Portfolio Management is the latest frontier in project management and PMI recognizes this by creating the new Portfolio Management Certification (PfMP). Unlike program and project management, which focuses on “how” to execute, portfolio management concentrates on “what” to do. In the overall balance, portfolio management is “doing the right project” and program/project management is “doing them the right way”.
My experience as a project portfolio management is fairly rich, running multiple PMOs for global and national organizations with its capability, in all of them. Here are the top five challenges that I have confronted over the years.
- Politics: If people believe programs and project are political, wait until you work on portfolios. At heart of portfolio management, portfolios are about investment decisions and resource allocations. These are important for all involved and changes often result in winners and losers (perceived or real). Thus, the various scenarios include being pressured into accepting a project or re-optimizing with a political (versus data-driven) slant, killing unpopular (even though may be important) projects and reallocating resources sometimes away from the needed projects to more politically connected ones. So be ready to play politics.
- Metrics: Portfolio evaluation metrics and model are rarely 100% correct (e.g. relevant, timely, comprehensive and appropriate). The resulting reality is that objectively is rarely absolute (or in worse case, the biggest contributor to the actual decisions). This is after achieving governance consensus of the scoring/ranking mechanism, rigor of the business cases, approval process and proper training. There are often too many “one-offs” And sponsors would often claim that their projects are unique and there should be a special case. So, be ready to play with the numbers and objectivity.
- Execution is poorer than hoped: Despite the best of intentions, the actual program and project results achieved are sometimes below expectation. While this is a bigger execution concern at the program and project level, their challenges ultimately impact portfolio performance. Even with the best of resource plan and allocation, program and project managers would rarely agree that they have the right level of resources. Even with the best of implementation methodology and approaches, the program and project teams are too busy. What is the right balance is always a constant struggle, and when the portfolio managers lose sight of progress sometimes even for a short time, the execution suffers. So be ready to wear many hats – strategic thinker, change driver, navigator and tactical executer – all at the same time.
- Poorly managed risks: Organization’s willingness to invest in risk management is almost universally shallow. The good news is that by 2014, this risk is sufficiently important so there are some rudimentary risk management processes and structures. Therefore the formality of risk management, even if it’s administrative, is usually present. The bad news is that low investment in this area means that portfolio/program/project teams can barely cope up with the “known” risks. (This problem manifests itself in the lack of distinction between issues and risks on some projects.) With this shortage of resources, there’s no time on risks that hoovers on the corner of the peripheral vision. Some of these “black swans” can result the most havoc. So, dust off your crystal ball and be ready to play the role of an oracle.
- Adoptions: While agreement on portfolio management, its structure, processes, procedures, guidelines, etc., can be achieved simply in principle. The adoption across the multiple levels (or circles) of influence can be painful. The immediate circle of influence tends to get on board earlier but the outer rings are sometimes slow, if not hopeless. As a portfolio manager, the success of your job depends on running and managing these processes. So are you ready to play ball?
What are your thoughts on the challenges you see from your experience? Do you agree or disagree with above?
In one of the future discussions, we will turn our attention on potential remedy. In the mean time, ProjectManager.com has a very good article titled the “Ultimate Guide to Project Portfolio Management“.
- For those who aspire to attain PfMP, we are a global PMI Registered Education Provider and have a broad range of courses including Pre-Recorded, Live Virtual, and Classroom. For more information, visit us at www.pmoadvisory.com/pfmp.
- For experienced PfMPers, I like to use these questions to trigger discussions and share best practices. For prospective PfMPers, these questions are at the heart of “experience-based” questions that you can encounter on the actual exams. Have fun!