I recorded a podcast with Gerald Leonard over at Principles of Execution and part of the discussion was about how the PMO is really just the custodian of a portfolio. The only reason a project portfolio exists is to deliver on business goals, and so the portfolio really belongs to “the business”. But in most organizations we work with, there is little consensus between executives on what the goals are and how they should be prioritized.
The process of getting agreement between executives on business priorities is, therefore, like herding cats… only these cats are killers because 72% of PMOs are called into question by these same execs.
It’s not your project portfolio
I’m a Brit, so it’s my patriotic duty to watch Downton Abbey. There’s a law, apparently, which the Queen herself enforces with a nail-brush and rubber gloves. Now I realize that not everyone will know what Downton is…
Downton Abbey is a TV show that follows the fictional lives of Lord Grantham and his household over a period that starts in 1910 and ends sometime in the 1930s. Lord Grantham is an Earl. He rubs shoulders with royalty. He has a huge stately home and lots of servants. His estate covers hundreds of acres / hectares.
Yet he makes the point again and again that he is merely a custodian of the estate. The house and grounds will be there long after he’s gone; it’s an important employer, it’s a focus of the community. His job is simply to keep it all together during a time of great change.
It’s exactly the same with a PMO. Your task is to deliver on the projects that will help your organization adapt to change, to thrive and to deliver on its goals. The portfolio will be there long after you’ve died and are managing your Gannt charts in the sky. It’s the organization’s resources you’re deploying. It’s simply not your portfolio.
This means that you have a fiduciary duty to look after that portfolio, to maximize the return to the business.
But how can you measure value? Many people try to use return on investment (RoI) or net present value (NPV) to define value, but these measures are generally not very flexible. They don’t necessarily take account of other factors (e.g. enhancing brand, strengthening the quality of service, etc.) These factors, of course, have an impact on financial performance, but often it’s in an indirect way and RoI / NPV can be almost impossible to define… yet the project can still add huge amounts of value.
This problem of defining value is even worse if you happen to be in a public-sector PMO. This is because the “bottom line” is not what’s important. The focus in a typical government agency is more around delivering “social good” (lower unemployment, higher educational standards, etc.) rather than a financial RoI.
So, you need a way to capture these goals and to assess their relative importance. But gets worse.
Cats in neck-ties
The executive team, and other stakeholders, will each have a view on what’s important, on where the value lies. Unfortunately for you, stakeholders will seldom agree on where the value lies. Herding these cats-in-neck-ties (or slacks, or pant-suits or whatever other dress code applies in your environment) is, however, a vital first step to delivering value from your portfolio. If you can’t define what value IS, you can’t build a portfolio to deliver it. It’s impossible!
Many PMOs / executive teams ignore the problem, or rather they think they are addressing it when they’re really not. What they do is run a beauty parade of possible projects in front of the execs who then approve/reject the projects. This leaves you wide open to projects getting picked because they were “sold well”, because it was a pet project for someone powerful, etc. This usually has very little to do with value generation and, if you know what you’re looking for, it’s easy to spot.
So how can you herd the cats without getting mauled?
We’ve created this ultimate guide to project prioritization for you.
This is the place to get the basics of how to do project prioritization properly and of how it can support strategic project selection. It includes a discussion on different methods and techniques for prioritizing projects and gives some guidelines on how to pick a balanced portfolio of projects.