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Issue Date: October 2007

PPM provides a strategic view of an organisation

31 October 2007
Paul Viviers, PMSight director

If organisations are seeking to increase their profitability, looking for process improvement, or simply competing with world class organisations, Project Portfolio Management provides them with a phenomenal opportunity to take their organisation to the next level.
Instead of focusing on the bottom line, as companies generally do, project portfolio management compels company directors to concentrate on activities that are required for strategic performance. This approach requires organisations focus their attention on where their organisation is currently, and where their organisation would like to be in the future.
The starting point is a strategic view of the company. The organisation's strategic needs are defined. The next step is to look at the resources that are available, and to ask which projects fit the organisation's strategic goals. Some projects keep the company's lights on, so these need to be retained even though they may not necessarily be profitable. Having gone through this thought process, organisations sometimes discover that they actually want to go somewhere else.
Project portfolio management is premised on doing the right projects, in the right order and ensuring that projects remain focused and on track in terms of time and scope.
While CEOs may baulk at the idea of using a strategic view of the company as the starting point, it is important to recognise that project portfolio management has a long-range focus. Globalisation requires companies to take a long-range focus: this is critical as competitors may not even be on a company's radar.
Companies obtain new information on an ongoing basis and this information needs to be factored in constantly. New information may require an organisation to change. It is extremely important that organisations show a willingness to change in the light of new information. Many organisations get locked in and they refuse to change, to their detriment.
There are a number of prerequisites for success, including excellent information, excellent communication and strong leadership. Although it is a given that the CEO is on board, it is imperative to recognise that it is the CEO's task to provide the vision and to ensure that everyone within the company understands it. His personal prejudice is to involve the troops in crafting the vision. We are much smarter together than we are alone. The troops are the doers, so they see the roadblocks in the process.
Great CEOs understand this. They have always involved and communicated with their team.
It is imperative that management knows absolutely everything that there is to know about the company's portfolio. Management must know what resources are available, what resources are required, and the skills sets that exist within their organisation. Management must know their people and what they are capable of doing. They should also know their employees interests and aspirations. If people are in this mode and they are given opportunities to develop, and they are also doing things that interest and excite them, then peak performance is possible.
While it is important to ensure that information is both accurate and current, one should always take cognisance of the fact that information comes through filters such as people and systems. Management needs to know what the limitations are to those filters and what filters do to the information.
As far as project data is concerned, this should always be held in a central repository as information is key to a project's success.
Information should be ready to use. It should be possible to move information around and evaluate it.
Project portfolio management cannot be achieved overnight. Because the process entails learning and cultural change, it can take 2-3 years to achieve.
Implementing project portfolio management is not an easy process, but the paybacks are phenomenal. Moving from a level 1 to a level 3, organisations can achieve a 28% reduction in project costs. These savings are achieved by reducing the amount of rework in projects, which can be as high as 35% in some industries. There may be another 20% in savings between levels 3-5. We are talking about achieving a 48% reduction in the cost of projects. How competitive would your company be if you reduced your project costs by 48%? Even if your company achieved a 28% reduction in costs, this would make the company very competitive and very profitable.
Project portfolio management is equally applicable in small and large organisations. It can also be deployed in government departments.
Project portfolio management probably has more effect in government departments, because these departments do not always have the focus or the dedication to a specific goal.
Project portfolio management provides organisations with an opportunity to move ahead of global competitors and to continue to improve world class activities. There are people who are trying to compete with South Africa who were never competitors previously. South Africa has to do everything possible to take advantage of its resources and its location.
It is absolutely essential that they consider how this approach will bring this about.

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