This series of papers has been developed from our work in upgrading TenStep's PortfolioStep™. For more information on TenStep's internal consulting methodology, please visit http://

Published here October, 2007.

PART 1 | PREPARE Phase, Steps 1 & 2 | PLAN Phase, Steps 3 & 4
PLAN Phase, Steps 5 & 6 | EXECUTE Phase, Steps 7 & 8
HARVEST Phase, Steps 9 & 10 | PART 3

In this Part 2 we will cover:

PREPARE Phase, Steps 1 & 2

Step 1 - Portfolio Setup (Categorization)

The Project Management Institute defines "Categorization" as: "The process of grouping potential components into categories to facilitate further decision-making", and it defines a category as: "A predetermined key description used to group potential and authorized components to facilitate further decision-making. Categories usually link their components with a common set of strategic goals."

When first implementing project portfolio management, obviously you must first establish what you are going to manage. That is, you need an overview of the extent and variety of existing and potential work, how it maps into the organization's overall strategy and so on. In other words you must have a good idea of the extent and size of your portfolio mandate.

So, for the first time you introduce project portfolio management the normal "categorization" step comes first, but here we prefer to call it "Portfolio Setup" as we have shown above. In subsequent passes, you may well decide that it makes more sense to conduct the detailed categorization step following identification of all the new portfolio components. But for now, Setup is where you define the terms, scope and definition of your portfolio, and gain agreement on your basic portfolio model.

Step 2 - Identify Needs and Opportunities (Identification)

This step starts with an evaluation of your environment through a Current State Assessment and then contrasting the current state with a Future State Vision that describes where you want your organization to be in the future. This process results in the validation (or creation) of your mission, vision, strategy, goals and objectives. In particular, your strategy and goals will provide the high-level direction that will help align and prioritize all the work for the coming business cycle.

The Identification step can also be very lengthy the first time you establish portfolio management in your organization. The Current State Assessment, for instance, may take a long time to complete. However, in subsequent years, you only need to recognize the changes. For instance, your strategy and goals may change slightly to put new emphasis in a couple different areas. However, they should not be radically different from one year to the next. Since your organization has probably not changed a lot over a one-year period, your Current State Assessment may need to be reviewed and updated, but not necessarily performed again from scratch.

The Identification step is also where all of the potential work is surfaced for the coming year. At this point, each request should have, at a minimum, a simple Value Proposition document that describes the work, the value that it will provide to the organization and the basis of alignment with the overall organizational strategy and goals. If you are including all work, the Value Propositions will include both projects and "Other Work".


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