Effective portfolio planning - Part 2 of 3Digital Project Management
Did you read the first part? If not you can find it here.
Project performance review
Projects are approved to be part of a portfolio based on very rudimentary estimates and plans. Organisations need to strike a balance between doing sufficient work to allow for a realistic assessment of the merits of the initiative, and avoiding doing large amounts of work on proposals that will never be approved. That’s completely acceptable, but it does mean that there should be an expectation that once the work starts on approved initiatives there will be variances from the plans. The law of averages says that objective plans should balance out over estimation and under estimation to deliver an overall portfolio budget that is approximately accurate, but we all know the world doesn’t work that way.
It is therefore important to review the more detailed plans and actual data from projects that are underway during the regular portfolio review. In particular projects that have begun during the last review period should be subjected to close analysis as that is where we will expect the largest variance from the original high level plan. If detailed plans and / or execution challenges are impacting the project’s ability to contribute its expected business benefits then changes must occur. Portfolio execution has very little to do with individual initiatives, and everything to do with attaining business results. That may mean significant changes are needed to the project, or that the project needs to be cancelled and investment dollars diverted elsewhere. Regular portfolio reviews can identify these problems more quickly and allow for corrective actions to be taken while losses are minimal.
Coming out of this review will be decisions to adjust budgets, decisions to reallocate funds, and potentially decisions to cancel some of the projects underway. There will also be approvals to release additional funds to begin work on projects slated to occur during the next review period, but that also needs to take into consideration the next area – project alignment.
Read more in part three.