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Proposal Evaluation and Process Management in Project Portfolio Management

September 13, 2009 | Author: PM Hut | Filed under: Project Portfolio Management

Proposal Evaluation and Process Management in Project Portfolio Management
By Miley W. Merkhofer

Based on formal evaluations, projects are prioritized and “go,” “no-go,” “kill,” and “hold” recommendations are made with the goal of creating a value-maximizing project portfolio. Project recommendations are reviewed by the executive committee and project funding for approved projects is authorized. Projects are phased based on critical paths to fit people and other resource constraints, with the most urgent projects starting first. Projects designated as “hold” may be resubmitted later (oftentimes project managers redesign such projects with the goal of increasing benefits and decreasing costs).

The portfolio management office monitors the status of on-going projects to ensure that projects stay on track to achieve the anticipated benefits that motivate their being included in the selected project portfolio. Once the project is completed, the products (assets, services, etc.) delivered or enhanced by the project should be similarly monitored and evaluated to ensure that the forecasted benefits are realized. The performance of activities that utilize project outputs is typically beyond the responsibility of the project portfolio manager. However, it is important for responsible managers to provide the project portfolio manager with feedback on the extent to which actual benefits are in fact achieved. Without such feedback on actual performance, there is no real accountability.

In addition, the portfolio management office should:

  • Ensure consistent and accurate progress reporting on the costs and other critical resources consumed by projects.
  • Define and develop the detailed, continuous process by which projects are evaluated, prioritized, selected, and managed.
  • Enforce a collaborative effort that enables senior executives (the steering committee) to reach agreement on portfolio goals and objectives.
  • Provide coaching and training to project managers to help then to understand project evaluation criteria and to enable them to efficiently generate inputs for the project template.
  • Communicate to project proponents and other stakeholders which projects are approved and project priorities.
  • Provide stakeholders with timely assessments of portfolio progress, with early identification and correction of portfolio-level issues that may impact performance.
  • Adjudicate resource conflicts between projects.
  • Maintain visibility of key project information across the enterprise.
  • Ensure that the project portfolio remains in tune with changing business objectives and strategy.
  • Identify lessons-learned and continually refine the portfolio management process.

Miley W. (Lee) Merkhofer, Ph.D., is an author and practitioner in the field of decision analysis who specializes in assisting organizations in implementing project portfolio management. He has served on advisory panels for several government agencies and has received grants and research awards for work in the area. Lee is an editor of the journal Decision Analysis.

Prior to becoming an independent consultant, Lee was a Partner of PriceWaterhouseCoopers, where he founded that organization’s capital allocation and project prioritization business practice. Lee is a founding partner of Folio Technologies LLC, a provider of web-based, project portfolio management software.

Lee received his Ph.D. in engineering economic systems from Stanford University. He is the author of the book Decision Science and Social Risk Management and co-author of the book Risk Assessment Methods..

Additional papers on project portfolio management can be found on Lee’s website, www.prioritysystem.com. E-mail: lmerkhofer@prioritysystem.com.

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This entry was posted on Sunday, September 13th, 2009 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.

2 people have left comments

Hi Miley,

Although short in content, the article is straightforward. These are key aspects of a PMO in an organization that manages its project portfolio. I would just emphatize the need to balance the portfolio when starting a new project. Projects that are on the “on hold” state can become strategical while projects being “on going” can be less strategical with the simple authorization of a new one. This decision process should use key indicators that are based on the organization’s strategical goals.

Best Regards,
Giovanni Giazzon

Giovanni Giazzon wrote on September 14, 2009 - 4:37 pm | Visit Link

Hi Giovanni,

Thanks for your comment. I agree with your statement that it is important to rebalance the project portfolio. By the way, there is a longer version of this article at http://www.prioritysystem.com/reasons2c.html.

Regards, Lee Merkhofer

Miley W (Lee) Merkhofer wrote on September 25, 2009 - 2:26 pm | Visit Link

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