Reasons for Tuning a Project Portfolio
By Pradeep Bhanot
Creating a perfect portfolio may be a dream, but striving for one should not be. Lean thinking encourages incremental measures that focus on the customer, improve processes, amplifying good projects and eliminating waste by switching off or deferring non-strategic ones.
What makes one portfolio better than another? One popular view is of a portfolio that manages to balance risk with return is perfect. A conservative company in a highly regulated market with minimal competition may be happy with a high percentage of its projects focused on customer retention and maintenance of existing services. This approach would protect top line revenue while trimming the bottom line by increasing efficiencies.
For an aggressive business that is in a growth market with a high tolerance for risk may consider an optimal portfolio to be one that supports a handful of ambitious “game changing” initiatives while mitigating essential regulatory exposures. A secondary focus on maintenance and customer retention may be tolerated if there is high demand from an emerging market. This might be the case for a vendor of GPS devices where the vast majority of the revenue from new customers.
Another definition of an optimum portfolio is one that is well aligned to the company’s strategy and business climate. The current economic reality is favoring measures that cut or contain costs, a scale back on large cost intensive projects and a focus on projects that offer fast payback to sustain the company through the recession.
In the absence of facts and metrics around business alignment, cost, value and risk factors, balancing a real portfolio becomes an art. PPM solutions provide some clarity by providing a decision making framework for making informed portfolio decisions, which makes the process less subjective and more of a science. When facing a cost cutting requirement from executive management, being able to quickly identify candidate projects based on cost, value or strategic fit can be pretty handy.
A project portfolio can be a quite dynamic. Tuning the portfolio is an exercise that needs to be done at on ongoing manner to keep pace with changes in the market.
Pradeep Bhanot Markets CA Clarity PPM in Europe. He has worked at BT, the UK Department of Energy, ECGD, Watson Wyatt, Oracle, Serena Software and CA Inc. He’s an ITIL v3 Foundation certified, a PMI member, and has a Computer Science Degree from Greenwich University. Pradeep’s blog can be found at http://community.ca.com/blogs/ppm/