Episode 387: Project Portfolio Management (Free)
For your smart phone: Project Management Professional (PMP)® Training:
Project Portfolio Management and the realization that strategic alignment of all projects within an organization is crucial are both gaining ground. And this realization also emphasizes the need for having solid project selection methods.
But how exactly do you do all of this? The number of books that focus on practical advice for implementing a strategic project portfolio management process is quite small. Lucky for us that a new one with exactly that focus has just been published
The new book is titled Project Portfolio Management in Theory and Practice: Thirty Case Studies from around the World (Best Practices and Advances in Program Management) written by Jamal Moustafaev (https://ca.linkedin.com/in/jmoustafaev. In our discussion, we answer these questions:
- What is project portfolio management?
- What are the three pillars of strategic PPM?
- What are some project selection models that support a company's strategy?
- How do we achieve strategic alignment?
In my past interviews with Jamal, we talked about what is scope in project management and how you can exercise scope control in project management. He also has a book on that topic that covers the whole domain, not just the change process. Now let's just hope there is no project management scope creep in this interview! Ready? Press play now.
Below are the first few pages of the transcript. The complete transcript is available to Premium subscribers only.
Cornelius Fichtner: Hello and welcome to Episode #387. This is the Project Management Podcast™ at www.pm-podcast.com and I’m Cornelius Fichtner. Project Portfolio Management and the realization that strategic alignment of all projects within an organization is crucial are both gaining ground and this realization also emphasizes the need for having solid project selection methods. But how exactly do you do all of this? The number of books that focus on practical advice for implementing a project portfolio management process is quite small. Lucky for us that a new book with exactly that focus has just been published. If you are a project manager who wants to become PMP or PMI ACP certified, then the easiest way to do so is with our sister Podcast, the Project Management PrepCast or the Agile PrepCast and study for the exam by watching the in-depth exam prep video training from www.pm-prepcast.com . The new book is titled, “Project Portfolio Management in Theory and Practice: 30 Case Studies from Around the World” written by Jamal Moustafaev. In our discussion, we answered questions like: What is Project Portfolio Management? What are the three pillars of portfolio management? What are some project selection models and how do we achieve strategic alignment? And of course we have two copies of Jamal’s book to give away. One copy is reserved for our Premium subscribers and the other one is up for grabs. If you want to participate in this give-away, then please go to www.facebook.com/pmpodcast and look for the book give away announcement. And now, add this to the portfolio of your skills and enjoy the interview.
Female Voice: Project Management Podcast feature interview. Today with Jamal Moustafaev, President and CEO of Think Tank Consulting, a consulting company specializing in product and portfolio management services.
Cornelius Fichtner: Hello, Jamal. Welcome back to the podcast.
Jamal Moustafaev: Hi, Cornelius. Always great to be on your program.
Cornelius: Hey, in 2010, you wrote the book, “Delivering Exceptional Project Results: A Practical Guide to Project Selection Scoping Estimation and Management”. Then in 2014 came “Project Scope Management: A Practical Guide to Requirements Engineering Product Construction, IT and Enterprise Project, Best Practices and Advances in Program Management” and then last year, you published your third book titled, “Project Portfolio Management in Theory and Practice: 30 Case Studies from Around the World, Best Practices and Advances in Program Management”. What prompted you to write this new book?
Jamal: Well, if you remember our interview back from 2011 when we were discussing my first book, “Delivering Exceptional Project Results”, what I did in Exceptional Project Results is that I argued, I believed for the first time in the Project Management field that you need to have a good grasp on both Project Management and Project Portfolio Management if you want to deliver exceptional results because Project Portfolio Management is responsible for selecting the best ideas for your company for implementation and then project management is responsible for the discipline to deliver these great ideas through planning, monitoring and control. So, I kind of got attached upon—because the book is limited in size, I got attached upon a little bit about project management, a little bit about Project Portfolio Management but since then I have been invited to a lot of places around the world where companies would call me and say, “Ok, we would like to do Project Portfolio Management implementation. We now understand what it is and we want to do it.” I’ve had the chance of doing a lot of courses, workshops and Project Portfolio Management implementations. Several things, actually two things happened: I gathered a lot of materials, case studies, actual Project Portfolio Management implementations and I’ve encountered in this engagements a lot of questions that I felt were left unanswered in the first book just because of the size limitations. Third reason is that again, I went through a lot of computing books that are available in the market and I’ve discovered that while they were excellent, good, great, they were more academic in nature rather than practical and if you’re approaching an average CEO of a given company, you better have a practical book in your hand rather than an academic. Again, just to reiterate, three things: a lot of materials gathered, actual case studies that I wanted to share with people, a lot of questions that weren’t answered in the first book were answered in this—these processes and again, trying to bring something practical into the market
Cornelius: Who is the book actually for? Is it more for project managers, for program managers, portfolio managers?
Jamal: I would say, if you go like from the bottom up, definitely program managers, definitely anyone whose job title is PMO manager, project management director, etc. etc., portfolio manager, all the way up to C-Level people. I mean it’s a great book to read for project managers as well if you want—they want to upgrade their skills but the target market, like the people who I expect to read this book and do something about it, probably C-Level down to people who manage other project managers.
Cornelius: Ok. Final question about your books: Why are your book titles so incredibly long? I mean halfway through I have to take a breath.
Jamal: No, no, no. OK. Here is the deal. Trust me a lot of thought went through that. As far as I’m concerned, the first book in my mind is called Delivering Exceptional Project Results, second book is called Project Scope Management and third book is called Project Portfolio Management Practice. What I try to do with the subtitle, I’ll try to explain it a little, if you go to the market and say, “Hey, Delivering Exceptional Project Results”, people are still not very clear about what the book is about. When you say it’s about project selection scoping estimation and management, they’re going to go, “Ok”. Project Scope Management very frequently gets confused with managing project scope. People kind of think Jamal wrote a book about scope (management) and change requests rather than project scope management as the entire domain and 30 case studies around the world as subtitle for the first book was kind of wild, guys. They’re actually real case studies that you can look at; it’s not just all talking. So that’s for me, maybe I don’t know it’s a professional disease [laughs]. I’m a business analyst as well as a project manager so I tend to become very, very detailed about it.
Cornelius: The longer, the better.
Cornelius: Ok. So we want to jump into the third book and learn a little bit more about project portfolio management. Let’s start with the absolute basic question. What is project portfolio management?
Jamal: Actually it’s a very good question because I am still encountering a lot of project managers—certified project managers like PMPs, etc. who are confused about this topic. Project Portfolio Management, my favorite definition is it is the science and the art of selecting the best projects for the organization and maintenance of the project pipelines subject to internal and external constraints. So the stress is being made on selection.
Cornelius: How does this differ from Program Management?
Jamal: Program Management starts, if you are a project manager or a program manager, someone from the C-Level. Someone’s in to your office and says, “Cornelius, you’re my program manager, here’s a program for you to do. A program consisting of several probably interrelated projects. And you assume at that point of time that the decision about the initiation of this program has already been made and you just take on and manage that program. As I’ve just mentioned a couple of minutes earlier, project portfolio management is about deciding which projects to run, which projects are going to go on the to-do list and which projects are going to be killed off that list. Focus is on selection.
Cornelius: Who is usually responsible for Project Portfolio Management, PPM in a company?
Jamal: Don’t even get me started on that!
Cornelius: [laughs] Who should be?
Jamal: Who should be? Senior executives. Basically whoever—who can walk into the conference room and say, “Wouldn’t it be really cool if we could do this project?” should be on the Project Portfolio Management committee. The reason I kind of reacted in this manner to your question is because very frequently, especially for some reason when I go to London, UK and I go there twice a year and I get to teach my Project Portfolio Management workshop, I really think that in the beginning of the course I say, “Ok guys, why are you here?” What do you want to learn? What is your goal? What is your target? Nine out of ten people—fairly high-ranking people in the company—Portfolio Management, directors of PMO school, “Well, my executives send me here to learn about Project Portfolio Management, come back home, develop a Project Portfolio Management model and implement it at the company”. And I go, “Are they going to be participating in deciding what should go into that model?” They go, “No, they’re too busy”. And I go, “Well, imagine the following situation: you develop a model, it’s great, it’s the best model in the world and it fits your company perfectly. Your CEO walks into your office and go, “OK, Bob, here’s a project that I want you to do”. You run that project through your model and you suddenly discovered that that project gets only five points out of a possible hundred. You go back to your CEO and say, “Sorry, I’m not going to do that. I’m not going to go ahead with that project”. “”Why is that?” “Well, it got only five out of a hundred.” What’s the reaction of the CEO? Well, he’s probably going to say, “Based on what?” “Based on the model I’ve developed.” “How come I didn’t participate?” “Well, you were too busy”. You see how this becomes ridiculous very quickly.
Cornelius: Absolutely. Yeah.
Jamal: So that’s why –but it’s definitely—it should be senior people in the room. Whenever I get a call or email from a company saying, “We’re interested in Project Portfolio Management. Actually I got a very similar call recently from one of the universities in Canada. I tell them right away, “Guys, you got to have your C-Level people on board. And here is why: if they’re not ready, don’t do that.
Cornelius: When we talk about Project Portfolio Management, we also have to talk about strategy. What is the connection between the two? What is the connection between strategy and Project Portfolio Management and I think we probably also have to talk about the three pillars of Portfolio Management as part of this. I’ll give this whole bunch of things here to you to elaborate on.
Jamal: To put it in a (short) sentence, one very short sentence, if you have no clear strategy there’s no way you’re going to have Project Portfolio Management in place because Project Portfolio Management rests on three pillars: 1. Project must deliver value to the company and it’s a very fashionable word to use especially recently –what is valuable be determined when you go into more detail scoring model, etc. but let’s just agree that we understand what value is. It sits on the third and the second pillar is balancing your portfolio in a most simplistic way. How many high-risk, high-reward projects you have versus low-risk, low-reward projects. And it has something called strategic alignment. For example, what percentage of your project will go into new product families, which percentage of your project will be allocated to improvements to existing products and what percentage of your projects will go into maintenance? Guess what—of value, I would say at the top of my head, 90 to 95% of the companies I have worked with, they had selected strategic fit as one of their selection scoring criteria. So there is a direct connection to the value. This is usually (a “kill”) category. So for example if I’m offering a project—proposing a project that has no impact on the strategic fit, that project should get killed right away irrelevant of other benefits it brings. Balance, again. What is your company’s strategy? Are you embracing risks? Are you more risk-averse? We’re talking about software developers versus a bank. Which one of them, do you think will be more a risk-taker and which one of them would be more risk-averse? So it is all three pillars directly or indirectly they tie to strategy. Another thing that I want to kind of give a heads up to you or your listeners is that, remember I said at the very beginning, it has to be a clear and simple strategy. So for example, saying something like company X will become an innovative leader in the world –that doesn’t work. Because as soon as you get into the Portfolio Management…
Cornelius: You have no idea which projects meet that.
Jamal: If you just say Company X will increase its market share to 45% in markets A, B and C, then time that to—strategy becomes very easy. So that’s my take on strategy and Project Portfolio Management.
Cornelius: OK. Just to reiterate the three pillars for our listeners here. The first one is: project selectively must maximize the value of the company. The second pillar was: they must constitute a balanced portfolio and lastly, they must be strategically aligned with the company’s overall business strategy and that’s how everything sort of fits into everything else.
Jamal: And you usually have strategy present in all three of them.
Cornelius: You mentioned scoring models. What role does strategy play in scoring models?
Jamal: Scoring models is basically—and by the way I shared some –probably four or five examples of full portfolio models of the companies I worked with and I think you will share them on your website.
Cornelius: Yeah, you have the info graphics, right?
Above are the first few pages of the transcript. The complete PDF transcript is available to Premium subscribers only.