Portfolio management - a duck in the hand...
... is worth three in the rushes? Should performance management be an essential part of portfolio management?
I would suggest that, while good portfolio management is about portfolio prioritisation of benefits and spend, there are some things to get right before proper prioritisation can happen largely in the area of performance management.
I think that before you can get your ducks in a row you need to figure out how well they are doing. And the latter assumes you know what ducks you have. The larger or less strategic the organisation, the more difficult it is to be able to define not only a list of activities but also how that list relates to strategic goals. This is especially true in government, where projects and programmes seem to ride on a vast swell of initiatives, and activities could fall within any number of governance or funding bywaters.
One of the roles for the Portfolio Office is rooting around for ducks in the rushes - there could be uncertainties around ownership as directors vie for responsibility in areas which they are accustomed to leading, or try to shake off areas theyd rather avoid. And in some organisations there may be lack of clarity as to strategic goals always the main driver for portfolio prioritisation. There is also always the usual plethora of small projects lurking around in the undergrowth (inevitably including pet projects, ones with long expired benefits realisation profiles, ones that conflict with each other and the It-was-a-good-idea-once-upon-a-time-project.) So getting your ducks right is the first step ... and lets face it, for those no longer wanted, culling is not a pleasant activity ...
Then its a question of finding the right pond, or should I say forum for discussion in appropriate senior management structures, to discuss the ducks. Where are your lead managers going to exchange ideas, challenge value for money or scrutinise spend? Do managers even want to engage in these topics? In short, how to motivate Alpha ducks, sorry, senior managers, to desire regular, systematic scrutiny of the portfolio?
I think a lot of it comes down to getting performance management in place, both of senior managers, and of the portfolio items. Senior management should set and be tested against targets for their individual performance. And projects and programmes need to report visibly on their delivery against outcomes. And all of this needs to be reported in the context of the whole portfolio before ducks can be culled off, one at a time, in any reprioritisation exercise.
So my personal checklist for successfully functioning portfolio management is:
- Knowing the list of activities and how they feed strategic goals;
- Motivating managers to get involved in scrutiny of the portfolio;
- Giving them the tools to do it properly through performance reporting on the right list of activities at the right forums, as well as providing the toolset for prioritisation.
Have I ducked any of the main issues here?
Dr Achilleas Mavrellis is lead portfolio quack at the Department for Environment, Food and Rural Affairs.
4 comments
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I rather liked this Blog for lots of reasons, not least of which it recognised that any portfolio management solution needs to integrate: process, people and technology.All too human behaviours were also brought up and "finding the right duckpond" is spot on. I would go even further, people make emotion based decisions.....which is often why you get pet projects in the first place. And organisations often react and behave like people (look at how easy it is to panic a crowd, but how diffcult it can be to win the trust of a team).This suggests that really good portfolio management actually starts with understanding how people....and the organisation, behaves.
I wanted to suggest that if we made the analogy of all the ducks coming to the pond to land, within the portfolio there needs to be a prioritisation criteria for projects. A process could consider solicitation initially that individual projects are evaluated periodically and each has a credible strategy that it is aligned with the organization's objectives and strategy. A business case for the project, containing these details, is produced as an output of the solicitation phase. The relative value of the project and its overall synergy with the organization's strategy is evaluated during the selection process. If a project is selected, the next step is its priorization.Let's say the particular pond was small and there are a large number of ducks. In our particular case in respect of Real Estate we can determine that some projects shall be given focus and some projects that are at the conceptual stage of design shall become suspended. The driver for the criterion for selection needs to be articulated and agreed with key stakeholders. In our case projects which relate to a catalyst core for a new city wherein the individual projects when brought together generate a 1 + 1 = 3 synergistic exchange i.e. the whole becomes more than the constituent parts.During the prioritization stage, a scoring system is used to determine the priority of the project with respect to other projects.Sunsequently, depending upon availability, resources are allocated to the project to allow it to proceed.A fundamental requirement is the need for strategy to be set at a corporate level and then filtered down to a project level. Strategy is all about informing material decisions on the allocation of scarce resources. It is a core business process and a key element of the responsibuilities of any Board. In tough times it is even more important that corporate decision making is robust and well informed.Thank you for the opportunity to contribute to your good discussion topic.
Thanks for following up my starter for ten, Richard.Priorisation is all really about getting your ducks in a row, isn't it, so you can pick them off one at a time and free up a bit of pond space?You mention using a scoring system to line them up. I'd be keen to know what success people have had using such systems?My success (in HM government) has been limited, and I have found that the appetite for scoring systems is marginal. But that may be due to the complexities and long time scales involved in public policy implementation.Achilleas
Understanding dependencies is vital. Thanks, Andrew, for pointing this out.I frequently use the phrase 'Big Picture' -- as you have -- when talking to senior managers in government. They don't always know what that means, and it is up tothe Portfolio Office to help 'paint' a picture of the pond. How well we do it depends on (a) how good our relationships with senior managers are, and (b) our 'grip' on the ducks - in short, Portfolio Leadership.Peter Parkes will be addressing this in the next Portfolio SIG blog -- please tune in again!