project management

Project Management2. Portfolio Management : 

Project Management2. Portfolio Management

Week 2 : 

Week 2

Project selection and portfolio management : 

Project selection and portfolio management

Project selection and portfolio management : 

Project selection and portfolio management

Project selection and portfolio management : 

Project selection and portfolio management What are the inputs that cause the project process to begin?

Unit Objectives : 

Unit Objectives Implement IT project planning and selection techniques Appreciate the importance of project portfolio management

Slide 7: 

Strategic Planning Identifying IT Projects Project Proposals Project Selection Methods Applying a Selection Model Project Selection Project Success

Slide 8: 

Strategic Planning Identifying IT Projects Project Proposals Project Selection Methods Applying a Selection Model Project Selection Project Success

Slide 9: 

But first

Slide 10: 

Assignment 1

Slide 11: 

Assignment 1 “Write a project plan”

Slide 12: 

Assignment 1 “Write a project plan” Topic: Week 3

Slide 13: 

http://www.teachers.ash.org.au/researchskills/Dalton.htm

Slide 14: 

Back to the programme…

Slide 15: 

Strategic Planning

Strategic Planning : 

Strategic Planning What is strategy? How do projects relate to strategy?

Slide 17: 

Strategy 2 Strategy 1 Strategy 3 Strategy 4 Organisation Mission Money Customers Efficiency and Effectiveness Adaptability

Slide 18: 

5 Forces analysis Supplier power Customer power Threat of New Entrants Substitutes Intensity of competition Michael Porter’s ‘5 Forces’ – 1980’s

Slide 19: 

business model template VALUE PROPOSITION COST STRUCTURE CUSTOMER RELATIONSHIP TARGET CUSTOMER DISTRIBUTION CHANNEL VALUE CONFIGURATION CORE CAPABILITIES PARTNER NETWORK REVENUE STREAMS INFRASTRUCTURE CUSTOMER OFFER FINANCE Osterwalder’s Business Model framework 2006 http://business-model-design.blogspot.com

Slide 20: 

Process efficiency Scorecard Customer satisfaction Financial Learning and innovation Balanced Scorecard Kaplan & Norton (1994?) HBR

Slide 21: 

Kaplan & Norton (1998?) HBR http://www.visual-literacy.org/periodic_table/pix/strategy-bsc-map.png Strategy Map

Slide 22: 

Strategy 2 Strategy 1 Strategy 3 Strategy 4 Organisation Mission Money Customers Efficiency and Effectiveness Adaptability

Slide 23: 

Strategic Management Overview Involves determining long-term objectives, predicting future trends, and projecting the need for new products and services Provides the theme and focus of the future direction for the firm respond to change allocating scarce resources Requires strong links among mission, goals, objectives, strategy, and implementation

Slide 24: 

Set (SMART) Goals Review Mission Develop Strategies Implement Strategies through projects Align Strategies to goals

Slide 25: 

Set (SMART) Goals Review Mission Develop Strategies Implement Strategies through projects Align Strategies to goals

Slide 26: 

SWOT Analysis

Slide 27: 

SWOT = SITUATIONAL ANALYSIS Where are we now?

Slide 28: 

S T W O

Slide 29: 

S T W O Positive Negative

Slide 30: 

S T W O Internal External

Slide 31: 

S T W O Internal External Positive Negative

Slide 32: 

S T W O Internal External Positive Negative

Slide 33: 

Set (SMART) Goals Review Mission Develop Strategies Implement Strategies through projects Align Strategies to goals

Slide 34: 

http://en.wikipedia.org/wiki/SMART_(project_management)

Slide 35: 

http://en.wikipedia.org/wiki/SMART_(project_management)

Slide 36: 

Examples of “not smart” goals?

Slide 37: 

Set (SMART) Goals Review Mission Develop Strategies Implement Strategies through projects Align Strategies to goals

Slide 39: 

Set (SMART) Goals Review Mission Develop Strategies Implement Strategies through projects Align Strategies to goals

Slide 40: 

Organisation Mission Money Customers Efficiency and Effectiveness Adaptability Strategy 2 Strategy 1 Strategy 3 Strategy 4

Slide 41: 

Set (SMART) Goals Review Mission Develop Strategies Implement Strategies through projects Align Strategies to goals

Slide 42: 

Organisation Mission Money Customers Efficiency and Effectiveness Adaptability projects projects projects projects Strategy 2 Strategy 1 Strategy 3 Strategy 4

Slide 43: 

What are the goals of the projects?

Slide 44: 

Figure 2.1 Strategic Management Process (Gray & Larson, 2006, p25)

Slide 45: 

projects

Slide 46: 

projects projects projects projects

Slide 47: 

projects projects projects projects projects projects projects projects projects projects projects projects

Slide 48: 

PPPM Project Programme Portfolio Management The ‘O’ is for Organisational OPM3

Slide 49: 

Programme OPM3 Portfolio Projects

Slide 50: 

Projects Programme Portfolio Project Programme Project Project Projects Project Project Projects Project Project Projects

Slide 51: 

One Portfolio or Several? Categories Approaches to project portfolio management

Slide 52: 

One Portfolio or Several?

Slide 53: 

Categories Venture: Projects that transform the business Growth: Projects that grow revenue or market share Core: Projects that help run the business

Slide 54: 

What are the benefits of Project Portfolio Management?

Slide 55: 

Benefits of Project Portfolio Management Builds discipline into project selection process Links project selection to strategic metrics Prioritizes project proposals across a common set of criteria, rather than on politics or emotion Allocates resources to projects that align with strategic direction Balances risk across all projects

Slide 56: 

Problems with Project Portfolio Management

Slide 57: 

Different views from senior management on what (and how) should be done

Slide 58: 

Competition (& effective utilisation) for resources

How to : 

How to Senior Management Input provide guidance in selecting criteria that are aligned with the organization’s goals decide how to balance available resources among current projects The Priority Team Responsibilities publish the priority of every project ensure selection process is transparent re-assess the organization’s goals / priorities evaluate the progress of current projects

Slide 60: 

Figure 2.8 Sample project portfolio approach(Schwalbe, 2005, p51)

Slide 61: 

Figure 1.5 Project management compared to project portfolio management(Schwalbe, 2005, p15)

Slide 62: 

Money Customers Efficiency and Effectiveness Adaptability projects projects projects projects projects programme projects projects projects projects programme projects Strategy 2 Strategy 1 Strategy 3 Strategy 4 Organisation Mission Programme projects projects programme

Slide 63: 

Short term Mid term Long term projects projects projects projects projects projects projects projects projects projects projects projects Strategy 2 Strategy 1 Strategy 3 Strategy 4 Organisation Mission projects projects projects projects

Slide 64: 

http://www.betterprojects.net/search?q=strategy

Slide 65: 

projects projects projects projects projects projects projects projects projects projects projects projects Strategy 2 Strategy 1 Strategy 3 Strategy 4 Organisation Mission projects projects projects projects

Slide 66: 

Identifying IT Projects

Identifying IT Projects : 

Identifying IT Projects Many organizations follow a planning process for selecting IT projects which is aligned with business strategy Research shows: Supporting business objectives is the number one reason for investing in IT projects Use of IT standards lowers development costs by 41 percent per user (Cosgrove Ware, 2002)

Slide 68: 

Figure 2.1 Pyramid for the Project Selection Process(Schwalbe, 2005, p35)

Slide 69: 

Project Proposals

Slide 71: 

Most business units have a strategic plan

Slide 72: 

Which SHOULD align with the organisation’s strategic plan Which SHOULD align with the organisation’s strategic plan

Slide 73: 

Solicitation of Project Proposals Within the organization Request for proposal (RFP) from external sources (contractors and vendors)

Slide 74: 

When ranking proposals, consider; Discipline Accountability Responsibility Constraints Reduced flexibility Loss of power

Project Initiation forms : 

Project Initiation forms Figure 2.4B Risk Analysis(Gray & Larson, 2006, p39) Figure 2.4A Major Project Proposal (Gray & Larson, 2006, p38)

Project Initiation forms : 

Project Initiation forms Figure 2.4B Risk Analysis(Gray & Larson, 2006, p39) Figure 2.4A Major Project Proposal (Gray & Larson, 2006, p38)

Slide 77: 

Project Selection Methods

Not all project proposals make it to initiation : 

Not all project proposals make it to initiation

Slide 79: 

Every project idea isn’t progressed. Why?

Slide 80: 

Time Money Focus

Slide 81: 

Methods for selecting projects include: Focusing on broad organizational needs Categorizing IT projects Financial analysis Using a weighted scoring model balanced scorecard Strategy mapping

Slide 82: 

Focusing on Broad Organizational Needs E.g. Non-financial, but important benefits Three important criteria: need for the project funds available for the project will to make the project succeed

Slide 83: 

Categorizing IT Projects Does the project provides a response to: a problem an opportunity a directive The time and date of expected completion The overall priority of the project

Financial Analysis : 

Financial Analysis $$$ Net Present Value Payback model Return on Investment (there are more)

Financial Analysis : 

Financial Analysis $$$ Net Present Value Payback model Return on Investment (there are more)

Slide 86: 

Net Present Value Net Present Value (NPV) Model Uses management’s minimum desired rate-of-return (discount rate) to compute the present value of all net cash inflows positive NPV: the project meets the minimum desired rate of return and is eligible for further consideration negative NPV: project is rejected Net Present Value (NPV) Model cont’d… NPV Calculations determine estimated costs / benefits for the life of the project and products it produces determine discount rate (ask organization) calculate the NPV some organizations consider the investment year as year 0, others consider it year 1 some organizations enter costs as negative numbers, others do not (ask organization) Example: CP829_Lecture_Week2_NPV.xls Time to Stop and turn to a new presentation pack

Slide 87: 

Payback model Figure 4.1 Charting the Payback Period (Schwalbe, 2006, p129) Measures the time it will take to recover the project investment Shorter paybacks are more desirable Payback occurs when cumulative discounted benefits and costs are greater than zero Limitations of payback: ignores the time value of money assumes cash inflows for investment period only does not consider profitability

Slide 88: 

Return on Investment Return on Investment (ROI) Calculated by subtracting project costs from the benefits and then dividing by the costs Formula: ROI = (total discounted benefits – total discounted costs) / discounted costs Higher the ROI, the better. Many organizations have a set or minimum rate of return on investment projects Example: CP829_Lecture_Week2_ROI.xls (total discounted benefits – total discounted costs) discounted costs

Non-financial Analysis : 

Non-financial Analysis $$$ Weighted scoring model Balanced Scorecard

Slide 90: 

$$$ Weighted scoring model A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria Steps in identifying a weighted scoring model: identify criteria for project selection assign weights (%) to criteria add up to (100%) assign scores to each criteria for each project multiply scores by weights to get total scores The higher the weighted score, the better Example: CP829_Lecture_Week2_WeightedScore.xls $$$

Slide 91: 

$$$ Balanced Scorecard Balanced Scorecard Robert Kaplan and David Norton developed this approach to help select and manage projects that align with business strategy Methodology that converts an organization’s value drivers, such as customer service, innovation, efficiency, and financial performance, to a series of defined metrics See http://www.balancedscorecard.org for more information $$$

Slide 92: 

Applying a selection model

Applying a Selection Model : 

Applying a Selection Model Project Classification Deciding how well a strategic or operations project fits the organization’s strategy Selecting a Model Focus on competitive strategy and broad organizational needs Perform net present value analysis or other financial projections Use a weighted scoring model Implement a balanced scorecard Address problems, opportunities, and directives Consider project time frame Consider project priority

Slide 94: 

Project Selection

The Business Case : 

The Business Case Impacts Costs & Benefits Clearly compares alternatives Objective Systematic

The Business Case : 

The Business Case Elevator pitches?

Slide 97: 

Table 3.4 Sample business case(Schwalbe, 2005, pp74-76) Example business case

Contents of a Business Case : 

Contents of a Business Case Introduction/Background Business Objective Current Situation and Problem/Opportunity Statement Critical Assumptions and Constraints Analysis of Options and Recommendation Preliminary Project Requirements Budget Estimate and Financial Analysis Schedule Estimate Potential Risks Exhibits

Slide 99: 

Figure 2.3 The Process for Developing a Business Case(Marchewka, 2003, p34)

Slide 100: 

Project Success

Slide 101: 

By the way, Things are getting better

Slide 102: 

Source: CHAOS Report 1995 by the Standish Group Access it here: http://net.educause.edu/ir/library/pdf/NCP08083B.pdf Not even completed Typically 189% over budget OTOBOS 53% Challenged 16% Success 31% Critical Failures 1994

Slide 103: 

Not even completed Still way over budget OTOBOS 51% Challenged 34% Success 15% Critical Failures 2002 Source: CHAOS Report 2002 by the Standish Group Access it here: http://www.standishgroup.com/quarterly_reports/index.php

Slide 104: 

53% Challenged 16% Success 31% Critical Failures 1994 51% Challenged 34% Success 15% Critical Failures 2002

Slide 105: 

1994 2005 Wasted money as a share of total project spend Billions of dollars

Slide 106: 

What happened?

Slide 107: 

“The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.” (Standish Group cited in Schwalbe, 2004, p13)

Slide 108: 

“The reasons for the increase in successful projects vary. First, the average cost of a project has been more than cut in half. Better tools have been created to monitor and control progress and better skilled project managers with better management processes are being used. The fact that there are processes is significant in itself.” (Standish Group cited in Schwalbe, 2004, p13) Smaller projects Better tools Better training

Slide 109: 

Better Selection Portfolio Mgt Strategic Alignment More recently

Things you should have(if you want to succeed) : 

Things you should have(if you want to succeed) Executive support User involvement Experienced project manager Clear business objectives Minimized scope Standard software infrastructure Firm basic requirements Formal methodology Reliable estimates Other criteria, such as small milestones, proper planning, competent staff, and ownership

Slide 111: 

incremental But, change has been…

Slide 112: 

There is still plenty of room for improvement.

Slide 113: 

? What do you think is still going wrong?

BetterProjects.net : 

BetterProjects.net Title page pic care of jpellqen & CC @ Flickr http://flickr.com/photos/jpellgen/444946201/