Time | The Most Important Reason for Project Portfolio Management (PPM)

The best decisions in life are made without the encumbrance of stress and emotion. As individuals, we have the luxury to take time for ourselves and reflect before making significant life changes – We consider the risks and benefits that lay on the road ahead. The business environment, however, is faced paced and the company culture’s core values tend to shape the decision-making process.

Why is it difficult for companies to make good investment decisions?

The best decisions in life are made without the encumbrance of stress and emotion. As individuals, we have the luxury to take time for ourselves and reflect before making significant life changes – We consider the risks and benefits that lay on the road ahead. The business environment, however, is faced paced and the company culture’s core values tend to shape the decision-making process.

Even if the strategy process is well-formed, the business units derive their own strategic goals from the corporate strategy. As its creators communicate the plan, the number of communication channels and interpretations increase tremendously.

The Main Limitation = Time.

Assuming a stable strategy has been set in place, one manager could communicate the plan to five of her/his direct reports in 1 hour. Due to the nature of how small groups operate, questions for clarification would be asked so that everyone ends up on the same page. If the same board member communicates the same strategy during a 1-hour town hall meeting to 6,001 employees, this opens up over 18 million communication channels that would need the same, or at least, a similar understanding of the strategy. It is highly unlikely that even if the board member dedicated all her/his time to communicate the approach, every employee would understand it in the same way. Therefore, the most efficient way is to let it drip down through the chain of direct reports in a timely fashion.

The closer a position is situated to the front line, the more time is spent on operations and, in turn, the less time spent on strategizing, including comprehension of the current strategy. Additionally, it becomes harder for one to picture one’s position in this context entirely. This amplifies the disconnect between strategy and execution.

Top-down strategizing and communicating

Top-down strategizing and communicating

To make right decisions, a data-driven process is needed to minimize the bias of external and internal influences and instead, focusing on the strategic goal. Look for technology that enables this process and integrates with your current project management platform, such as Power BI. This process should leverage already existing data and information to cut the time of base discussions and lift everyone up to a level that focuses on capital investment decisions. Instead, a recent survey showed 61% of senior executives say that their strategic initiatives are based on negotiations between influential players.

Wait. How is that possible?

The issue is whether or not every participant has comparable data on the strategic alignment and feasibility of investments. The governing bodies are often provided and pitched with different sets of data, depending on the idea of the strategic initiative itself. Oftentimes, they can assess the absolute value of the project. However, they hardly get an overview of the projects that compete for the same budget allowing for no strategic comparison to take place.

Even if a project is approved and starts its life cycle, there is little data available to compare a projects’ performance to other projects. The benefits that were promised when the project was initially selected becomes diluted, and their strategic value deteriorates. In turn, the decision-makers have to rely on their gut feeling. The fewer data points available, the more discussions for understanding and alignment are necessary. Such discussions can be time intensive. Even more important, under these circumstances without standardized data, we can’t assess a project’s relative value.

We finally gathered all the data and its looking good. Can we now go for it?

No. As individuals, we can efficiently reflect at any time about the necessary changes. Getting 10 or more people together to contemplate and decide about changes in the company strategy or portfolio of capital investments is a time-consuming task. The main issue here is time again. The data might be outdated, or the decisions do not match the intended strategy anymore should any new external or internal information arise.

External event induces chain of changes

Internal event changes from bottom

Internal communication chain

In turn, new strategies arise and need to be accounted for concerning time, resources, and projects. They moderate the initially intended approach, reducing calculated opportunities because changes occurred. The realized strategy is, in effect, a combination of the intended and emergent strategies.

Intended strategy vs emergent strategy

Globalization penetrates all economies, and changes frequently occur, allowing alternative strategies to suddenly emerge. Companies need to be able to take new data and factors into account including the evolving circumstances. Strategic agility becomes a prerequisite to survive or drive the market. Given the current problem, how can we make more time available, make the use of time more productive, and provide the comparable data necessary for sound decision making and less time waste?

How Project Portfolio Management (PPM) drives good decisions

A portfolio of projects is a component collection of programs, projects, or operations managed as a group to achieve strategic objectives. Portfolio management is the coordinated management of one or more portfolios to attain organizational strategies and goals.

It provides executives with a common ground of comparable data in the least possible time with real-time data. It minimizes the bias by supplying the opportunity to evaluate the relative value of a project.

A set of business drivers ensures that the projects in a portfolio align with the strategic goals of the entity, rolling up to the leadership level.

Project Portfolio Strategy Alignment

Everyday performance indicators reveal whether the project is financially viable, whether there are enough resources available to support it, and the overall benefit/goal alignment. As performance indicators are can easily be compared, the company is agile and can execute quickly based on universal criteria. As a result, a company reduces the time wasted by gathering and consolidating data, avoiding lost investments on unsuccessful projects or ideas without strategic value.

When we, as private individuals, contemplate about significant decisions such as choosing a retirement plan, a health care provider, renters and car insurance, etc. — we think about our needs and wants first as a high-level strategy. Then, we analyze the available data by comparing the companies that have relevant features as a demand analysis. Many sources save us time by creating reports allowing us to quickly compare options. We merely need to look at them and align the features and prices with our situation as portfolio selection. Even after signing those contracts, we manage all of our providers according to our needs and wants. If our circumstances change, we look to adjust the plans provided or switch to another provider- real-world portfolio performance management.

Our process should be similar to an organization, providing objective measures and reports keep the leaders focused on the decisions at hand. This supports making informed choices which in turn, translates into organizational success and profitability.

I’m excited and want to learn more about PPM. Where do I start?

Microsoft Project e-cademy is a reference book and training course all in one. Combining e-learning with an e-book, it provides education and ongoing guidance to ensure project managers have everything they need to be successful.

If you are interested in leveraging the latest project management best practices in your PMO, please contact us.