The Role of Executives in Project Portfolio Manage.ppt

ICS Group 20021 ICS Group 20022Stating that executives need to be aligned with our portfolio management strategy seems intuitively obvious. But taking that from an intellectual statement to a behavior can be a challenge. If an alignment is not true, we soon find that new projects are being championed and interjected atop our current portfolio commitments and we are spending time defending a position rather than delivering upon it. ICS Group 20023 Natural role in organization - decision-maker Formally or informally, executives will make decisions on portfolio content Those decisions will impact the portfolio Direction Ability to resource, to deliver ICS Group 20024 Approving lobbied-for projects outside of the process Redirects investment of assets to special interests, not necessarily in strongest alignment or in balance with organizations strategy behaviorally reinforces that PPM is hers alone, ensuring future circumventions “Piling-On” - deciding/demanding more projects be launched than can be resourced, resulting in lack of focus lower % of projects completed and business objectives met employee exodus when economy good ICS Group 20025Provide a specific role for execs in PPM First - have a clear structure for PPM Clearly define roles, accountabilities, sources of information, review & decision calendarsRole for execs: Investment Management - iM Linkage: iM is the driver of PPM Bound scope of executive decisions (strategy, alignment, investment categories mix, funding of investment, external implications)Transparency Publicize the process Publicize decisions ICS Group 20026We want to tap in to that ability and direct it at the appropriate issues, at the appropriate level, in an appropriate forum that is consistent with the strategies and objectives of the enterprise. ICS Group 20027At the top, an Investment Management (iM) Team comprised of executives from across functionsiM Team establishes organization-wide allocation of assets among investment categories in line with strategyiM Team identifies overarching performance goals for portfolioPortfolio Manager(s) determine specific projects to launch, monitor and measure Based on performance measurements and external conditions, iM Team validates or redirects the investment strategy ICS Group 20028Of these 3 ways people take in information - visually, audially and kinesthetically - The primary processing style for over 80% of us is visual.Facilitate understanding complex inter-relationships among iM, PPM and other processes with a picture. ICS Group 20029InitiationPlanningExecutionClosureSolution DeliveryOperations25 %20 %15 %25 %15 %20 Project ManagementProgram ManagementGovernance ProcessesProject Life Cycle ProcessesExecutiveManagementBusiness Area ManagementMatrixed Project TeamsDiagram: Framework for Governance in the Project-Based Organization. Copyright 2001 Andrews Dimensions/ICS Group AnnualQ Q Q Q Framework for Governance and Decision-MakingPortfolio ManagementInvestment ManagementWho is responsibleCycle TimingProcesses ICS Group 200210Quantification of AssetsProject ScreeningPrioritizationPortfolio PlanningBusiness StrategyInitiationPlanningExecutionClosureSolution DeliveryOperationsInvestmentAsset Allocation25 %20 %15 %25 %15 %20 %Project ManagementProgram ManagementGovernance ProcessesProject Life Cycle ProcessesExecutiveManagementBusiness Area ManagementMatrixed Project TeamsTo InvestResource Capacity/ Doability TestSelectionApprovalAnnualQ Q Q Q Data:Portfolio category performanceFuture performance risksChanges in market Regulatory environmentAvailability of fundsData for each project:Performance schedule, cost, qualityFuture performance risksIssues & solution optionsRecommendation to keep/killWhich Projects will we keep, kill, start, to effectively achieve performance measures?Investment Strategy Stay or Redirect? DecisionsPortfolio ManagementInvestment ManagementData & Decision FlowFramework for Governance and Decision-MakingDiagram: Framework for Governance in the Project-Based Organization. Copyright 2001 Andrews Dimensions/ICS Group ICS Group 20021120 %15 %25 %20 %-Diagram: Governance within the ProjectBased Organization. Copyright 2001 Andrews Dimensions/ICS Group Data & Decision Flow Leverage something familiar to the executives speeds buy-in and support of framework Assume all execs have a personal, financial portfolio Map the familiar financial portfolio management elements to the iM / PPM framework ICS Group 200212Working with a financial portfolio manager, a client communicates his goals and often decides the targeted allocation of assets, e.g. 40% in equities, 20% in bonds, 30% in real estate and 10% in collectibles. The client does not select the individual investments that comprise each asset category. The financial portfolio manager keeps in close contact with the client and shares the performance of the portfolio relative to the clients goals, and in the valued advisor role, continues to educate and counsel the client, allaying fears of situational ups and downs, keeping the focus on the longer term. ICS Group 200213Apply the 3 Stage Financial Portfolio-Client Model 1.Buy-in to portfolio strategy & process2.Transition to desired portfolio mix3.Management of portfolio to achieve strategyAssume the role of the professional financial portfolio advisor. The executive is in the role of client. ICS Group 200214Financial Portfolio Client ModelStage 1 The portfolio manager gains clients buy-in to portfolio strategy & processUnderstand clients overall long-term objectivesUnderstand clients current assets and how they are investedIdentify future stream of funds, $ needed to live onUnderstand clients risk toleranceEducate client on investment categories (following 2 slides)Discuss range of potential returns on investments and elements of measurementAgree on desired allocation of assets across categoriesCommunicate how we will work together e.g. monthly informational performance reports, quarterly meetings to discuss any major issues that require agreement on buying/selling, annual rebalancing of allocation, portfolio manager may have full or partial discretionary authority to make day-to-day trades, fees associated with managing/ administering the portfolioSign agreement on how we will work together ICS Group 200215Asset Allocation Personal Investment CategoriesEquities (stocks)Fixed Income (bonds, CDs)Real EstateHigh Risk (start-up, art)*Money Market * Unsubstantiated70% of achieving a portfolios goals is related to picking the right asset allocationAllocation of Assets in Clients PortfolioEquities55%Fixed Income10%Real Estate20%Money Market10%High Risk 5%- different investors, different goals, different market conditions, different allocation, same categories ICS Group 200216Asset Allocation Project Investment CategoriesInfrastructure new or improved technology, process or facilitiesMaintenance staying in businessNew Productsdevelopment and launchResearch future possibilitiesUnsubstantiatedCorporate Asset AllocationInfrastructure20%Maintenance10%New Products50%Research20%- different investors, different goals, different market conditions, different allocation, same categoriesThe executive investment management team decides the asset allocation of the portfolio ICS Group 200217Financial Portfolio Client Model Stage 2 - Transition to desired portfolio mixAnalyze current investments against target allocations and return measurements. Recommend new portfolio composition specific investments to sell, hold and buy. Gain agreement on specific new portfolio composition and the plan to transition to it.Execute the buys and sells to achieve the desired portfolio composition. ICS Group 200218Financial Portfolio Client Model Stage 3 - Management of portfolio to achieve strategyPortfolio Manager “manages” the portfolio Monitor investments performance against return assumptions Identify trends, research, and make mid-course corrections Has discretionary authority to buy and sell specific investments Provides monthly reports to client investorQuarterly face-to-face client meetings: Review performance, forecast future, options for defensive or offensive opportunities. Client makes decisions based on options presented.Annual client meetings: Rebalance Portfolio Allocation targets based on clients current state, changes in clients overall strategy and short term objectives and market conditions. ICS Group 200219Project Portfolio Management can provide clear structure, context and information enabling executives to make appropriate decisions.“High office teaches decision making, not substance. It consumes intellectual capital; it does not create it. they executives learn how to make decisions but not what decisions to make.”Henry A Kissinger, White House Years ICS Group 200220Summary from experiencesAbility to be competitive tomorrow depends on the effectiveness of project portfolio todayExecutive behavior and decision-making impact that effectivenessAn enterprise PPM framework enables executive participation and decision-makingLeveraging something familiar to the executives speeds buy-in and support of frameworkTransition to living the framework requires powerful leadership ICS Group 200221About the SpeakerK.C. Yelin is a much-called upon speaker and innovator on issues related to process, teams, communications, technology and the integration of those items. Those who collaborate with her benefit from her insight into the human elements which enable teams and organizations.Ms. Yelin founded and led ICS Group from 1982 to 1999. She is the author of the ICS Group Project Leadership Process and its Portfolio Management Model. Prior to founding ICS Group, Ms. Yelin held management positions with IBM, Control Data Corporation and Digital Equipment and was on the faculty of the University of Connecticut Graduate School of Business Administration. K.C.s area of specialization is the Project Portfolio Management practice for ICS Group. (800) 248-0056 ICS Group 200222About ICS GroupICS Group is a consulting firm specializing in building project management competency in organizations. Its mission is to help business leaders and their project teams succeed. The project best practices and models that ICS Group employs have been developed during its 20 year practice in collaboration with Fortune 100, government and non-profit organizations such as those listed below.Aetna, American Red Cross, AT&T, AXA, Blue Cross/Blue Shield, BOC Gases, Bristol Myers/Squibb, Chase Bank, CIA, Cigna, Con Edison, Connecticut Mutual, Duke Energy, EDS, Emory University, Ford Foundation, Fort James, Fujisawa Healthcare, Gartner Group, GE, Grolier, GTE, Heublein, International Flavors and Fragrances, IRS, IBM, Johnson & Johnson, John Hancock, Kraft, Mass Mutual, McNeil Consumer Healthcare, Merck, MTV Networks, Nabisco, NASA, Pepperidge Farm, Pepsi, Pfizer, Phillips Laboratories, Pitney Bowes, Prodigy, Rich Products, The Travellers, United Illuminating, United Nations, United Technologies, US Army, US Census Bureau, USDA Forest Service, Washington Metro, Xerox . . . (800) 248-0056