The Practical Reality
Of course it's not that simple. In our example the product development project stands out as being an important initiative that likely facilitates future business benefits. So that has to be viewed as a more strategic project, while the other two are fairly tactical.
If we find that, as these projects proceed, the product development initiative can achieve the 20% market share growth on its own, then we may decide to terminate the other projects even if they are being successful. That may sound odd, but if we have already achieved the business goals then we may be better off diverting the resources and investment into other areas of the portfolio where we are having more difficulty achieving the business objectives. Then we would reallocate the resources to where they can generate the best return against those other business objectives.
Similarly, if we find that the three projects above are collectively not going to achieve the 20% market share gain then we may need to modify them. Maybe we should divert resources from elsewhere to develop a bigger marketing campaign, or to add new features. We may even cancel one or more projects in another part of the portfolio in order to free up resources for a new project in the product area. Maybe we should develop a program to bring resellers into the mix and create a new sales channel.
For organizations that have a project-focused view of the world, this is completely illogical. Cancelling successful projects, or turning down the opportunity to exceed the target objectives on an initiative, run counter to everything that they have been conditioned to believe in. However, from a portfolio standpoint it allows the organization to redirect effort and resources to areas where the bottom line contribution is more significant. A $100,000 revenue gain from the over delivery of benefits on one initiative is less impressive if it eliminates the possibility of a $200,000 revenue gain in another area of the business.
This drives another requirement of PfM, to ensure that the program and project managers who are responsible for the portfolio constituents on a day-to-day basis are guided in their decision-making by the overall portfolio goals. That does not mean that they ignore the project deliverables, especially those that are ultimately the vehicle by which the portfolio benefits will be achieved. It does mean that their choices of action and decision-making are guided by the overall contribution that an initiative is expected to make.
Consider a very simple example. A project is falling behind and the project manager has to decide between cutting scope, adding resources (cost) or delaying the project. One of the most important factors in that decision should be which of the options maximizes the chances of the project maintaining its overall contribution to the portfolio. By extension, the sponsor and stakeholders who will review and approve the project manager's recommended course of action will need to have the same focus.