Managing a Portfolio of Projects: A Playbook for Success

Porfolio Managers should establish and prioritize Key Results Areas (KRAs) for the portfolio with the stakeholders. Typical KRAs include schedule, cost/cash flow, safety and environment, change management/scope, resource allocation, procurement and supply-chain management, quality, risk management, and client satisfaction. (IR303-2, pp. 15-20)

After ranking the KRAs, Portfolio Managers should establish Key Performance Indicators (KPIs) and targets for each KRA to measure portfolio management success. Suggested portfolio level KPIs are identified in the Implementation Resource.

Porfolio Managers should provide a common format and establish a data collection process for all reporting project managers. Traffic light dashboards which tie the traffic-light colors to pre-determined targets for each KRA can be effective for reporting project status and other information to upper management. Establishing a good dashboard will allow the portfolio stakeholders to make better decisions regarding project re-prioritization. (IR303-2, p. 20)

To facilitate resource planning, organizations should create a workload assessment tool to define and forecast resource requirements by project phase. Project managers should be required to document and communicate resource availability and use which will allow the portfolio manager to identify over-booked and under-booked resources. Portfolio managers can then allocate and level resources based on the needs of the project managers. The metrics used to measure performance for resource management are the key performance indicators (KPIs) shown in Table 1 above. These include project team member turn-over, planned versus actual engineering/construction hours, planned versus actual resources, capital efficiency, and percent utilization of project team members per project. (IR303-2, p. 23)

Most companies track and resolve risks only at the project level, but managing risks at the portfolio level allows organizations to assess the interdependency of projects and mitigate the corresponding risks at the portfolio level. The key to a successful portfolio risk management process is the team’s ability to discuss, identify, track, report, and document project risks in a consistent structured way using a common language. Using a numerical risk identification structure and a risk management system to track and analyze risks is essential. A comprehensive risk register can be used to document risks and identify their impact when aggregated at the portfolio level. (IR303-2, p. 28)
 

Portfolio managers should have the authority to reallocate resources, including budget, within the portfolio. However, budget re-allocation and project re-baselining should go through the company change control process. A contingency budget at the portfolio level can be used to manage financial risk. Good front end planning and actively monitoring monthly cash flow will allow for more efficient management of monthly spending, thus improving predictability and supporting contingency management. (IR303-2, p. 31)

A Lessons Learned (LL) process should be integrated into an organization’s portfolio management processes. If the portfolio is controlled in different phases, it is a good idea to document LL at the end of each phase and at the end of the project/portfolio cycle. The LL documentation should include causes of variances and issues, corrective actions, and recommendations for future projects and portfolio cycles. LL should address both individual projects and the portfolio, and identify common issues as well as best practices. It is important to ensure that portfolio managers are engaged in key roles and responsibilities in the LL program. Having a separate continuous improvement leader who is also responsible for the LL has been shown to be successful. Peer reviews and look backs can be performed to develop action plans for identified weaknesses. There are many ways to document and share LL within the organization including informal conversations, group meetings, social media type systems, and searchable web-based databases. (IR303-2, p. 34)

Portfolio managers must ensure that every project in  their entire portfolio consistently adheres to the change management process. In order to analyze change metrics with a high degree of confidence, 1) there must be alignment on what constitutes a change, 2) changes must be identified as early as possible, 3) changes must always be submitted and reported, and 4) all projects within the portfolio must follow the same defined process. For optimal results, the change management process should include a means of automating the collection of change management data. With online visibility of potential changes across the entire portfolio of projects, portfolio managers benefit from the ability to focus promptly on change with potential inter-project impacts and are better positioned to ensure that effective risk mitigation strategies are developed and implemented. (IR303-2, p. 37)

Portfolio managers should utilize front end planning tools to ensure adequate scope definition for projects in the portfolio and to identify and address risks from both a macro and micro standpoint. Portfolio Managers should focus on the following four specific areas to achieve the most effective front end planning across their portfolios: (IR303-2, p. 41)

• Developing an Integrated Process
• Leadership Commitment to a Planning Culture
• Training on Front End Planning Processes
• Ensuring Adequate Scope Definition

With systematic data collection in place, portfolio managers can derive significant value by benchmarking front end planning metrics across their portfolios.

IR303-2, Managing a Portfolio of Projects: A Playbook for Success.

Is a how-to manual of recommended portfolio management practices. It includes practices for resource management, risk management, financial management, change management, front end planning, and lessons learned—all at the portfolio level. It also recommends a process for portfolio performance management and suggests key performance indicators. To illustrate these practices, it presents an example of a portfolio management system that includes portfolio metrics and dashboards.