Project Portfolio Process - PPP

Project Portfolio Process Explained

Project Portfolio Process (PPP) is defined as a method that organizations use to maximize the output potential of the various projects at a given time and within the limited resources. It mainly helps the organizations to link their goals and strategies to the projects. The process is carried out throughout all the stages of the projects, and it also helps in monitoring and controlling of the organization’s strategic projects.

Let's discuss these steps in detail.

Establishment of a Project Council: In this step, a project council is established to define a strategic direction for the projects, which covers both internal and external boundaries. Examples of such projects are joint venture and cross-departmental projects. The project council must include:

• Members of the senior management
• Project managers of major projects
• Head of the Project Management office
• Important general managers
• Individuals who can identify key opportunities and risks

The council is also accountable for the allocation of funds to projects which are aligned with the goals and objectives of the organization, and the administration of resources and skills to projects.

Identification of Project Categories and Criteria: In this step, project categories are defined, and criteria is established to identify good and better projects. By defining the project categories, the multiple objectives of an organization can be achieved and the projects are restrained from competing against each other on improper categories. The projects can be identified on the basis of the changes in product or process. The different categories of projects are as follows:

Derivative Projects: These include the projects whose objectives and deliverables are only incrementally distinct in both product and process from the current offerings. Such projects aim to either replace the current offerings or add an extension to the existing offerings.

Platform Projects: These include the projects whose planned outputs depict major deviations from the current offerings in terms of product/services. These outputs become platforms for the latest generation of offerings.

Breakthrough Projects: These projects include the latest technology as compared to the platform projects. It can be either a disruptive technology which the organization is familiar with or a proprietary one on which the firm is working.

R&D Projects: These projects include a visionary aiming towards the deployment of latest developed technologies or using the current technologies in a new way These projects can also be undertaken to acquire new knowledge or develop latest technologies.

After the categorization of the projects, distinct criteria are developed along with cost ranges for individual category to find if the projects would support the organizational goals and objectives. For each criterion, scales must be determined to assess the scores of each of the projects. After that, an importance weighting must be established by the project council for different criteria for every category.

Collection of Project Data: In this step, the data related to the criteria is assembled for the existing and proposed projects. The data must be updated for the ongoing projects in addition to the data from the last assessment. All the collected data should be verified, and the assumptions made must be documented for future reference .

Evaluation of Resource Availability: In this step, the availability of both internal and extremal resources should be assessed. The resources should be evaluated based on type, time and department. For instance, the availability of labor is assessed conservatively, excluding vacations, personal needs, illness, holidays and regular functional (non-project) work.

Reduction of the Project and Criteria Set: In this step, the competing projects are reduced using multiple screens. The most important screen includes the project support of the organizational goals. Apart from this, other screens may include the following criteria:

• Existence of the required competence in the organization
• Availability of market for any offering
• Profitability of the offering
• Extent of project risk
• Availability of adequate and appropriate resources

Domination of the existing project by another ongoing project or proposed project After the evaluation of projects, some ongoing projects may get withdrawn or replaced by the new ones.

Prioritization of the Projects within Categories: In this step, the projects are ranked within each category by applying the scores and criterion weights. After the ranking is done, the projects should be reconsidered with respect to their benefits and resource costs. At this time, the project council may summaries the returns from the projects to the organization.

Selection of Projects to be Funded and Held in Reserve: In this step, the first task includes determining the desired mix of projects across different categories and durations. Some organizations may lay more emphasis on R&D projects, while others may put more emphasis on current projects.

A certain percentage of the organization’s resource capacity is kept free for exploiting new opportunities, dealing with crises in current projects, rectifying errors in estimates, etc.

Then, the prioritized projects from Step 6 are picked from each of the categories in ranking order to get the desired mix of projects. The main emphasis should be laid on taking up fewer projects with enough budget to enable project completion on time.

Implementation of the Process: This is the last step of PPP, which involves communicating the results of PPP to the people associated with the project. The senior management must support the process as well as results to stay committed to the resultant project portfolio. The process should be repeated regularly and be flexible, so that improvements can be made continuously.