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April 2011
Project Portfolio Management: Past Performance Should Ensure Future Success
By Stephan Ahlquist

     When it comes to managing our personal investment portfolios, we are all familiar with the phrase, “Past performance does not guarantee future returns.” We see it in legal-sized font on the bottom of investment marketing materials and hear it in a super-fast voice at the end of those flashy investment commercials. Unfortunately, it seems that this holds true for our business investments in projects as well. But what if it didn’t have to? What if we could ensure the returns we get on our project investments?

     We’ve heard it all before. The project was abandoned before implementation. I can’t get funding, or resources, for my important project. The project timeline is slipping because of contention or dependencies with other projects. We don’t get the promised ROI on our projects, or we don’t know what our ROI is on our project spend. Multiple projects deliver duplicate solutions, or deliver solutions that are then abandoned over the next couple of years.

     Any or all of the above may strike a familiar chord. However, they all reduce down to a common problem: How do we ensure that we are spending our precious project dollars on the right activities and are then caring appropriately for those investments?

     Many organizations are now taking an enterprise portfolio approach to manage project investments. Project requests are submitted from across the organization, and then prioritized against each other for funding. But how are these projects prioritized? Office politics can play a big role. Oftentimes, this portfolio approach devolves into a “we need this now” situation or a “we generate the revenue” perspective that brings us back to where we started.

     If our prioritization criteria is not well established or well thought out, then our portfolio prioritization process is simply a “squeaky wheel gets the grease” approach in disguise. Have you ever been asked to build a stronger business case by making larger assumptions about the benefits? This is simply a mechanism to make your wheel squeak louder. This also sets up departments as adversaries, competing for project dollars and creating an environment detrimental to the collaboration required in our more integrated world.

     We all practice some form of Project Portfolio Management, even if it is as simple as deciding to fund a project or prioritize one project over another. However, the solution lies in a holistic and robust approach to Project Portfolio Management that addresses these three key areas: Project Selection, Project Coordination, and Result Tracking.


Project Selection

     Projects should be selected by the enterprise. Stakeholders from across the entire organization select the “right” projects in which to invest company dollars. This creates awareness across the enterprise of the project work occurring throughout the organization. This, in turn, helps engage stakeholders beyond the immediate scope of the project, increases the ability to leverage solutions across multiple business areas, reduces the number of duplicate solutions and sets the stage for coordinating projects through delivery.


Project Coordination

     Project Coordination begins with the approval, prioritization and initiation of a project. Significant efficiencies can be obtained if our prioritization and scheduling activities take project interdependencies into account when initiating new projects. For example, rearranging the order of services generated in a Services Oriented Architecture (SOA) project to align with the services needs of a new Web portal project can reduce duplicate requirements definition activities, streamline testing activities, provide a valuable proof of concept for the remainder of the SOA build-out and eliminate the need to retrofit the Web portal into the new architecture. This level of coordination can only occur if the entire organization is aware of project activities across the enterprise.


Result Tracking

     Tracking the results of the project, particularly that the proposed benefits have been realized, is the key to maximizing the effectiveness of Project Portfolio Management. After all, the whole reason we undertook this project in the first place was to achieve certain benefits. The only way to know that we have realized those benefits to is track them. This brings focus and maintains commitment to achieving the promised results. Benefit realization tracking also enables us to implement a feedback loop for future project selection activities, allowing us to improve our project cost estimating or benefit forecasting processes.

     Effective Project Portfolio Management can help ensure organizations achieve the benefits promised by the projects in which we invest. It provides the framework to select the right projects by taking an enterprise view of our investments and evaluating these projects based on the benefit case and alignment with our business strategy.

     Project Portfolio Management enables the prioritization and coordination of these projects to ensure we are maximizing efficiency through the project delivery lifecycle. Tracking the realization of the project benefits brings focus and rigor to capture the benefits promised by the projects. This allows us to use those results in a feedback loop to improve the quality of the cost estimation and benefit projection in the project selection process. With effective Project Portfolio Management, past performance should guarantee future returns.

     Content contributed by NouvEON, a management consulting firm. For more information, visit To contact NouvEON’s Delivery Management expert, e-mail him at or follow on Twitter@NouvEON.


Stephan Ahlquist is a senior managing consultant and delivery management knowledge domain leader at NouvEON.
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