Figure 11-13: Top-down, portfolio-level, resource estimation table for a specific period.
Agile Strategy Monitor your monthly (periodic) resource estimates at the portfolio level, and only revisit resources at the project level when a gross mismatch is identified between the two.
Resource Estimates and Multiple Pathways
Since the future pathways of individual projects, as well as the overall portfolio, are not fully predictable, it is often valuable to do a resource analysis based on various potential scenarios. (For example, the test phase of project 1 will only take one pass, the sales group will close the deal for project 2 next month, etc.). I’ve found that the most valuable analysis is to create a resource-by-resource (or role-by-role) trend over time in the form of a bar chart (see Figure 11-14). This will let you quickly see the loading of any specific resource, should a particular scenario come to fruition.
Figure 11-14: Portfolio-level Gantt chart showing rough resource usage over time.
Resources:
Provide an estimate of the time to be spent on the various projects for the next period. Resources should be estimated using FTE months.
Period: Month
Other Typical Criteria
The specific weighting criteria used to manage a corporate project portfolio are dependent on the actual business/company and, generally, determined by executive management. A few of the more common criteria are strategic fit, ROI, and risk (among others), and they are largely addressed similarly in the agile or classic environment. As your portfolio management process matures, these criteria will become more detailed and business specific. The key points to consider are these: First, evaluating a project is different from evaluating a portfolio. For instance, you may not be able to justify an individual project alone, but it is more than justified when viewed as part of a portfolio of projects with a common, higher-level objective. Second, the nature of the agile environment (high uncertainty with multiple pathways) makes the strategies and objectives more likely to require multiple, small projects rather than a single, large one (see Figure 11-15). This, in turn, makes agile projects more conducive to the use of a portfolio management approach instead of treating each individual project separately when evaluating the project’s value to the business.
Figure 11-15: Approach to achieving high-level objectives through tactical projects in an agile versus classic environment.
Successfully managing individual projects is only the start of a truly agile project-driven organization. Creating an agile portfolio management process will help ensure that the business is working on the right projects to attain its high-level objectives and business strategy. Integrating your portfolio management process with your project management processes will, in turn, provide the necessary, real-time linkages between the strategy and project levels of the business to keep them in alignment as business and project conditions change.
Summary
Portfolio management is a vital linkage between business strategy and tactical project execution.
External influences in the agile paradigm are felt at the project level, as well as at the strategy and business objectives levels. This, in turn, can create an upstream ripple effect from the project level to the strategy level.
In the agile environment, integrating the project management and portfolio management processes will lead to greater success in achieving business objectives and strategy.
In the agile paradigm, objectives are often achieved through a portfolio of many smaller, but closely linked, projects.
In the agile environment, portfolio management is an ongoing effort, often best managed by a portfolio program manager rather than executive management.
It is critical to understand resource allocation in the agile environment so that resources can be efficiently shifted between projects, as necessary.
Coming at the resource estimates from both the project and portfolio levels will increase your confidence in the results, as well as make the maintenance less painful for your team.
Chapter 12: Integrating Portfolio and Project Management with the Product Development Process for Business Success
In many technology companies, especially smaller ones, the project portfolio (and the business) revolves around R&D. This actually makes perfect sense, since it is the technology that provides the competitive advantage for the company. The problem is in balancing the desire for innovation against the need for process (see Figure 12-1). Most creative engineers and scientists would much prefer to focus on the next technological breakthrough than portfolio management, project management, or any other process for that matter. These processes are often considered a necessary evil, and they are given less attention than is usually required to make them successful. Our quandary, then, is this: Do we emphasize the importance of project and portfolio management at the risk of killing innovation, or do we take a hands-off approach and encourage pure innovation, with the hopes that what is developed will, indeed, support the business strategy? These are tough questions that permeate many technology businesses. Of course, the answers are probably somewhere in between.
Figure 12-1: Balancing process and innovation.
Integrating Process and Innovation
Balancing the needs of the process against the needs of innovation is on the minds of technical project managers everywhere. The problem with this approach is that it implies that process (in this case, the portfolio management process, but it could also be the project management process) and innovation are two separate entities with different requirements that need to be balanced. This, in turn, suggests that process and innovation have separate owners and are at odds with each other—which is definitely not a recipe for agility. Much of the agile paradigm is about integrating activities, processes, and roles so that the right information flows in a timely fashion to whomever needs it. In this case, we should be looking for ways to integrate process and innovation in a supportive manner instead of trying to balance them against one another.
From the project team perspective, project management can be justified as a tool that helps the team meet the immediate project milestones. Portfolio management, on the other hand, is one step further removed from the team. It is more related to business-level objectives than project-level ones. This means that portfolio management activities are generally a lower priority than project management activities to the team, making it that much more difficult to instill an effective process.
Most companies that are successful in integrating process and innovation have managers and project managers with the right mix of technical, business, and interpersonal skills. These gifted individuals have earned credibility within their organizations by demonstrating subject matter and management expertise. They consistently add value and a host of other leadership qualities to the organization. The problem with depending on individuals to integrate innovation and process is that it is difficult to help people progress up the skill ladder. Experience is one common denominator of successful project managers in R&D, and even experience doesn’t guarantee that they will be successful. Training certainly can help, but there isn’t much training available on this specific topic of how to meld technical/subject matter capabilities and business/management processes, since it’s tightly related to company-specific process development. We need to find new ways to help project managers become more effective at integrating the creative and business needs without relying solely on interpersonal skills.
While process is somewhat of an outlawed word in R&D, most good R&D managers realize that some level of process is necessary to efficiently develop good products. In many industries, a well-designed product development process (PDP) is mandated by government regulations, or it may be required to obtain certain certifications, such as ISO 9001. In the end, it just makes good business sense to have a robust product development process, since the structured methodology will help ensure that your product meets customer needs, functions as advertised, and is supportable and manufacturable. Most R&D organizations already have some type of product development process in place and in use. If there is any process that will be tolerated or even embraced in R&D, it is the product development process. Rather than inflicting the additional layers of portfolio management or project management process on the poor engineers, you should be looking for ways to extend their product development process to cover key elements of these other processes (see Figure 12-2.) In this way, the importance and requirements for effective portfolio and project management are more easily digested, thus creating a more optimized and integrated process.
Figure 12-2: Integrating project management and portfolio management into the product development process.
Acknowledgment of the product development process as the core business/technical process for the company (and also building on it) is often the most effective business solution for technology-centric companies. By cleanly extending the product development process to encompass key dimensions of portfolio management and project management, you add value to the established core R&D process (PDP), advance the effectiveness of R&D managers and project managers, and create the foundation for effective portfolio and project decision making.
Agile Strategy Integrate core elements of project management and portfolio management into the already-established product development process, rather than attempt to establish two new processes.
Integrating Portfolio Management Into the Product Development Process