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The Roadmap for PPM Implementation
By Miley W. Merkhofer

The steps for successfully implementing PPM depend on your organization’s particular situation. However, in many cases, I have found that the following sequence of 9 steps effective: (1) assess your current capabilities, (2) analyze the stakeholders, (3) form teams, (4) develop a charter, (5) design your PPM approach, (6) pilot test the approach, (7) acquire or create a PPM tool, (8) roll it out, and (9) practice continuous learning.

PPM Roadmap

PPM Roadmap

Step 1: Assess Current Capabilities

Begin with a gap analysis focused on your organization’s current capabilities with regard to the activities addressed by PPM. Evaluate the current project portfolio and the methods used to select projects. This information can be collected and documented through interviews, participation in meetings, reviewing documents, etc. The goal is to identify differences between current practices and what should be. The results will help you to determine the PPM approach that will be appropriate for your specific situation. Also, understanding PPM maturity levels is useful for designing effective implementation strategy.

Step 2: Analyze Stakeholders

Identify all PPM stakeholders. Key stakeholders include corporate executives and senior management responsible for business lines and support services that require projects either to support operations and/or to deliver products and services, program and project managers who propose projects and compete for funding, middle-level managers who provide resources to plan and execute projects, and project managers who plan and deliver projects. Determine their expectations, needs, concerns, and level of acceptance. From this analysis, you can determine the amount of education and selling required. Stakeholder interviews identify critical issues and capabilities that help guide the design of the PPM approach. Also, understanding concerns can enable you to identify political conflicts that could occur as well as mitigation tactics.

Step 3: Define PPM Implementation Teams

To ensure buy-in, as well as to enable you to obtain full understanding of the issues, the PPM approach should be designed as a collaborative effort. You will need a Core Team responsible for developing and implementing the approach, and an Executive Steering Committee to provide leadership and policy-level inputs, and to approve key design choices. You may also need to identify technical teams to help you to address specific, technical issues related to the evaluation of certain types of projects. Obviously, you should include critical stakeholders as members of your teams.

At this stage you are essentially beginning the establishment of your PPM governance structure, since subsets of your Core Team and Executive Steering Committee will likely become the Portfolio Management Team and Executive Team, respectively, that you will need for ongoing portfolio management.

Step 4: Develop a Charter

As with any other major project, creating a PPM charter is a valuable step. At minimum, the PPM charter should include statements from the Core Team indicating the objectives that you expect to achieve by implementing PPM and your initial scope. The charter should communicate the PPM value proposition—Why do this? The scope establishes the types and categories of the organization’s projects that will be managed within the portfolio(s). The charter should also document the schedule and potential risks to success. Get agreement on the charter from your Executive Steering Committee, as well as from your other key PPM stakeholders. The charter will provide direction and make defining requirements much easier.

Step 5: Design Your PPM Approach and Value Measurement Framework

Develop your organization-specific approach to PPM as well as the framework you will use to value projects. You must also define the PPM process by which projects are proposed, evaluated, and prioritized, and resources are allocated. Knowing your approach and how you will estimate project value will, in turn, allow you to determine what information needs to be collected to support the process and the quality assurance mechanisms that will be required. From there, you can determine what existing processes need to be realigned or improved, and the new processes that must be implemented based on your PPM requirements.

Bear in mind that you are building the PPM of the future. Establish PPM on a scalable model. It will help ensure that major components of your approach do not become obsolete as your organization evolves. Do a logic “walk-through” to help assure you that the approach will work.

Step 6: Pilot Test the Approach

Implement your approach and value-measurement framework sufficiently to conduct a pilot test. If your value measurement framework is a qualitative model, have those responsible for setting priorities test whether the documented logic leads them towards comfortable conclusions. If your value measurement framework is a quantitative model, you can do a paper-and-pencil application, or create a quick-and-dirty spreadsheet implementation.

Conducting a pilot test allows you to test major components of your PPM approach in a controlled environment while it is still fairly easy to make changes. Importantly, you can explore how easy or difficult it is for the inputs required to evaluate projects to be generated. You will get a good indication of sticking points, which you can address either through training and documentation, or by refining the approach. Importantly, you can test whether the value measurement model and associated project prioritization logic produce reasonable results. Showing that the logic will correctly prioritize difficult projects is critical for easing stakeholder concerns.

Check stakeholder satisfaction carefully. Almost certainly, the pilot test will point to important changes that you should make before purchasing or implementing sophisticated software and propagating the approach through the organization. Revise the design, and develop a plan for completing the remaining steps of the implementation. The plan should be communicated to key stakeholders to solicit feedback. Include initial executive and senior management training on the necessary concepts and processes.

Step 7: Build or Acquire a PPM Tool

Practicing PPM does not necessarily require a sophisticated PPM tool. As indicated above, spreadsheet software may be adequate. Tools generally provide three basic functions, data acquisition and management, decision support, and reporting and graphing. Available tools differ considerably in how well the accomplish each of these functions.

You will want a tool that is capable of accommodating your value measurement framework. Also, the tool should have features that are appropriate for your situation. You need to take care on both counts. With the exception of tools that include general-purpose modeling and analysis platforms, most tools have limited flexibility to accommodate different value measurement models. Consider ease of use, ability to import/export data from your other systems, customer service, vendor financial status, cost, ability to grow with your evolving needs, etc. Tools may be delivered as single-user, desk-top applications (e.g., built using Excel), desktop/server multi-user applications, or web-based applications. Some companies host “on demand” PPM services. Again, conduct pilot tests to ensure that the tool has been properly configured to meet your needs.

Step 8: Roll It Out

Once you are confident that your approach and associated tool will work, executive management should give their approval to roll it out. Materials produced in documentation will help you communicate the new approach to the rest of the organization. Be sure to allocate sufficient time within the budget cycle to allow necessary training and build familiarity with the new process. Set staff expectations, and be very clear about roles. Signal types of change to be expected, and communicate the value to be gained from achieving such changes. Let people know that you expect challenges, especially early on, but balance this against the anticipated pay-off. Expect some resistance from project managers.

Step 9: Practice Continuous Learning

To improve you must get better as you go. Effective PPM needs to be a living process within your organization. Be sure to do a thorough “lessons learned” review following the first full-scale application. Involve senior managers in the assessment. Keep what worked, change what didn’t work, and learn to do it faster, better, and cheaper.

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, E-mail:

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