Best-practice, objective portfolio selection techniques equip PMOs to recommend that the right investments are selected. With scarcity becoming the new reality, it’s imperative to move beyond the traditional “first-come, first-served” approach and develop the capability to prioritize and select portfolios under budget and resource constraints. This not only helps select investments that deliver the best bang for buck, it also helps ensure that investment is aligned with strategic priorities.
Define business drivers based on strategy.
It’s critical to engage executives early on in the process to ensure that business strategy is clearly articulated. Having a clear understanding of strategy provides the entire organization with a “North Star” that it can orientate itself around. This understanding helps define the actionable, measurable and unique business drivers that will be used to drive recommendations for the optimal project portfolio.
Objectively prioritize business drivers.
One of the most overlooked yet important steps in PPM is to prioritize the organization’s key business drivers, which in turn provides a more meaningful way to rank incoming investment requests. Objective techniques like pair-wise comparisons transcend arbitrary “1-10” approaches to ranking strategy and help PMOs to facilitate driver prioritization sessions with executives to drive consensus.
Better demand management.
Demand management is a foundational component that helps bring order to the chaos by consolidating the many requests that can originate from anywhere within the organization. Standardizing the intake across the enterprise helps streamline capital planning by centralizing cost, benefits, resource requirements, and varying scoring mechanisms. Strategic impact assessment gauge the contribution each request has against the business strategy and helps the organization derive the Strategic Value score it needs to objectively evaluate all projects.
Powerful cost optimization/what-if analysis.
With demand prioritized based on a clear understanding of strategic business drivers, it’s easy to run what-if analysis and use Efficient Frontier modeling to help determine the optimal project portfolio under varying cost constraints. Powerful controls account for inter-project dependencies and provide the ability to force projects in or out to help to quickly reveal the trade-offs of all decisions.
Powerful capacity planning capabilities bring resource demand together with capacity to help maximize utilization of your company’s most important assets. Intuitive controls make it easy to identify both over- and under-utilization of resources across the planning horizon. Adjust a project start date to quickly determine the best schedule to fully utilize available resources and run headcount scenarios to help drive decisions about when to hire full-time vs. contract resources.