How to Make Difficult Portfolio Management Decisions

There isn’t always a right answer and there probably isn’t a unicorn around the next corner.

Fear of better options in project portfolio management.

You may have come across the acronym ‘FOBO’. It stands for ‘Fear Of Better Options’ and refers to a consumer trend where people are reluctant to make a decision, to commit to doing or buying something, due to a fear or belief that something better may appear, if only they delay long enough.

I’ve certainly done it and I suspect that you make have as well. Phones, clothes, events – so much choice, so little time.

The irony is that, faced with so many choices, we have a tendency not to make any decision at all. We’re not sure how to discriminate between one choice and another. As a consequence, we don’t do or buy anything, and thus we don’t get the benefit of any of the possible options. As you might anticipate, social media is seen as contributing to this paralysis, as we become more aware of more options.

FOBO in the Business World

The parallels with business are clear.

Systems are dynamic and environments change rapidly. Planning cycles have become shorter. What you want today, you probably won’t want next month, because your needs or expectations have altered. We’re encouraged to be agile in our approach and flexible in attitude (note that ‘agile’ does not give us licence to constantly change our mind, because we couldn’t be bothered to prepare for the decision in the first place…).

This is the reality of life and we may not be comfortable with it.

We should also recognize that it may not be a good thing, as challenging decisions repeatedly is wearing, and undermines those people that have made them. Continually having to justify your decision, that you made on good information at the point it was made, can become time-consuming and unproductive for organisations.

It’s a very seductive proposition for managers – “What if there’s something better that we could do, what if there’s a better portfolio, what if there’s a unicorn just around the next rainbow, carrying a bag of gold and wearing a garland of four-leafed clover…?”

Part of staying sane in the modern planning world (which by the way, also makes you way more productive), is being comfortable with a certain level of uncertainty. None of us have reliable crystal balls, none of us are right all the time. It is perfectly acceptable to say ‘I don’t know…’, if you can follow it with ‘…but I’ve assessed the likely alternatives and these are the possible outcomes’.

So, how do we approach this within a Project Portfolio Management (PPM) framework?

Be realistic.

Let’s be pragmatic about this, as it’s tempting to go down a highly esoteric, perhaps academic, route to project prioritization. In practice, most of us do not have that many metrics against which initiatives will be measured. Risk, NPV, alignment, cashflow, market development – all good ones. How many do you really need for your organisation? Develop a straightforward framework for assessment, scoring and prioritisation that is clear to users – they’re far more likely to use it.

Keep it simple.

Yes, we can argue whether it’s medium or low risk, but honestly…? One point in one metric is not going to be the deciding factor in achieving a good portfolio – we’re looking for an objective framework against which we make a management decision. Oh, yes, and if you can’t measure it, then it’s not a benefit. Be graphic – pictures speak louder than words. It’s much easier to spot a project that’s overrunning by six months by seeing the two Gantt bars, than from a column of dates.

Be brutal.

Long-term strategy, short-term tactics. What are the benefits, when are they going to be realised, what’s the confidence level? Avoid elongated timelines. Avoid projects that ‘contribute a little to multiple goals’ (that is code for fudging a decision, because no-one want to say ‘No’). Don’t be seduced by sunk cost. The fact that you’ve worked on it for three years isn’t a good reason to keep working on it – if it’s never going to deliver, then stop it!

Learn how to make difficult project portfolio decisions.

Manage the boundaries.

Your decisions will focus around the work that doesn’t get done, not the work that does. There are ‘no-brainers’ in the portfolio – legislative, infrastructure, Business as Usual (BAU). Don’t discuss them to death, put them as Must Have’s. Spend your time on the work that is discretionary – the focus will be on those projects that fall just outside the chosen portfolio, so be as clear as you can be on those borderline projects.

What if…?

You don’t know the future, you’re guessing. Model your alternatives. ‘If this happens, then that would be the option. If that happens, then this would be the option.’ Present a limited number of alternatives to your decision-makers, based on the best information you have, so they can make informed choices.

Document, report and retain.

Record the decisions. Take a clear ‘snapshot’ of the portfolio and the metrics behind it, balanced against the resources that you have to deliver it. Things will change, decisions will be wrong – good, that’s life. Make sure the stakeholders have ready access to the reports, so they can understand what’s happening. Retain your snapshots, so you can revisit, compare and see what’s changed – then you can learn for the future. It also helps spot the serial offenders – those champions that promised the benefits again and again, but never actually delivered them.

Want to Make Better Portfolio Decisions?

We know how it feels to be faced with an overwhelming number of possible projects. Meisterplan helps us make better project portfolio decisions. Give it a try. We think it could help you too.

“Meisterplan is critical to the management of our project portfolio.”

Phil Morris, Head of PMO, First Utility

To be able to model possible futures and, as an organisation, to be able to live within the parameters of those futures, means you can manage without having to constantly agonise over whether you’ve made the ‘perfect’ decision. Whatever the actual outcome, you’ve allowed for the uncertainty and you have a mitigating response in place to deal with the consequences.

Within project portfolio management, you need an approach and tools that are flexible and simple enough to model your options, to produce a limited number of practical alternatives. You probably won’t make the perfect decision, but it should mean that you’ll be able to make better, informed choices that will avoid the disastrous route. You’re neither spending forever on getting to the ‘right answer’ nor delaying your decision because that darn unicorn may just be round the next bend.

Unsurprisingly, Meisterplan supports all of this, because we developed it to help manage this process. Try it, we think that you’ll like it.

By |2018-07-25T19:12:26+00:00July 24th, 2018|Categories: Project Portfolio Management|

About the Author: John Morrissey

John, one of the consultants at our partner Sandhill Consultants in the UK, has worked in both multinational organisations and SMEs, in public and private sector, as an employee and a contractor, in roles covering manufacturing, sales, new product development, operational and strategic marketing, finance, IT and business transformation. This has involved a lot (really, a lot) of projects, programmes and portfolios. He is a big believer in KEEPING THINGS SIMPLE and avoiding drowning in too much detail!