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Project Portfolio Management (PPM) Domains - Prioritization and Decision Making

October 27, 2008 | Author: PM Hut | Filed under: Project Portfolio Management

Project Portfolio Management (PPM) Domains - Prioritization and Decision Making (#3 in the series Project Portfolio Management (PPM) Domains)
By Demian Entrekin

Quick Recap: I have outlined three PPM Domains that span across the core disciplines of Project Portfolio Management (PPM). They are repeated here:

  • Supply/Demand management
  • Prioritization and decision making
  • Execution of critical projects or programs

In this installment, I will spend some time on number 2 of the 3 PPM Domains: “Prioritization and Decision Making.” In the PPM Domains part II, I focused on Supply/Demand and I said that prioritization was a crucial component to the Supply/Demand domain. And now we have a domain named “Prioritization.”

So the natural question is: how is Supply/Demand prioritization different from Prioritization and Decision Making? Here’s the initial summary for Domain 2:

“Prioritization And Decision Making: All project-driven organizations have a project portfolio. It may contain 10 projects, or a 100, or a 1000. Whatever the number may be, someone owns the overall performance of that portfolio, and that performance includes the value created by the outputs of the projects. You may be able to say that you can finish your projects “on time and on budget” but are you working on the right things? Are you creating value for the organization? These are the questions that lead business leaders to evaluate the project portfolio in terms of value creation. How do we focus our limited resources? What items are nice-to-have and what are must-have? In the private sector, What will give us competitive advantage? In the public sector, What items will create the greatest benefit for our constituents? This is a classic problem for new CIOs, who must come in and get their arms around the work being done.”

One of the most important differences between “Supply/Demand” and “Prioritization and Decision Making” is that Supply/Demand focuses on in the inbound request management process whereas Prioritization focuses more on the active portfolio. This distinction is especially important when an organization is implementing PPM for the first time. Where do we start? What problems do we solve first?

When you implement PPM, you will be forced to merge the new tools and techniques in with an already existing portfolio of projects. It is extremely rare to start with a clean slate. That means that an organization must at some point weave PPM into mix of active projects. Quite often, the most obvious payback from a PPM implementation is the clarity and focus derived by the “Prioritization and Decision Making” domain.

This typically starts with a catalog of active projects, followed quickly by a series of basic questions. Where are we currently spending our time and money? What should we change to get better results? How can we free up resources for other high priority demands? It may very well turn out that there is little “low hanging fruit” in the first pass of evaluating the portfolio. But it may also turn out that some projects or tasks can be postponed, reconceived or canceled altogether.

The simplest way to distinguish these two domains goes something like this: Supply/Demand is about managing the request queue so that only the best ideas get through to the approval process; Prioritization is about knowing which projects to fund, which to continue funding, and why…

Next up is Domain 3: Execution. If we can’t do work, the rest is mute.

Demian is the CTO of Innotas. As founder and CEO, Entrekin oversaw marketing, product development, sales and services for the company. Today, he focuses on strategic product direction. Prior to Innotas, Entrekin co-founded Convoy Corporation and was Chief Architect of its initial products. In that role, Entrekin helped the company lead the middleware market with an annual growth rate of 670 percent and played an instrumental role in Convoy’s subsequent acquisition by New Era Networks in 1999. A recognized thought leader in Project Portfolio Management, Entrekin has published numerous papers on PPM and his blog (PPM Today) explores current issues related to successful PPM implementation. During his 18 year career, Demian has assumed leadership roles as a consultant and as an entrepreneur, delivering commercial and corporate database applications. Demian holds a B.A. in English from UCLA and an M.A. in English from San Francisco State University.

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This entry was posted on Monday, October 27th, 2008 and is filed under Project Portfolio Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1 person has left a comment

[...] a huge list of several hundred (in one recent case, nearly a thousand!) to the business so they can prioritize the portfolio. This bottom-up approach is always doomed to failure. It is often the result of several years of [...]

Project Portfolio Management Is Not a Collection of Projects - PM Hut wrote on September 27, 2009 - 11:31 am | Visit Link

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