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Controlling the Project Portfolio: Understanding the Fundamentals Print
Effectively monitoring and controlling a project allows the entire organization to ensure a smooth process and a realistic assessment of project status, cost and schedule to complete, as well as associated risks. This, in turn, allows for actionable decisions based on factual evidence to determine next steps with respect to continuing with the project, re-scoping the project, or canceling the project.

 

Control is the process of comparing actual performance with planned performance, analyzing the differences, and taking the appropriate corrective action. Project control ensures that actual performance meets expectations or plans. Expectation setting is a critical function in any project-based endeavor. It is best achieved by marrying the tool to a pre-defined process, and executing against the expected outcome. For a project to remain in control, tasks, issues and risks must be kept within limits of anticipated performance, and corrective steps can be taken if deviations occur.

Using Control to Reduce Project Cancellations

Two major project types generally raise the specter of cancellation. In the first case, a project is destined for failure when it exhibits vague requirements and deliverables - thus leading to scope creep - and lacks business sponsor and/or organizational support. Seasoned managers are well attuned to these project types, although not always empowered to act accordingly.

In the second case, the pace of economic, technological, or environmental change rapidly renders the project goals and benefits obsolete well in advance of completion. This is a no-win situation for all parties involved. It is very difficult for a manager to monitor environmental events when they are in the throws of a critical project. An on time and on-budget project for an obsolete deliverable is significantly inferior to a late and over budget project deliverable. In a worst-case scenario, these projects will undergo continuous change, eventually arriving at an agreed upon deliverable, only to see it accumulate dust.

A longstanding recommendation is to insist on reviewing the value of projects across the entire portfolio and mercilessly kill low value ones in favor of higher value ones.

Four Keys to Control


1. Reduce Uncertainty

- Accept risk and its potential consequences
- Control risk via mitigation of occurrence and impact
- Seek alternatives when risk is not accepted
- Transfer risk to able third party if it cannot be handled

2. Project Status Metrics and Reviews

- Business requirements reviews and stage gates
- Contractual obligations review
- Cost/schedule data
- Objective status versus baseline
- Project scope vs. business requirements
- Risks quantified as cost and time

3. Realistic Expectations

- Avoid Scope Changes
- Focus on business outcome and value rather than technology
- Make the hard decision early
- Manage to schedule
- Say No!!!!
- Work with available resources

4. Involve the User

- Believe in the organizational vision and objectives
- Celebrate the small achievements
- Consensus on requirements
- Gain executive sponsorship
- Put together a competent team

To Cancel or Not to Cancel?

Politics aside, a project becomes a candidate for elimination when the cost and time of achieving the deliverable exceeds the value of the deliverable. While it is difficult to keep an eye on all projects at once, industry surveys have revealed that more than 50% of an organization's project spend is on only 75 critical projects. This means that there is significant opportunity within organizations to do a better job of heading off problems in only a small percentage of the total number of projects.

From a control perspective, it is suggested that managers and business sponsors keep far enough ahead of the resource supply and demand curve, allowing for retooling, reallocating, or hiring, keeping critical projects on track. The resource issue is particularly critical, as the project manager must find better ways for project teams that exceed 10 FTE's to work more closely. This could include collaborative software, document management solutions, or integrated project and portfolio management solutions.

The figure below highlights the value of an early project cancellation mechanism. The use of effective project control provides senior executives and managers with the decision support data required to initiate a cancellation process. The resulting benefit is the reallocation of resources, a skills infusion to other potentially critical business projects, as well as the resultant cost and opportunity savings.

Recognizing The Traps

Disjointed systems and business processes inhibit the ability for organizations to align their projects, people, and partners with corporate objectives. The fragmentation between tools used to manage projects and resources and an organization's budgeting and financial management systems contributes to a misalignment between business strategy and project execution. This problem is exacerbated by the gap between cost center and project-based financial management.

The organizational behavior that develops around these inappropriate processes and lack of tools to facilitate sound business decision-making gives rise to inadequate financial guidance for effective management decision making.

What About the Tools?

Fortunately, powerful technology is available to help organizations connect business strategy, financial management and project control in a continuous process and within a single application - increasing alignment, integrity, and financial transparency across the enterprise.

Tools providing this kind of project and financial governance go beyond the hype provided by traditional project management solutions and offer a level of depth of functionality inherent in an integrated solution. Key differentiating areas driving a tool purchase should include functionality for budgeting, funding, financial reporting, auditing and integrity, and executive governance and communication.

Leading F100 firms have dramatically improved the ROI of their technology organizations by ensuring their capital works harder through the early redeployment of underutilized capital and visibility into projects at risk. These organizations have successfully implemented project control and governance process using an automated synchronization of project portfolios, resources, budgets and strategy.

In conclusion, the notion of control is a critical component to the success of any business initiative or program. By combining executive sponsorship with the four keys to control, organizations will achieve greater productivity and alignment.

Mark Strauch (c) 2006
President and CEO, Business Engine, Inc.

About the Author

Mark Strauch is President & CEO of Business Engine. In this role he has oversight responsibility for Sales, Professional Services, Product Development, Global Support and Solutions Management. He also works closely with the Board of Directors and Management Team to formulate and execute Business Engine’s corporate vision and business strategy.
Before joining Business Engine, Mark was Vice President of Business Development at Desktop.com and was a key member of the software and Web services practice at Broadview International, a global technology investment bank. Mark was also responsible for sourcing and structuring private equity investments in WebEx, Softbook Press and Done.com. Mark was previously a director at Electronic Arts, where he managed the supply chain procurement and planning functions.
Mark holds an undergraduate degree in industrial engineering from Lehigh University and an MBA from Northwestern University's Kellogg School.
http://www.businessengine.com/

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