Um caso de sucesso em Project Portfolio Management

Date last updated 11:51 am Oct 22nd, 2007

This is an excerpt from Lisa DiTullio’s first book, Simple Solutions:  How “Enterprise Project Management” Supported Harvard Pilgrim Health Care’s Journey from Near Collapse to #1 .  It was published in "Mundo Project Management", November 2007 edition.

Strategic Portfolio Management:  You Can’t Manage the Plan Until You Create the Plan

In an environment of increasing demands and stagnant resources, businesses must be precise in evaluating their priorities and setting the “right” agenda.  Choosing the right set of projects that properly align to business goals and optimizing limited resources to support project portfolios are enormous challenges for most organizations.  Over the past few years, businesses have begun to realize that selecting the “right” projects is key to realizing organizational and business strategy.  The process and rationale by which project decisions get made will vary from organization to organization.  Much of this variation is due to the high level of subjectiveness embedded in the process.  The key to an efficient portfolio development process is establishing the right balance between clear criteria for prioritization and selection on the one hand, and the need for simplicity and results on the other.

The PMO’s primary role is to assume the neutral position and guide the enterprise through the project selection process, facilitate the identification of selection criteria, and maintain a clear audit trail of how decisions are made.  To be effective in the role, the PMO must extend its purview beyond pure project management practice and become more strategic in aligning the portfolio selection process with corporate needs.  The PMO must also remain strong in its position to never be the decision-maker.  Making the decisions about which projects will offer the best return for the organization’s future falls to senior executives.  The members of the executive team who are responsible for setting the corporate strategic direction should also be the ones to make the decision about corporate priority initiatives.

A good business plan demands set principles, reliable processes, and measurable targets.  Business planning is usually preceded by review and determination of a strategic direction, a set of corporate goals, and key performance metrics for the upcoming year.  This article does not suggest strategic planning processes.  Instead, it focuses on what to do once the strategic direction is set.  To succeed, organizations must have well-defined processes in place to smoothly transition from strategic vision to portfolio building.  Having a process in that guides the organization from strategic vision to tactical planning is key; a company cannot manage the plan until the critical building blocks are identified.  Projects are the critical building blocks in achieving an organization’s strategic plan.

The PMO must have some fundamental capabilities in place to guide the portfolio process.  The elements include:

• A process for prioritization and selection,
• An understanding of budget and resource capacity,
• Commitment to use the process,
• Ability to measure portfolio success, and
• Willingness to improve the process based upon stakeholder feedback.

One of the biggest challenges is defining a process for project prioritization and selection.  The process cannot be cumbersome, as too many review gates will slow down the approval process.  At the same time, organizations cannot be manipulated.  Establish simple criteria that define the attributes a project must have to be considered for inclusion.  The criteria must set guidelines for how a project aligns with the strategic plan.

Harvard Pilgrim Health Care’s portfolio development process consists of three phases:  Nomination, Prioritization and Selection.  The process is uncomplicated, so the activities are easy, repeatable and reliable.  Keeping the process simple promotes stakeholder buy-in and does not require a tremendous investment of time.  When you ask senior executives to participate in a set of activities, it is critical to keep the procedure undemanding.  Introducing a straightforward process that requires minimal time and produces clear results will guarantee executive endorsement and a high level of engagement.

The three-phase process is a valid way for senior executives to present business cases consistently, so all cases can be evaluated equitably and selected appropriately.  Without guidelines in place, the project proposed by the most charismatic executive is more likely to be approved for portfolio inclusion.  Having standard criteria in place helps level the playing field.  Project presentations should be made with one goal in mind:  to show how they contribute to the organization’s goals and generate value.

The Nomination phase is a standard, concise way for business leaders to nominate initiatives that best support the organization’s corporate goals.  A standard presentation template is used for all nominations.  Business leaders are asked to present their nomination in no more than 10 or 15 minutes, and must address the following areas:  Business Opportunity, Project Goal, Expected Business Outcomes, Risks if Project is Not Done, Project Interdependencies, and Risks to Project Success.

The PMO plays in important role in the nomination process by creating the standard nomination template and informing executives about what is required by when.  The PMO also coordinates the nomination information in a sequenced and comprehensive package.  Even though the PMO offers continuous training and outreach on how to best present project nominations, the PMO often finds itself offering guidance and suggestions to those responsible for producing project nominations, to ensure their business cases contain all key elements presented in a uniform manner.

During the Nomination phase, audience members consider a few guiding questions to help them assimilate the information and prepare themselves for the next phase.  Here are some questions they may consider while listening to nominations:

• Is this project a “must do” (e.g., a mandate)?
• Will this work help the organization gain a strategic advantage?
• Does this work directly support our growth objectives?
• Does this work directly support our financial goals?
• Can efforts be made to narrow the scope of the project so we only do the necessary and the critical?

The Nomination phase can be streamlined through standardized templates and a commitment to keeping nomination presentations within a set time limit.  It is necessary and expected for the presenter to know the project information.  Allow time for questions and answers, as it is equally important for the other decision makers to also understand the nominations.  A global understanding of all nominations is essential before moving on to the Prioritization phase.

Once all nominations have been heard, the Prioritization phase begins. This phase forces decision makers to review the nominations and consider each of the initiatives with respect to one another.  Your organization must establish prioritization criteria before the process begins.  The qualities a project must have in order to proceed can include strategic alignment, risk, resource availability, level of work effort, and interdependent relationships.  While the criteria are important, having everyone understand them and be able to consistently evaluate projects using the criteria is more important.  Harvard Pilgrim Health Care applies a system that generates quantitative values based on subjective judgments.  (The practice was adopted from Project Portfolio Management:  Selecting and Prioritizing Projects for Competitive Advantage by Lowell D. Dye and James S. Pennypacker.)

This system includes an exercise also known as Poor Man’s Hierarchy, and is intended to enable decision-makers to rank order portfolio options in a relatively painless fashion.  After identifying prioritization criteria, decision-makers compare each nomination pair-wise.  The outcome of this exercise provides input into how each decision-maker sees the relative importance of initiatives.  The collective results show where there is agreement on priorities and where there are significant differences among perspectives that the group should discuss.  The Pairwise exercise in only a guide for determining portfolio priorities; the exercise does not provide conclusive results, not does it adequately confirm the relative sequence of priorities—business is seldom that precise.  What is does do is provide a basis for correlative discussion, which supports the overall prioritization process.

Once a prioritized list of projects emerges, participants review the list of projects against several constraints, including capital requirements and resource availability.  The goal of this session is to identify the risks and tradeoffs among the projects on the list, balanced against existing day-today work, and to identify the major resource gaps.

Since organizations seldom have the capacity to do every project nominated, this exercise forces executives to consider options for their project nominations.  For example, Harvard Pilgrim Health Care will often find instances when a project can be scaled back in scope, requiring fewer resources to support the work, yet still be capable of meeting the business needs.  Or it may see a way to bundle like projects, leveraging a limited set of subject matter experts.  This exercise results in a list of mutually agreed upon, consensus-driven priority initiatives, all of which directly support corporate goals and are likely to be supported by adequate resources.

Assessing resource requirements at this point in the process is the most challenging aspect of the exercise.  Even though projects are not fully scoped and planning has not yet occurred to project the true resource demand, executives must decide what makes the portfolio list.  The PMO can add extraordinary value to this challenge by guiding business leaders through a risk-identification process, using tools and techniques specifically designed to assess how a project will draw on resources.  Assessing resource capacity in an onerous task, as many organizations do not have the right tools in place to effectively track how much effort is required to support the work.  Even with the right tools in place, however, plenty of organizations do not take the time to develop interventions or contingency plans to support the necessary work—even when the resource draw is apparent.  This becomes particularly difficult when assessing project resource draw relative to operations demand.

The whole process of moving from Nomination to Selection typically takes multiple sessions over a two-month period.  While this may seem long to some, Harvard Pilgrim Health Care has found the process itself quite streamlined; the duration from start to finish represents the planned time allowed to support healthy discussion and debate.  No matter how precise the data, the systems, or the processes, these major decisions require an engaging exchange of opinions and position, and an augmentation of objectives.

The PMO plays an integral role in supporting the portfolio process.  It gathers necessary information, instructs participants on tasks, and facilitates the process from start to finish according to corporate deadlines.  Because the PMO does now “own” any projects and does not have a vested interest in one project being nominated over another, the PMO is the most valuable player in the process.  It provides neutrality while facilitating a business-critical function for the organization as a whole.

Once the portfolio is set, the PMO assumes the roles of facilitator, ensuring the organization delivers on the plan.  The PMO can direct traffic and unsnarl congestion along the route between strategic vision and project execution.

In an ideal world, the list of projects identified during the portfolio development remains the same list of projects throughout the year.  Unfortunately, business in not that clean.  The list of priority projects is subject to change almost as quickly as it is created.  This does not suggest the process to build the portfolio is flawed; it does, however, highlight the challenges involved in maintaining strong strategic directions amidst changing business conditions.

Initiatives initially identified as priorities are typically the ones selected at the beginning of a business planning cycle, which is a particular point in time – a snapshot.  However, business is dynamic; organizations must be able to respond to new opportunities and challenges that arise or were originally unforeseen.  An organization must be able to remain competitive and viable, which depends upon its ability to be agile.  In some instances, this means being able to add to a list of priorities during the year and then reallocating resources to support them.  Since organizations have limited resources (both capital and human) to support projects, they cannot simply keep adding items to the portfolio.

Effective portfolio balancing must occur to ensure all senior leaders agree on what is important (the items to remain on the list), what changes need to occur (what gets added to the list), and what trade-offs must be made (what comes off the list of gets delayed).

At Harvard Pilgrim Health Care, the process for balancing the portfolio is similar to the one used for building the portfolio.  All new project requests must be presented as a new Nomination, using the standard Nomination template.  New projects are assessed against existing ones in terms of corporate alignment, dependency relationships, and implementation requirements.  In other words, new nominations are evaluated against the existing portfolio to assess them in terms of business priority and organizational ability to support the work.

The balancing process can and should be an abbreviated version of the portfolio building process; using the Nomination, Prioritization and Selection process works well in both situations.  In other words, keep the process simple to be effective.