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Use Organization Strategy to Drive Project Portfolio Management
By: John Reiling

Business or organizational strategy is intended to drive all decisions within an organization. It provides a direction, a rallying point, and a litmus test for decisions at all levels. Hence, it only stands to reason that strategy would drive the projects, programs, and the project portfolio management process. Good projects map well to organizational goals. In fact, the best organizations make sure their initiatives are in alignment with their strategic plan. Whether for project initiation or for simply evaluating how the value of a project fits within the organization, becoming familiar with the strategic plan is invaluable.

Background
Here is some background on strategic planning, project management, program management, and project portfolio management.

There are many approaches to strategic planning. One approach is to think through these 5 points for the organization:

1. Vision - where the organization wants to be in the future
2. Mission - purpose, or why the organization exists
3. Values - organization's culture and priorities
4. Goals - results that the organization desires in carrying out its mission 5. Tactics and Initiatives - actionable behaviors and initiatives supporting all above

It is important for project managers to understand where their project fits into the organizational strategy. What organizational goals does it support? Does it support the organization's vision and mission? How are the organization's values being expressed in the execution of the project?

It is equally important for a program manager, with responsibility for an initiative, or program, which involves several projects, to understand how the program supports the organizational strategy. The program manager needs to make sure the individual projects align to organization strategy, and that the project set as a whole that make up the program support that vision.

Project Portfolio Management is concerned with selecting the projects that best support the organization's vision and strategy. PPM works with a list of candidate projects and assembles critical data on each, such as cost, resources, purpose or objective, expected return, risks, and more. With a formal strategy in hand, assuming there is one, the PPM process involves mapping the products to the various elements of the strategy. One of the keys with such data is to be realistic by checking assumptions versus actual on projects and programs in the portfolio over time. Establishing the appropriate parameters for this data is important to accomplishing the desired results.

What the PMI Says About Portfolio Management
"The Standard for Portfolio Management" published by the Project Management Institute (PMI) states that in order to be successful, the portfolio management team must:

1. Understand the organization's strategic plan.
2. Establish determining factors for managing the portfolio based on the strategic plan.
3. Consider all of the organization's projects, programs, and other portfolio components.
4. Follow agreed-upon processes.

The standard clearly articulates the importance of the relationship between strategy and project portfolio management!

Working Together By Thinking "Outside the Box"
Project managers develop plans to execute the projects in the portfolio, and then lead the effort to implement the plan. Likewise, program managers develop plans for their programs, but they do it for a higher level entity that contains many projects. In each case, the Project Manager or Program Manager "owns" his/her project or program. It naturally follows that portfolio managers "own" their respective project portfolios. The element that MUST tie the portfolio managers, program managers, and project managers together is strategy, which often requires some "out of the box" thinking on the part of the respective managers. Strategy needs to be the common thread through the project portfolio, programs, and projects.

By taking "ownership" of a portfolio, program, or project, professionals are addressing the "what". So how can they "think out of the box" within the overall organizational context to be more effective? The answer is by being driven by the "why" by clearly understanding the link to strategy. Maintaining that tie throughout implementation is a challenge, and can be supported by devising feedback processes to ensure that everyone is aligned with strategy. Each area needs to produce metrics that map back to the stated strategic initiatives of the organization, and communicate those metrics among the project portfolio management team, project teams, and program management teams on these metrics to "close the loop".

Call to Action
The project portfolio management team, project teams, and program management teams need to take ownership of the "why" as well as the "what" in order to ensure their actions are aligned with the strategic direction of the organization. They need to be intimately aware of organizational strategy, and if there is no formal strategy, they need to devise one and verify it as formally as possible. They need to think "outside the box" by mapping the projects and programs back to the strategy, and taking ownership of the whole process.

Article Source: http://www.excitingdestiny.com/articles

See the author's site, Project Management Training Online, for online Project Portfolio Management training courses for PDUs. For more ideas and insights on project portfolio management and strategy, see John's post "Strategy Needs to Drive Project Portfolio Management" at PMcrunch.com.

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