Share with OthersLarge companies struggle to manage project portfolios efficiently. They fall for the trap of optimizing resource allocation. They focus on making sure everyone is busy, rather than getting things done.
Project work is at least 100 percent of the time for team members. People are often working on multiple projects, which is more than they can manage. Although resource utilization is high, which should mean that many projects will be delivered, tangible progress is difficult to find.
Examples abound.
A financial services company was in the middle of a transformational frenzy. They launched more than three-dozen strategic initiatives that had a major impact on all aspects of the business. Leadership reviewed their strategic priorities after missing milestones and delays in scheduling. Two minor projects were postponed. The company continued to struggle.
A Federal agency’s CIO wanted an annual, fully loaded resource allocation plan for his organization. The tool was implemented. Each month, a lot of effort was spent updating, reviewing, and analysing the data. Nothing was changed fundamentally. The CIO was focusing too much on the wrong metrics.
Manage the Limitations
It is said that if we don’t recognize and proactively manage our constraint, we can unwittingly become their prisoner.
We all face constraints. Our personal spending is governed by one constraint: our income. Portfolio management is governed primarily by two constraints: funding levels and the ability to deliver. Our desires often go beyond our limits, both at work and at home.
Portfolio funding levels should be determined by the enterprise’s strategy and finances. Capacity is determined by the number and success of the projects that the organization can deliver.
The most visible constraint is funding levels. The annual budget process is something everyone is familiar with. In the hope of getting what we want, we request more money than we can actually use.
The more important constraint is the ability to deliver. Imagine an hourglass. The narrow neck represents the ability to deliver. You can pour money on the top, but it doesn’t mean that more projects will be completed at the bottom.
People define their capacity in knowledge work. Frederick Brooks, in The Mythical Man-Month stated that “adding manpower [only] makes it late.” Only so many people are capable of working effectively on a single project.
A construction company had fallen behind in preparing a proposal to fund a large infrastructure project. Leadership decided to send people from all over the country to help. However, this only made things worse. It was a distraction to try to orient the new employees. Parsing out the work caused coordination problems.
Recognize and honor your primary constraint, the ability to deliver. It is not easy to measure capacity. Sometimes, this means reducing the number projects until the completion rate rises. Also, less is more.
Plan Locally and Progressively
Portfolio planning cycles often align with the fiscal year, which simplifies accounting. This pattern is not the case for business cycles or projects. Problems can arise when portfolio planning and project planning are forced onto the fiscal calendar.
Planning cycles can often begin months before the fiscal year begins. Project requests often exceed the limits of what is possible to fund. Commitments are made on the basis of assumptions about the future business environment. This can lead to poor decisions, long lead time, reduced flexibility, and many hours spent documenting, analyzing, justifying, and justifying these requests.
An unhealthy artificial project cycle is imposed by annual funding. Instead of a predictable fund flow, there is an inefficient pattern of peaks and valleys. It is common for teams to rush to start projects at beginning of the year when they don’t have the resources to deliver. Towa