Program and Services Management

Airline Case Study Instructions

First, read the book case studyfound in Chapter 18referenced below in the UD Library 24×7 books section:

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Chapter 18 – From Start to Flight Level: Implementing Project Portfolio Management at a Midsized Airline
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The PMOSIG Program Management Office Handbook: Strategic and Tactical Insights for Improving Results
by Craig Letavec and Dennis Bolles (eds)
J. Ross Publishing (c) 2011
9781604270440

This case study examines a real world situation demonstrating how a PMO was initially set up with no portfolio management capabilities. When a new PM architecture technology investment was made, improvementsin Service delivery were realized with visibility to the complete lifecycle of allProgram Projects. As a result, PM teams were better able to manage scope, dependencies, issues, risks and other technical Service delivery outcomes. To maximize data/reporting analysis benefits to the PMO, the tool was also integrated with their financial data systems and enterprise resource planning (ERP) system.

You are a Program Management Consultant who has been hired to make recommendations to the PMO about how to further improve current PMO delivery effectiveness.

Copy/Paste the black font text underneath the dotted line below into a brand new MS Word document.
Next, delete the instructions highlighted in blue after you have read them so these additional instructions for analysis can be included in your final presentation.
————————————————————————————————————————————-
Program and Services Management TECH 7374

Individual Airline Case Study
Your name __________________________ Date _________

• Summarize by restating the Airline case study Chapter 18 in your own words
– In 1-2 paragraphs highlight key points (This helps ensure that you are getting the important points)

• Problem statement
In 1-2 sentences, state what the problem is and what the primary solution should focus on.Answer is:
Assume the major problem is the PMO efficiencies/effectiveness needs to be further improved to support the Enterprise Portfolio Management group, the PMO projects and Service Delivery Technical teams. Assume you are a Program Management Consultant who has been hired to make recommendations to the PMO about how to further improve current PMO Program Management team effectiveness. Prioritizeand document a list of any other Chapter 18 case studyissues that need to be addressed.
• Solution Options:

I. Program Management Effectiveness

o How could the PMO improve their Program Management roles/responsibilities/skills, processes or technology/PMO architecture? Selectideas to improve PMO efficiencies from our classPMI Program Managementcourse text book. Explain why the ideas you selected are important.
Research and use outside research to support your solution for new PMO efficiencies.

Below are some examples to include in your analysis. In addition to the ones listed below, you can also do additional research for more ideas to consider too. For example, review the book in the UD library Chapter 3.1 and look at Figure 3.1 called “Program Management Process Interactions”. This figure is a summary of some of our keyProgram Management processes that can be improved upon by Phase you can consider at:

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Chapter 3 – Program Management Processes
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The Standard for Program Management
by Project Management Institute
Project Management Institute (c) 2006
9781930699540

Next, pick a few ideas to improve PMO efficiencies from book below you think are most importantto considerat:

Program Management for Improved Business Results
by Dragan Z. Milosevic, Russ J. Martinelli and James M. Waddell
John Wiley & Sons (c) 2007
9780471783541
Also, refer to Appendix B about ConSoul Software case study referenced below. Did ConSoul implement some good ideas that the Airline PMO could benefit from? Pick a few ideas you think are important from the ConSoul case located at:

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Appendix B – ConSoul Software
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Program Management for Improved Business Results
by Dragan Z. Milosevic, Russ J. Martinelli and James M. Waddell
John Wiley & Sons (c) 2007
9780471783541

Next, study examples of PMO Architectures in Chapter 5 in the library book below located in books 24×7 section at:
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Chapter 5 – PMO Tools: Establishing a PMO Architecture vs Implementing a Tool
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Business Driven PMO Setup: Practical Insights, Techniques, and Case Examples for Ensuring Success
by Mark Price Perry
J. Ross Publishing (c) 2009
9781604270136
Chapter 5 examines popular PMO Architectures used in corporations. Assume the Airline
case study has implemented one of these architectures already but has not fully taken advantageof its capabilities to make the PMO more effective.
II. PMO Service Delivery Management Effectiveness

How could the PMO improve on how they could work better with ITIL Service Delivery teams? Pick afew ways to get information to analyze from ITIL process framework processes that the Airline PMO team wouldbenefit from.

For example, consider the pdf below when determining how the PMO could get key information
for improved data reporting analysis (e.g. new KPIs for Status reports or other info the PMO
could use) located at:
http://www.ca.com/us/~/media/Files/ProcessMaps/ca-itil-process-maps_223811.pdf

Select the “Using” hyperlink on left side of web page below to view more detail on processfeatures/functions of Service Management to consider and select from at:
https://docops.ca.com/ca-service-management/14-1/en/using
Other considerations below:
https://docops.ca.com/ca-service-management/14-1/en/search?q=itil&max=10
or
https://wiki.ca.com/display/CASM1401/TechDocs%2C+Courses%2C+Greenbooks

Select the top ITIL processesyou recommend where data could be collected for the PMO to analyze and add value. Describe how it may improve Program and Project Delivery team service Delivery benefit outcomes.

Please use the following assumptions for the Case Study below:

• Assume the Airline PMO tool is CA PPM with the features/functions noted in url below. Assume this tool (formerly known as Clarity) was used in the Airline case study at:
http://www.ca.com/us/products/project-and-portfolio-management.aspx?intcmp=headernav

• The case mentions some projects are managed outside of IT which is a problem. Here is an example of some of the issues IT Service Delivery Management teams have with external Marketing departments controlling IT work outside of the IT organization. Read article at:
http://www.cio.com/article/2456696/cio-role/cio-cmo-marriage-strained-but-can-be-saved.html
(Below is direct link to article referenced in link above)
https://www.accenture.com/us-en/insight-cmo-cio-alignment-digital-summary.aspx

• Summarize your final Solution and Analysis (Qualitative)

o Summarize yourfinal solution recommendationsbased on your outside research
andthe instructions in this document in order to make the needed improvements to the Airline
PMOefficiencies/effectiveness.
 Give both pros and cons to the solution you recommend
 Recommend short term and long term implementation considerations
 Summarize key issues and risks including mitigation plans
• Analysis (Quantitative)

o If numbers are available, use them to reinforce Part 3 above
Note: Document formulas, assumptions or information presented in your analysis
o Recommend appropriate key performance indicator (KPI) metrics to use
Add Reference Section:
Use the document called Citing Sources Generalcontaining formats to use for citing outside research sources located in the Unit 3 doc sharing folder.
Once you have studied and researched options, write up your individual case study.
It should be a minimum document of 7 and up to 10 pages single spaced using
times new roman font size 12. You can upload it to the Unit 8 Drop box before class begins on 3/21/16.
This document is not a team based project. Do not share your document content or research with fellow students since this is an individual project.
Reminder: Proof your document carefully for spelling or grammar errors and to add an extra page at the end of your document that cites references to materials properly.
Chapter 18: From Start to Flight Level: Implementing Project Portfolio Management at a Midsized Airline
Ulrich Aigner
Introduction
This case study involves an airline that works as a group and consists of a national carrier that focuses on business travel and long-haul destinations, a regional division that is mainly responsible for regional traffic, and another division that is offering leisure travel and charter operations.
In late 2008, this airline group was acquired by another airline. The deal took effect after final approval of the required governing body at the end of 2009. The carrier maintains its profit and loss responsibility but will be embedded into the larger holding.
Currently, the overall financial situation is not ideal, as the airline was back in the red in 2009. The financial trend has been positive over the past few years; however, fuel prices and theeconomic crisis have significantly impacted the profitability of the company. In 2010, the trend and forecast are promising, and it is hoped to be profitable again during 2011.
The IT division (corporate project and IT services) has about 120 managers and is the home of the office of corporate project management (CPM), which is comprised of a team of 525 full-time employees (FTEs). IT CPM is responsible for companywide project management with the following duties:
 Process ownership for project and project portfolio management
 Designing, implementing, and maintaining the project management (PM) and project portfolio management (PPM) methodology
 Offering internal PM training at two levels—one for project managers and one for project owners
 Providing coaching to project managers
 Managing projects and programs that cannot be assigned to a specific division
 Preparing and maintaining the project portfolio
 Owner and user support for PM and PPM tools

Description of the Project Landscape
The company is facing a growing number of projects every year. From 2006 to 2007, there was an increase of 9 percent followed by 12 percent in 2008. Hence the quantity of projects is climbing faster than the yearly increase of passengers. But it is also seen that an increasing number of projects are stopped before reaching their goals or are not fulfilling the projectmanagement standards.
From the perspective of CPM, it is necessary to distinguish between two groups. On one side, it is necessary to know how many projects are handled with involvement of the IT department and how many are handled within the business divisions only.
On the other side, starting in early 2007, projects have been split into two categories: smaller projects with a budget of up to EU 50,000 (internal and external costs) and larger projects with a budget of more than EU 50,000. Formerly, projects were divided into small, medium and large sized projects. Classifications were made using seven criteria such as the number of departments involved, number of team members, internal or external partners, and so on. That grouping was skipped in an effort to reduce the complexity and has been switched tothe mentioned classification, now influenced only by the project budget.
The distinction between projects with or without IT is important, as CPM is situated in the IT department. Therefore it is possible that some other departments think that they are not concerned with the defined standards of project management and project portfolio management.
The share of projects without IT is steadily increasing. Although IT is an inherent part of daily life, and even if only a computer will be installed (e.g., during a relocation of an office), it is counted as a project with IT involvement. There are certain areas where IT involvement is not noteworthy, such as the phase-in of a new aircraft or technical changes that have to be made to an aircraft.
The project manager has to be a member of the department that either is initiating the project, or is expecting the biggest benefit out of it. Previously, the project manager (who was alsothe main programmer) was from the IT department because there were no official projects outside IT. This situation created a lot of problems as the projects mostly ran late, overspentthe budget, or delivered without the required quality. The next step was double project managership, but that also created problems concerning the responsibilities between the project managers from the IT department and the business units. Currently, if IT is involved, an IT coordinator is assigned to the project manager to support him with IT topics.
Since the business units of this company are very functionally oriented, projects are only distinguished between:
 Business unit projects without IT (e.g., setting up a new customer service)
 Business unit projects with IT (e.g., new software for customer handling)
 Projects with building or construction (e.g., office relocation abroad)
 Pure IT projects (e.g., implementing a new operating system on every computer)
The second differentiation is the split into small projects (called task forces) and all other projects. The monetary boundary of EU 50,000 has been set up by the controlling department and is arbitrary (equates to the limit that a head of a division is allowed to sign). The big advantage is that task forces face a shorter list of required signatures to get an approved project budget, as they usually are of limited organizational complexity (only one division involved except IT and facility management). The boundary was a compromise between projectmanagement and controlling, as the latter required a formal project if the expected budget is higher than EU 10,000. Since it was impossible to start an official project without a budget larger than EU 50,000, the less administrative task force has been accepted to handle the smaller topics.
Task forces were introduced in 2007, and accounted for 50 percent of all projects finished in 2008. But figures of the current running projects show that task forces are now leveling off at about a third, hence reaching the expected share.
All official projects that are currently executed have an average budget of around EU 500,000 (internal and external effort of the top five projects is an average of EU 1.2 million).
From that point of view it shows that we handle rather small projects (compared to other industries) at about 100 projects a year. The annual figures are highly divergent and show no clear trend. Exceptions are common and usually the company faces one to two programs a year that boost the average budget due to their large volume (typically EU 5 to 25 million).
Nevertheless, it is obvious that the company cannot call itself a project-oriented company at all, as only a little more than one percent of the operating revenue is handled through projects, although there are divisions that are very project-oriented such as IT and facility management. All other business units use projects for any implementation, adaption, or change that is handled outside of daily business.
Regarding the magic triangle (deliverables, costs, and schedule) the airline is doing fine in delivering on budget and on quality, but is rather poor in adherence to schedules. For every project or task force that is delivered, the project owner has been faced with an average delay of three calendar months. That is an average delay of one-third regarding the cycle time. Notwithstanding that these figures look bad, it is understandable because the budget is limited and a certain quality of the deliverables has to be reached—therefore, schedules are expanded.
A second reason is justified by the project manager and the project team members themselves. Usually they get their project jobs in addition to their regular duties—companywide, only about five to ten project managers are assigned fully to their projects—and if time is running short, their daily business takes priority.
Start Level: From Starting to Establishing Project Management
Project management practices have been fundamentally implemented since 1998, but in 1999 they were formalized. Once project management in the IT division became formally oriented, this became the driver behind establishing enterprise-wide professional project management. It began with IT management supporting the establishment of a formal requirement to manage all IT investments using project management practices. They began to achieve this objective by designing a project management methodology based on International Project Management Association (IPMA) standards and developing techniques for designing the methodology in-house. It was rather easy to establish project managementpractices inside IT because the need and advantage of doing so was clearly understood by the staff. The members of the project management office, which was part of the IT development department, received training from a consulting company to pass the certification program of IPMA.
In 2000, the IT project management office was used as a program management office (PMO) to manage a program—the alliance change from the old partner to the new one. A large number of business unit members were involved in the change that had to be done within six months. It soon became obvious to the company that project management is able to provide benefits to the whole organization rather than just the IT division. In 2002, project management was shifted formally to the top management level as a department inside IT. ThePMO then earned companywide responsibility and process ownership for project management.
The next three years focused on training, coaching, and supporting the project managers in the business units. By the end of 2005, the first project management tool was implemented.The tool boosted the quality of project management as it enabled CPM to have a look at all projects, assure a certain level of project management quality, and provide a single source for handling projects by removing the use of templates as well as other project management software tools.
A monthly reporting system was established to list all the currently active projects with consolidated information provided via e-mail to the board of directors and vice presidents. Everyone has access to look up the projects in the report via the Intranet.
For the first time, the annual budget preparation in the summer of 2006 was not only submitted for projects with IT involvement, but also for all other projects, thereby closing the last gap in the project management cycle illustrated in Figure 18.1.

Figure 18.1: Established project management process.

Flight Preparation: Reasons for Implementing Project Portfolio Management
As project management became more accepted within the organization as well as more mature, the PMO assessed itself, comparing the current status quo with the available possibilities to gain maximum benefit.
Project management had been implemented outside the IT division in a missionary style due to limited hierarchical possibilities. By showing the advantages and convincing the persons concerned, project management found its users companywide; some were fans and others simply accepted the benefits.
That missionary effort was good in reaching a certain level and pervasion, but could not develop any further. The three main problems described in the following sections describe thesituation before project portfolio management had been implemented (as portfolio management was seen as a possible solution to solving or diminishing these problems).
Uneven Maturity
In an attempt to rank the company using the capability maturity model integration (CMMI®), the company fits on three levels, but does not fulfill them completely.
The main business of the airline is to transport people from Point A to Point B in the most convenient way possible. That is a straight-line business with strictly repeatable processes to trust in. This has been on the minds of the employees for the last decade. Processes are more or less stable, and if certain situations require immediate attention, every effort is made to assure the best travel experience for our customer. That means sometimes unusual or unconventional reactions. The divisions that have to deal with the customer directly like to follow defined processes but require enough freedom to leave the beaten track.
On the other side, we deal with divisions that are supporting the passenger-handling units and prefer clear decisions about what has to be done, as their daily business is maintaining and delivering new benefits.
The first group views project management as an administrative and bureaucratic hurdle, but as a necessary evil. They are switching between level two and three. The latter group recognizes the advantages of a clearly defined and repeatable project management process. Their maturity is ranked higher and is therefore around a stable three.
Division Blindness
The second main problem is that projects are initiated to solve a specific topic that hurts or hampers the daily business of the particular division. Seldom are the project owners accepting incisions to their intentions in favor of companywide strategies. That is not caused by ignorance, but by the belief that their projects deliver the highest benefit to theorganization. Hence, single-sighted goals are described in an organized way, but without following an enterprise-wide aim. We settled on the term division blindness for setting local goals over the company strategy.
Limited Awareness of Top Management
Top management accepted project management as a state-of-the-art methodology to handle complex topics. Where projects are useful (from the project owner’s point of view) or required for getting an official budget, the company methodology is used.
By implementing a project overview report in late 2005, management gained its first comprehensive awareness about which projects are running in their single division or department. Furthermore they were able to look outside their division box to get a feeling about which projects are running in the other units and might affect their interests. But the overview was a static view and no central forced action was taken if projects were unsuccessful.
Although the board of directors was officially in support of companywide project management, they also accepted some projects that were not tracked in the monthly project overview and offered project approval by becoming convinced in meetings rather than by trusting the controlling department.
As a solution to these problems and as the next step in project management evolution, project portfolio management (PPM) seemed to be the right answer. PMI® offered a guide for this with its Standard for Portfolio Management.
By coupling different projects into portfolios and networking them, it should prevent being blindsided in any single division, thus keeping the ship on course.
Takeoff: Initiating a PPM-implementation Project
In the summer of 2006, the director of CPM discussed with his team the idea of implementing project portfolio management to get rid of the described problems and support thedevelopment of project management maturity. The need to implement PPM was recognized first within the PMO and not by top management. It was therefore necessary to convince upper management to build up PPM and get its support and approval.
The vice president of the IT division was easily convinced, although support was limited because portfolio management was not ranked at the top of his personal action list. On the other hand, he set no boundaries and offered free possibilities to develop PPM and align our ideas directly with the CEO.
As the board of directors was the main focus of the planned efforts, a short meeting was arranged. Luckily a few months prior, a new CEO was appointed. With his personal experience and background, he was amazed that the company had not already installed portfolio management. Thus, an approval was given and the PMO was allowed to implement PPM.
Project Setup and Objectives
To start a project portfolio, it has to be clear what you want and how to do it. Furthermore, certain basic conditions have to be cleared, specified in detail, or installed.
Those clarifications do not seem to be directly linked to project management; rather they are the foundation of project portfolio management. Without them and especially without linking these to the projects, you will develop a project portfolio (merely a listing of certain current projects) but you will be far away from managing it.
To assure that comprehensive project management would help to connect projects directly to the company’s benefit, it became necessary to apply more pressure via company hierarchy because CPM had reached its limit in spreading the methodology and ensuring a consistent project management standard. But to gain support from the board of directors, the PMO wanted to offer to them a direct benefit as well. Being mindful of the personal advantages of their work, they should assist and encourage project management voluntarily and honestly.
For this reason, project portfolio management seemed the right solution to address two problems with one initiative. By implementing PPM, the management board should gain advantages through:
1. A better overview of all running projects
2. Better control of the project landscape
3. Assuring focus on the company strategies (avoiding division blindness and ensuring top management attention)
By spreading the word that the board is more concerned with project management, the PM standard should be pushed to all levels and hence eliminate uneven maturity within thecompany—all of which should benefit the enterprise.
The director of CPM was the project owner, and a member of the team was assigned as project manager. As insisted by the vice president of IT, external consulting had to be used but had to be limited. Due to the experience of the PMO, the design could be developed internally. The consultant was used as a sparring partner; they showed him the ideas and intentions based on the knowledge of the project team and compared them to his external know-how. The strategic objectives of the projects were to:
1. Provide a way to ensure a connection between the company strategy and the projects
2. Install mechanisms to allow optimization of project portfolio results
3. Strengthen companywide project management
The agreed operative objectives were to:
1. Design and reach agreement regarding project portfolio processes
2. Define reporting
3. Implement project portfolio management with the necessary infrastructure
4. Set up the first project portfolio group meeting
The decision was made not to implement a new software tool, but to use the existing software toolset. This decision was made because the project team wanted to stay focused on themain topic of PPM and not to deviate into a complex tool-set implementation. Our existing project management tool, FocusPro (internal name of tool, custom made), built the foundation as a data provider via export of the necessary data into a business data warehouse and furthermore extracting the information and preparing the required reporting tables and charts. On the monetary side, the approved budget accounted for EU 30,000 for internal effort and EU 15,000 for consulting and adaptations of FocusPro.
In the following project WBS shown in Figure 18.2, it is obvious that the design phase (definition) was the most complex and intensive part of the project.

Figure 18.2: Work breakdown structure (WBS) of PPM-implementation project.
Reflection on Implementation
The basic portfolio process definitions were designed rather quickly. But deciding which metric would allow an easy and fair way to manage the project portfolio was very challenging, time consuming, and required a lot of discussion. There were some very strict ideas about which criteria were required, yet not every criterion could be technically executed into a report. In this matter, our consultant was of great help in sharing his experience.
The second main issue seemed simple but required greater discussion: who will form the project portfolio group? Our first thought was to assign all vice presidents and the managementboard to the group. The VPs should have a deeper overview of the projects and act nearer to the market. But the main challenge would have been to get 23 division heads and two presidents together while handling a large portfolio group meeting and still assure a productive outcome. The next thought was to skip all heads that are not involved in projects. Ten divisions and two presidents would still have remained. Finally, the easy way was chosen: limit the portfolio group to the management board.
With that limitation, it was possible to design a straightforward group meeting and not exceed a reasonable meeting length; the quarterly meeting was set to run for 2.5 hours.
The technical setup (training for the PMO portfolio manager, build data cubes for getting the required information, etc.) had some downsides as not everything that the project team discussed could be implemented because the data handling would have been too complex.
The final results of the report designs were discussed with the head of the IT division instead of discussing it with top management. That was an experience that should not be ignored as this input sometimes brought us back to earth. Due to the enthusiasm of the project work, you get ideas on top of ideas until you have so much to tell or show about what a project portfolio could provide, it would create information overkill for the audience. That overkill could interfere with the objectives of portfolio management.
Another important issue to handle was the project marketing. It was decided to personally sell project portfolio management to every vice president to gain support and hence avoid a blocking risk. The short information meetings were rather surprising as there was no opposition (that had been originally expected) against project portfolio management. The reaction ofthe VPs had been mostly neutral—sometimes even positive—as they became aware of the benefits for them. That feedback supported our project work and prevented difficulty duringthe implementation.
Overall, the project was finished on time (within three months), below budget, and with the desired quality range. Only the first project portfolio group meeting had been delayed by one month due to time restrictions of the CEO.
Flight Level: Defined Project Portfolio Processes
The project team had to implement a lean and clear process to avoid misconceptions and help understanding. Thus the core process was designed in three basic steps: assign project, control project portfolio, and assure portfolio synergy (see Figure 18.3).

Figure 18.3: Core process of project portfolio management.
It was also important that, if possible, we avoid changing the established project management processes. As the project lifecycle is also following portfolio processes, we used thegraphic in Figure 18.4 as a sales pitch in discussions and pointed out where portfolio management takes effect and where a project manager or a project owner gets into contact with it.
Figure 18.4: Project portfolio process compared to project lifecycle.
PPM Step 1: Assign the Project
After a periodic check to see if the corporate strategies had changed or if the defined project portfolio strategy had to be updated (and therefore the portfolio criteria as well), projects have to populate the project portfolio via an assignment. Assigning a project to the portfolio has two steps and two possible methods.
One method (the preferred one) is that a project idea is formed, put into the annual budget, and started at a certain time (i.e., planned projects).
Due to the nature of the business, not every project is known ahead of time; you have to react to certain environmental circumstances that require immediate action. In that case, there would be no planned budget and money would have to be withdrawn from other budget items. These are called ad hoc projects.
1. Planned projects—By early July, the annual budgeting process is started. Business units and IT are asked to name the planned projects for the following year. This initial planning of the projects is done on a high level (e.g., reason for the project, elementary objectives, total cash out, sum of internal effort, expected start and end date, etc.). After a review phase, controlling the budget is transferred to the enterprise resource planning system and the company’s total budget is formed. That corresponds to Gate 1 in Figure 18.4. If the project is started in the budgeted year, it has an easier approval phase.
2. Ad hoc projects—These projects were unknown at the time of budgeting, and therefore have no money reserved for their realization. As it might be useful to start them anyway, they face a tighter check to ensure the project is necessary or beneficial (in general, at the expense of another project that has to be skipped).
The project portfolio group meeting is scheduled quarterly. Hence the project portfolio managers of the PMO visit the head of the divisions quarterly (usually accompanied by theappropriate directors) and compare the budget list with real life: are projects planned to start in the next three months proceeding as expected or are they postponed or cancelled? Furthermore, new (ad hoc) projects are anticipated and they have to provide the same information as is provided during annual budgeting—both types of projects must have verbal justification (description of benefits or why necessary) at that time.
With the aggregated information from the division portfolio meetings, the project portfolio group meeting is started. The group (board of directors) is asked if the listed projects will be allowed to start and prepare detailed planning. The PMO informs the persons concerned about the decisions and the project owner can assign a project manager to start the project.
PPM Step 2: Control the Project Portfolio
The project portfolio group meeting is used as an assignment stage, but also as a controlling meeting to govern the projects and assure that they are supporting the company’s strategy (see Figure 18.5).
Figure 18.5: Process for controlling the project portfolio.
As a spin-off of project management, the project portfolio group is also informed (by the project manager) about critical projects (projects that are far behind schedule or budget) and decides on action items.
To get the required information for controlling the portfolio, we use the controlling meetings of the projects. The portfolio managers attend these meetings of the top-ranked projects (ranked by budget). Every project manager also has to update its project methods and plans in our PM tool. That provides the required input to prepare the portfolio group meeting bythe PMO. Critical projects are discussed during the monthly division portfolio meetings where suggested action items are offered to get them back on track. If project manager suggestions are in line with the PMO’s view, the consensus will be tracked by the PMO without feedback from the portfolio group. If there is dissent (e.g., suggested items were unsuccessful or no offer for improvement is recognizable), then this disagreement will be a topic for the portfolio group.
With the required information from project portfolio meetings and actual information from the PM tool and quarterly division portfolio meetings, we are able to prepare the project portfolio group meetings. The standard agenda for the meeting is:
1. Information on and discussion of critical projects
2. Current status of the project portfolio
3. Approval for beginning project start phase
4. Controlling of the project portfolio
5. Any other items concerning the project portfolio or project management
Finally, the decisions of the group meetings are monitored and tracked by the PMO to assure their realizations.
PPM Step 3: Assure Portfolio Synergy
The toughest part is to gain synergy out of the portfolio. The project team focused on the implementation of a functional project portfolio management, assured strategy fitness of theprojects, and tried to make the portfolio controllable. However the synergy items were mainly pushed to a further phase that had to be developed.
Nevertheless, quick wins were gained such as starting a light resource management inside IT (delivering core information about planned projects and rechecking availability of technical personnel) or establishing an escalation level to help to get resource alignment based on project category.
A major synergy that is usually gained with PPM is an optimized companywide resource allocation. It was decided not to account for it due to two reasons:
1. Expected resistance in the line business divisions as they are not used to resource management
2. To avoid risking the goals of the implementation project by discussing or fighting over resource management and limiting complexity
Flight Check: Selection of Project Portfolio Management Criteria
Many new criteria were implemented during the set up of project portfolio management. Subsequently, a few selected criteria being used are:
Project Clustering
Project clustering is used as a primary classification of projects to decide if a business case and return on investment (ROI) has to be calculated. One of the four groups (see Figure 18.6) has to be decided and justified (either verbally or with an ROI).
Figure 18.6: Project clustering.
Project Category
We are distinguishing between four categories from Group A (top, most important) to Group D (basic, necessary). Due to the financial situation, 60 percent of the calculated criterion is justified by the size of the ROI. The other 40 percent is based on the project’s strategy fitness. This fitness has to be declared by the project owner who states on a scale of 0 (no support) to 3 (fully supported) at which level the project supports the appropriate strategy. We have a few projects in Group A and many projects in Group D (pyramid-shaped allocation).
The category is a practical advantage for the project managers because it prioritizes the right to use resources. If two projects are requesting the same resource, or one resource is blocked by another project, the one with the higher category has the right of way automatically. If projects are on the same level, the issue has to be discussed. The PMO can be used for escalation if no solution can be found (seldom necessary).
Value Proposition
The value proposition is the most powerful information provided to control the project portfolio. Figure 18.7 shows (based on the criteria necessary for the project category) the project landscape and where the projects should be.
Figure 18.7: Value proposition.
The upper right quadrant contains the superstars (high strategy relevance, high ROI). The lower left quadrant should include the projects caused by regulatory standards or to ensure business (no strategy relevance and no ROI). For easier reading, a dotted line has been drawn showing the border between ideal projects and subideal projects.
If a new project is up for approval, it is shown on that chart and opens the door for discussion. The current situation of the company determines whether the portfolio group prefers strategic projects over financially attractive projects, or the other way around.
Share of Delayed Projects in the Portfolio
Delay is a major issue in our project landscape. The chart in Figure 18.8 shows how many projects of the current portfolio are delayed (behind approved project closure). Suspended, finished, and projects not approved are excluded. It is obvious that the implementation of PPM brought immediate success as the delay rate dropped in the first year of operations and continued the trend the following years!
Figure 18.8: Share of delayed projects in portfolio.
Volplane: Current Situation of Project Portfolio Management
Advantages
A major benefit of PPM was that through project portfolio management, project management is not seen as limited to IT topics, but also as relevant for business unit topics. Thus, it strengthened project management and built up pressure in the business units to follow the corporate PM standard.
Furthermore vice presidents saw a big advantage in PPM as the quarterly division portfolio meeting (in addition to the monthly written overview) assures them the best overview of theprojects that are handled within their budget. They also appreciate that an independent group is cross-checking the projects and can deliver an outside view and be a neutral unit for escalations.
As controlling division representatives were involved in the quarterly PPM meetings, they also recognized the advantages of a controlled environment—to know what is going on and act rather than react.
Challenges
The most crucial part is the project portfolio group and therefore the board of directors itself. Two big issues need to be handled appropriately in the near future:
1. The presidents have limited time available, project board meetings are periodically postponed, and one meeting in four is cancelled. Either it shows that the board truststhe PMO to do a good job or it is a sign that project portfolio management is not important to them.
2. More disappointing is when the controlling is not done as expected. The board expects that the controlling division is doing a critical check and therefore is eliminating projects that do not fit into the landscape. But controlling is figure oriented and therefore accepts projects that support no strategy if they have a positive ROI. So, thedivision blindness in favor of the company’s strategy has been reduced but not eliminated.
It also has to be mentioned that the work for preparing the portfolio is higher than expected. A high number of meetings have to be handled, and there is some information chasing that needs to be done (e.g., because the deadline for the monthly status report has been forgotten again).
By early 2009, a new standardized PM tool had been implemented, that, among other things, offered a big help in reducing administrative work.
Furthermore, a few reports had been adjusted, skipped, or changed in their design to make them more understandable. The amount of information had also been reduced (only discussing projects with a budget higher than EU 500,000) to get the right focus.
Landing: Summary
Out of different circumstances (e.g., nonstrategic orientation of projects and uneven maturity regarding project management within the company), the project management officerecognized the need for implementing project portfolio management to optimize projects. Support from top management has been assured, and a project has been set up to optimize theimplementation. Definition, setup, and realization within the project took about seven months with the design and key figure calculation most laborious.
Although not everything is running as expected and leaves room for improvement, the bottom line is that project portfolio management has been implemented successfully, but some tuning is necessary to get the most out of it.
In early 2007, the first project portfolio group meeting was held, followed by recurrent meetings with the management board once every quarter. The last milestone in the development of project management was the implementation of a new and more advanced PM tool. With that tool (it went live in February 2009) the PMO gained new capabilities within project portfoliomanagement as the new software offers advanced handling facilities and more ways to manipulate the provided data without involving IT specialists. The complete lifecycle of a project is now handled in one single tool and is cross-linked to the central financial data stored and processed in our enterprise resource planning system.
Author Biography
Ulrich Aigner has been practicing project management for 13 years and has developed and managed PMOs in two organizations. He is currently the director of CPM for one of the major European airlines where he is the process owner of project management and project portfolio management, responsible for PM methodology, PM training, PM coaching, PM audits, and preparing the PPM. His team is made up of five project management professionals with a combined 70 years of experience. He has a background in industrial engineering and was among the first in his country to be certified in project management by IPMA. He also has a Masters Degree in project and process management to bridge practice with education
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