability Streamlined PMO processes and templates Improved organisational productivity

3-27 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Key Terms Analytic Hierarchy Process (AHP) Benefit Cost Ratio (BCR) bottom-up implementation gap innovation process investment business case mission Net Present Value (NPV) Nominal Group Technique (NGT) pair-wise criterion payback model portfolio management Continued on next slide

3-28 Copyright © 2013 McGraw-Hill Education (Australia) Pty Ltd Pearson, Larson, Gray, Project Management in Practice, 1e Key Terms (cont) priority system priority team/project portfolio office Project Management Information Systems (PMIS) Project Portfolio Management (PPM) systems project sponsor sacred cow SMARTA strategic objectives strategic planning top-down vision