A Broader View
The question that we asked at the beginning is: "Does this guide fully serve the stakeholders' best interests?"
In our view, the objective of any project, other than simple make-work, is to produce some form of product that provides some benefit - in this case to the organization. Moreover, in a strictly business sense, that benefit must not only be consistent with the organization's goals and objectives but also exceed the cost of the whole project by a margin that makes it competitive with other potential projects in the portfolio. So we find it quite remarkable that none of the Eleven Key Principles mentions "benefits".
However, we do find a mention of benefits in question B2b under Key questions pertaining to Project
Sponsorship. This question asks: "Are sponsors accountable for the realization of benefits?" But can sponsors really be "accountable" when
the product of the project is turned over to some other part of the organization to deploy and use? Sometimes, perhaps, but
not always. However, we think a more important issue is: Does the organization even try to track the benefits to validate
that the assumptions upon which the portfolio is being managed are true?
What appears to be needed is a more holistic understanding of project portfolio management. We suggest that a more complete picture is provides by a Project Portfolio Life Span (PPLS) that consists of the following five phased components, and not just the first three:
- Identification of needs and opportunities (corporate fiscal planning)
- Selection of best combinations of projects (project portfolio management)
- Planning and execution of projects (project management)
- Product launch and deployment of project deliverables (marketing and sales)
- Realization of benefits (corporate due diligence and accounting)
By way of simple illustration, Figure 2 shows the first three phases of the PPLS.
Figure 2: First three phases of the project portfolio life span
It seems to us that without collecting the data generated by the fourth and fifth phases and, to the extent possible, feeding it back to the project portfolio management process, the organization's responsibility is not complete. Without this feedback it is in no position to verify the success of its projects, validate its project portfolio management assumptions and generally become a real "learning organization". Figure 3 shows the fourth and fifth phases of the PPLS, the return of benefits to the organization and the key element of feedback of benefits information to the portfolio management function.
Figure 3: Completing the project portfolio life span
The true measure of project portfolio management success must extend to the evaluation of the question: To what extent were the intended benefits from the projects in the portfolio actually obtained? What is now needed is some form of satisfactory methodology for the tracking, analysis and feedback of benefit achievement.
Figure 4 illustrates the impact of a successful project portfolio in terms of future corporate cash flow.
Figure 4: Product life span cash flow
Data on revenue and profit is normally collected through the financial accounting function, but is rarely identified with specific project initiatives. This is because the allocation and analysis of corporate financial data to this level of detail is not considered part of the finance department's responsibility, nor is it a practical reality, given their regulatory responsibilities.
However, for project portfolio analysis purposes it is essential for data of this nature to be linked to specific projects. Therefore, just as project management requires separate project cost accounting routines for effective project cost control, so should routines be developed somehow for project portfolio cost/benefit control. This might be on a project-by-project basis, or at least conducted on selected and representative projects.
Moreover, Figure 5 suggests that the nature of the benefits may well change through the post project period and that therefore prolonged periodic verification may be necessary. Whatever strategy is adopted to gather feedback on the actual benefits achieved, and their valuation, this is clearly a vital element of complete project portfolio management.
Figure 5: Benefits change through the post-project period
It is evident that much work still needs to be done before project portfolio management can be categorized as a complete and solidly based function. But every step towards that end, such as the Project Portfolio Governance Guidelines issued by the Association of Project Management, is a step in the right direction.
15. White, Barbara
A. Healthcare Project Management - A Prescription for Success for Healthcare Organizations, Projects & Profits, ICFAI University Press, Hyderabad, India, December 2004, Figure, p36