In this four-part series, Dr. Jörg Leute examines the question why it is so complex to establish a stable project portfolio using common means. Why do those “shadow excel files” exist, being used beyond P6 without any official approval in order to determine the project portfolio? The suggested solution is a novel, intuitive and collaborative software to simulate and rate project portfolios, used on top of Primavera P6.
Part 1: Why Project Portfolios Don’t Function
Which projects can we execute next year? Which ones are already running or apply to the following year? Can we really execute all of the proposed projects? These are the pivotal questions many companies face when trying to manage project portfolios, and were usually answered by exclusively looking at the budget. The addition of P6 through OPPM can in many cases contribute to optimization, but a key functionality was still missing; an overview combining strategy, budget and most importantly: resources.
In the past, the projects were approved by using a “top down” budgeting strategy. This approach is OK and definitely helps to establish a first assessment. But this tactic is not optimal and resulted in two problematic circumstances.
First, this approach disregarded the labor. A valid and optimized plan detailing the true working capacity of the workforce was lacking. Thus, a single bottleneck resource could thwart the carefully planned project portfolio for an entire year.
The reason for this disaster? People and budgets are fundamentally two distinct factors. In emergency situations, tight budgets can be increased, pushed from month-to-month or redeployed to other areas – people cannot. Employees cannot be easily “increased” or pushed from month-to-month. Even outsourcing options are often met with a myriad of coordination, skill set and work-load difficulties.
The second problem using this approach, which especially applies to larger companies, is that internal project portfolios are often in general opposition. Take for example the situation with the IT and Marketing departments. While everything in marketing seems to be laid out well, it’s possible that the conditions in IT are completely different. Conversely, an IT manager seeking to exploit their bottleneck resources, may inadvertently hinder the time-to-market plans of another department.
Such independent planned oppositions often lead to accusations, escalations and management interventions.
Do you see a problem here? This doesn’t have to necessarily be the case, but could be the reality when working with a sub-par project portfolio. If your business is regularly under pressure with an overstretched workforce and shorted time-to-market expectations, your project portfolio needs to be “healthy.” Not just “healthy” in budget, but also “healthy” in capacity and aligned to a strategy.