He who attempts too much seldom succeeds.
— Dutch proverb
A good way to outline a strategy is to ask yourself: “How and where am I going to commit my resources?” Your answer constitutes your strategy.
— R. Henry Miglione, Oral Roberts University, An MBO Approach to Long-Range Planning
CHAPTER LEARNING OBJECTIVES
After readingthis chapter, you will be able to:
* Understand current practices in corporate project portfolio management and how they are applied
* Know how to deliver explicit business value through a strategically aligned project portfolio
* Adapt the concepts and practices of project portfolio management
Organizations that invest in information technology projects, whetherhardware focused, software-focused, or both, must have a plan for investing in these projects. The dollars needed to fund these projects almost always exceed the dollars available. How should an organization decide which projects should be funded and which shouldn’t be funded? Is this a short-term decision that looks only at the coming budget cycle, or is there some long-term strategy that spansmultiple budget cycles? How can the funding agency determine whether an IT investment is a good investment? Can some criteria be applied?
The answers to these questions are simple in some cases and extremely difficult in others. This chapter uses a life-cycle approach that traces the life of a project through the portfolio management process.
Introduction to Project Portfolio Management
In thisfirst section, I set the foundation for our exploration of project portfolio management. While everyone knows what a project is, not everyone may understand that not all projects come under the purview of the portfolio management process. Just what types of projects will be candidates for the project portfolio is a very basic tenet for every portfolio. You need to have a clear understanding of whata portfolio is, and in some situations more than one portfolio is advised. I want to make sure everyone is on the same page before I launch into the depths of a portfolio management discussion. In this section, I present a conceptual overview of the portfolio management process. Subsequent sections describe each part of the process in detail.
Portfolio Management Concepts
I first want to takeanother look at the idea of a project. The definition of a project comes from earlier discussions in this book, but not all projects belong in the portfolio. The word portfolio probably conjures up several different ideas. I have a simple definition that will put everyone on the same page.
What Is a Portfolio Project?
In Chapter 1, I defined a project in the following way:
A project is asequence of unique, complex, and connected activities having one goal or purpose that must be completed by a specific time, within budget, and according to specification.
This is a technical definition, and it tells you quite a bit about the type of work that can legitimately be called a project, but when you are dealing with a portfolio, it doesn’t tell the whole story. Because you areconstructing a portfolio of projects, you need to define the types of projects that qualify for inclusion in the portfolio. Not all projects will be managed as part of a portfolio. What about small, routine projects that are done as part of normal business operations? Certainly they will not fall under the portfolio management process. They are already included in the operations budget of their respectivebusiness units. Conversely, how big, complex, and expensive does the project have to be before you will consider it for the portfolio? No matter how specific you are in establishing the qualification criteria, a certain amount of subjectivity will be involved. For example, consider complexity in the case of the selection and purchase of a desktop computer. If you are technically savvy, the...