The following paper has been abstracted from chapter 15 of Jamal Moustafaev's book: Delivering Exceptional Project Results: A Practical Guide to Project Selection, Scoping, Estimation and Management. This paper is presented in two parts. In this Part 1 Jamal cites a number of examples to illustrate the need for project portfolio management. In Part 2, he will explain the essential elements of project portfolio management.
Introduction to Part 1
Let us start with what executives want. Senior executives obviously do not go to meetings to brag about what a skilled group of project managers their company has. Their mission is to make more money or, in government and the non-profit sector, to achieve specific goals. Gone are the days when senior executive's interests in their organization's projects were limited to when will they be finished and what will they cost.
Now they want to know if their mix of projects will maximize growth or is optimized to achieve their objectives. Yet, despite this change, the average senior executive lacks a clear understanding of the differences between project management and project portfolio management and the relationship between the two. Based on numerous interviews with executives, the following quote is a common complaint about project management.
"You know, we implemented a project management methodology at our organization several years ago. There have been some improvements, such as our projects are better controlled, most of them are on time and on budget and the quality has improved considerably. There is, however, something missing - something we had hoped project management would address.
"A considerable percentage of the products we deliver to the marketplace turned out to be less successful than we expected. In addition, my people still complain that they are overworked and project managers constantly demand more resources. We claim to be the market leader in innovation but I have recently discovered that only five percent of our projects can be qualified as R&D ventures … What are we doing wrong?"
In fact, the problem here is not necessarily with project management but with project portfolio management. So, what the heck is project portfolio management? But before delving into that, let's take an historical perspective.