© The Knowledge Academy 2020 1

© The Knowledge Academy 2020 1

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Contents

Introduction ..................................................................................................................... 3

Introduction to a Portfolio ................................................................................................. 3

Introduction to a Portfolio Management .......................................................................... 3

Introduction to a Programme ........................................................................................... 4

Introduction to a Project ................................................................................................... 5

Difference between a Project, a Programme, and a Portfolio .......................................... 5

Features of a Project Portfolio Management ................................................................... 7

Portfolio Management Process ......................................................................................... 8

Five Principles of Portfolio Management .......................................................................... 9

Multiple Choice questions 1: ........................................................................................... 16

Portfolio Definition Cycle ................................................................................................ 17

Portfolio Delivery Cycle ........................................................................ .......................... 20

Roles and Responsibilities ..................................................................... ......................... 26

Centre of Excellence (CoE) .............................................................................................. 34

Multiple Choice Questions 2 ........................................................................................... 35


Introduction

Management of Portfolios (MoP) offers a set of principles, practices, and techniques to help organisations safeguard their programmes and projects contribute to strategic objectives and attain maximum ROI (Return on Investment).

MoP is the Portfolio Management standard available that enables you to:

Remove redundant and duplicate projects and programmes

Run the right projects and programmes, delivering a measurable contribution tostrategic objectives

Realise benefits that align with corporate strategy

Report efficiently to improve accountability, transparency, and corporate governance

Introduction to a Portfolio

The word Portfolio is used to define an organisation's overall collection of programmes and projects. Portfolio Management is a coordinated set of strategic processes and decisions that commonly allow the most efficient balance of organisational change and business as usual/operations.

Introduction to a Portfolio Management

Portfolio management includes gathering appropriate details on the investment plans of the company in one place, including programmes and projects, and aligning their execution with strategic goals, business specifications, and the capability of the organisation.

It should not just consider those programme and project commitments comprising the organisation’s change program, in terms of resources, but should also find the broader business picture‐taking account of Business as Usual. Only by understanding and appreciating the organisation’s full suite of commitments, a fully balanced business portfolio can be achieved

In this context, Business as Usual is defined as the things done to keep the business operating day‐to‐day. By understanding the demands on Business as Usual, its lifecycles and critical events, the delivery of change through programmes and projects can be timed and managed to ensure the least disruption

Introduction to a Programme

A programme's primary aim is to understand the results and advantages of decisive importance. A programme is a temporary, adaptable company developed to organise, manage, and supervise the implementation of a collection of similar projects and tasks to fulfil results and profits related to the strategic objectives of an organisation.


A programme is likely to have a life that spans several years. A programme offers advantages by a change to an organisation, and it is based on an accepted idea of how a company or an organisation will go ahead in the future. Programme Management offers a well‐organised process for organising, planning, aligning, handling, and monitoring the tasks involved.

Introduction to a Project

A Project is typical of shorter duration (maybe a few months) and will be concentrate on developing a set of deliverables under‐recognised parameters of cost, time, and quality. It is dedicated to meet an organisation's particular needs to develop a service or to change a business method. It is in direct contrast to how a company usually operates continuously to produce its products or services. For example, an organisation's task may be to produce vehicles continuingly, and the task or work is called functional because the company produces over‐and‐over again the same goods or services and employees maintain their jobs semi‐permanently.

Project management is the practice of handling all the numerous project resources and facets in a way that the resources provide all the performance required to accomplish the project within the specified scope, time, and cost constraints.

Difference between a Project, a Programme, and a Portfolio

Project Programme Portfolio

Scope Projects have defined objectives. Scope is progressivevly elaborated throughout the project lifecycle.

Programme have larger scope and provide more significant benefits.

Portfolio have a business scope that changes with the strategic goals of the organisation.

Duration Temporary (short time duration

Temporary (can last for many years)

Permanent (continually changing)

Management Project level plans with focus on detailed delivery using stage plans

High level plans supported by detailed plans

Ongoing process of prioritising and aligning the portfolio to meet strategic objective

Success Success is measured by product and project quality

Success is measured by the degree to which the progress satisfies the needs and benefits for which it was undertaken

Success is measured in trems of aggregate performance of portfolio components


Features of a Project Portfolio Management

The following the features of a Project Portfolio Management:

Adaptable workflows: It is essential that the Portfolio Project Management solution you are planning to buy has adaptable workflows to suit every project type. This means, you have one universally accessible system, and therefore standard practices in place, to maintain projects of any nature across the whole organisation.

Linkage to organisational strategy: Any Project Portfolio Management system that works on its own, without the ability to direct link to organisational strategy, will only be half‐useful. Each project has its own objectives with the ultimate result being in line with the overall direction of your company.

Gantt Charts: When a project is associated with organisational strategy and all corporate plans, it is crucial that each project activity is prioritised. Therefore, the PPM application of your decision requires to be capable to give the ability to prioritise projects. Likewise, tracking, prioritising, and allocating adequate time to particular tasks within a project is also critical. Gantt charts are a simple, visually immersive approach to simply understand and maintain the project and task progression at‐a‐glance. Easily prioritise and plan ahead with Project Management Gantt charts.

Automated and scheduled reminders and notifications: Automated and scheduled reminder alerts make sure good performance management of projects. An effective Project Management solution has the potential to send scheduled alerts when each phase of a project is completed, or when sign‐off is needed before moving on to the next phase.

Portfolio Management Process

MoP defines a set of Portfolio Management Principles and Portfolio Definition and Delivery Cycles as part of the Portfolio Management Process

Senior Management Commitment Governance Alignment

Strategy

Portfolio Office

Energised Change Culture

Understand

Categorise

Prioritise

Balance

Plan

• Management Control

• Benefits Management

• Financial Management

• Risk Management • Stakeholder

Engagement

• Organisation Governance

• Resource Management

© The Knowledge Academy 2020

6

Five Principles of Portfolio Management

MoP is based on five flexible Principles which provide the foundation for successful Portfolio Management (PfM) practice.

1. Senior Management Commitment: Top‐level support comes first in MoP’s list as anychange initiative struggles without it. Change initiatives must have public victors tocommunicate the value and benefits of Portfolio management. They need to useboth the stick and carrot – ensuring compliance with PfM standards and personallydemonstrating the behaviours essential to the success of the Portfolio.

Senior level engagement is crucial in three ways, by:

i. Providing a mechanism to prioritise the programme and project portfolio in line withbusiness objectives.

ii. Creating a clear decision‐making structure with agreed lines of accountability so thatdecisions are made swiftly and in line with business strategy.

iii. Demonstrating that senior management is committed to the change.

The following are ways in which senior managers should support portfolio management

o Publicly championing and positively communicating the value of portfoliomanagement within their areas of command – and particularly when the going getstough and the circumstances demand it, for example, when an initiative isterminated.

o Personal, active, and positive participation in the process.

o Contributing their expertise to the development of portfolio management across theorganisation.

o Taking effective steps to ensure compliance with portfolio governance and preventpet projects from being progressed under the portfolio ‘radar’.

o Explaining the rationale for decisions to their staff.

o Personally demonstrating the behaviours essential to the success of portfoliomanagement – senior managers must ‘walk the talk’.

Governance Alignment: PfM will fail without proper governance including clarity about what decisions are made. MoP provides examples and diagrams of a successful Portfolio governance structure – from Programme and Project managers up through the Portfolio Progress Group to the Director/Investment Committee level. Supporting these are the P3O model and, working alongside them: Business as Usual areas which will be impacted by the change. A full set of role descriptions are provided in the MoP manual as ready‐to‐use templates.


Which initiatives should be subject to portfolio governance?

All change initiatives?

– Provides an overview of all change initiatives which can be aligned to theorganisation’s strategic objectives.

– Helps provide a complete view on resource requirements.

– But: risk of overwhelming the portfolio governance body with data.

Or only those that:

– Make a material contribution to the organisation’s strategic objectives;

– Are above a cost threshold; and/or

– Are above a risk threshold.

But with checks:

– That sub‐portfolios are consistent with the organisational‐level portfolio

– That initiatives are not deliberately disaggregated into smaller initiatives to avoidportfolio governance

– To inform resource management decisions and assessment of impact on operations.

3. Strategy Alignment: Change initiatives which do not deliver benefit is equal to wasteand confusion. The ultimate objective of PfM is to achieve the strategic objectives ofthe organisation. MoP suggests a driver based model starting with very high levelstrategy, down to strategic objective then benefits and finally, change initiatives thatwill deliver them. It provides useful, practical, examples for the private and publicsectors.

Techniques that facilitate strategic alignment where strategy is not defined in measurable terms:

i. Portfolio segmentation i.e. splitting the total available funding into segments or‘buckets’ to reflect high‐level strategic choices on relative importance. Initiatives in each segment are then prioritised on the basis of criteria relevant to that segment.

ii. Weighting and rating systems e.g. rating the strategic contribution of an initiative as, for example, mission critical, highly desirable, or desirable.

iii. Pair‐wise comparisons and decision conferencing techniques to reach consensus on the relative merits of the various initiatives.

Portfolio Office: There has to be a business area that provides up to date and accurate information to allow good decision making by Portfolio Managers. This is the role of the Portfolio Office and this MoP principle is strongly linked to the OGC (Office of Government Commerce) standard: P3O. MoP shows different P3O models including linked (but


temporary) Programme and Project offices as well the permanent Portfolio office and aligned Centre of Excellence.

To be fully effective, the portfolio office should

Have sufficient organisational status to help overcome silo‐based interests and to demonstrate the importance of effective portfolio management across the organisation. Ideally the portfolio office should report into the top of the organisation, for example, to the business change or portfolio director.

Be sufficiently independent of PPM delivery so that its analysis are objective and credible and it is not accused of ‘marking its own homework’.

Be sufficiently skilled to ensure the analyses produced are reliable and timely.

Portfolio offices vs programme and project offices

o Programme and project offices are primarily concerned with coordinating the delivery of individual change initiatives in the right way.

o Portfolio offices are primarily concerned with ensuring these initiatives remain strategically aligned, coordinating delivery at a collective level (addressing dependencies, portfolio‐level risks, and managing constraints to optimise delivery), monitoring benefits realisation, ensuring that senior management receive relevant and timely information on the performance of the portfolio, and that lessons learned are identified, disseminated, and applied.

o Programme and project offices are temporary structures set up to support a specific change initiative.

o Portfolio offices are usually permanent and integrated into the organisational governance structure. Ideally they should have direct contact with, and report to, the management board.

Energised Change Culture: The success of the Portfolio depends as much on people as process so this principle recognises the need for an engaged team working together to define and deliver the Portfolio. Here, MoP gets into the ‘softer side’ by looking at areas such as communication, the learning organisation and listening and engagement with staff.

Elements of an energised change culture

i. Senior management commitment, communication and motivation.

ii. A mutual and shared desire to succeed based on effective employee engagement.

iii. Effective governance with an appropriate level of bureaucracy.

iv. Culture and behaviours reflective of a focus on the overall good and success of theorganisation rather than individual or silo‐based interests.


Sources of Energy

i. Connection: how people link themselves, their values, and their work to the purpose of the organisation.

ii. Content: work stimulates and provides a sense of achievement.

iii. Context: working practices support and enable people to do a good job.

iv. Climate: how the organisation helps people grow, achieve their potential and do their best

Multiple Choice questions 1:

1. The term _______ is used to define an organisation's overall collection of programmes and projects.

a. Process

b. Portfolio

c. Project

d. Program

2. Which of the following is not a MoP principle?

a. The business case

b. Portfolio office

c. Strategy alignment

d. Government alignment

3. A programme is a/an _________, adaptable company developed to organise, manage, and supervise the implementation of a collection of similar projects and tasks to fulfil results and profits related to the strategic objectives of an organisation.

a. Permanent

b. Portfolio

c. Temporary

d. Activity

4. Success of a project is measured ______.

a. by product and project quality

b. by the degree to which the program satisfies the needs and benefits for which it was undertaken

c. in terms of aggregate performance of portfolio components

d. None of these


5. _______are a simple, visually immersive approach to simply understand and maintain the project and task progression at‐a‐glance.

a. Flowcharts

b. Gantt charts

c. Progress chart

d. Time graph

Portfolio Definition Cycle

The goal of the portfolio definition cycle is to verify critical information that will give clarity to senior management on the collection of change initiatives that will deliver the most significant contribution to the strategic goals, subject to consideration of risk/achievability, resource constraints, and cost/affordability.

The key output of the portfolio definition cycle is an understanding of what the portfolio is going to deliver ‐ encapsulated in a portfolio strategy (the long term view of the portfolio and its contribution to strategic objectives) and a portfolio delivery plan which focuses on the forthcoming planning period. Together, these documents will reflect the decisions taken by the management board (or sub‐boards when portfolio functions are delegated) regarding the scope, contents, key milestones, costs, risks, and the results anticipated from delivering the portfolio successfully.

The essential purpose will come from the Portfolio Office team, who will collect data to give reports and critical points to the decision‐makers, usually the members of the board. This provides the team opportunity to obtain fact‐based decisions of what work to invest the time and effort

The portfolio definition cycle involves five steps to help the business managers.



Understand: It is the first step, and it gives the fundamental knowledge of what the portfolio should be accomplishing. It concentrates on explaining the scope of the portfolio (helpful for when an organisation has more than one portfolio). It can also involve knowledge of any current change actions which could set into this portfolio. After that, work doesn’t stop because there is no portfolio to drop the projects into, so there will likely be some projects or programmes ongoing that can be incorporated into the portfolio.

Categorise: It is challenging to maintain various change actions in a big organisation, so projects and programmes should be categorised. You can then see if any area is lacking investment. The categorisation is done on any criteria that accommodate your business, and you can even set up sub‐portfolios.

Prioritise: Prioritisation is essential. It is necessary to prioritise the actions within the portfolio so that the projects and programmes with the most useful return and the good connection to strategy are at the top. These then get the project resources and investment first, so the company obtains the benefits. It is beneficial to have a structured prioritisation system.

Balance: The portfolio must be balanced. Through it, the direction means that it should make reasonable sense in terms of timing, risk (not too many high‐risk projects happening at the same time), and resources (ensuring there are resources to do everything; not spending a year doing Finance projects only to leave all the marketing ones to next year).

Plan: It is essential for the tasks and actions that the project, programme, and portfolio managers will do. The plan is to design a portfolio strategy for that portfolio and to put together a delivery plan. Then this can be published widely, and the executives can publicly announce their help and support for it and work can start.

Portfolio Delivery Cycle

The portfolio delivery cycle involves seven practices. These are created to deliver the portfolio work and keep the portfolio itself up to date as things change, just like a leader, guides and manages an organisation.

Management Control: Once agreed, the portfolio strategy and delivery plan form the baseline for what is to be delivered. The purpose of the management control practice is to ensure that progress, at an individual and portfolio level, is regularly monitored against this baseline. This helps to ensure that delivery stays on track and that the portfolio remains strategically aligned.

Benefits Management: Benefits management is also a component of programme management and project management. It is important to identify at a portfolio level and maintain the benefits from all the change initiatives, projects, and business-as-usual work. Benefits management is a well-organised strategy for increasing good business results for an organisation as an outcome of change. It is vital for efficient programme and project management and successful delivery.


Stakeholder Engagement: A Stakeholder Engagement Strategy is a procedure to interact with project stakeholders to obtain their help for the project. It includes:

o Stakeholder list

o Project phase

o Contact name(s)

o Areas of Influence

o Power

o Engagement approach

Organisational Governance: Governance is a different part that develops over projects, programmes, and portfolios. At this level, it is necessary to ensure that governance of the portfolio is aligned to the overall corporate governance strategy, so it all ties up. Basically, it is only about to ensure that there is transparency and clarity about decisions and data.

Resource Management Strategy: Portfolios have dedicated resources and the project and programme managers delivering the change actions and projects. Resource management includes assuring that there are enough people with the appropriate skills to deliver the change in the most suitable schedules.

Financial Management: Portfolios can take a lot of money. It is the combined cost of all the projects supporting the strategic goals, which can total hundreds of thousands, if not millions, of dollars. So strong financial management is necessary. There is also a role here in making sure that the company's fiscal year and management cycle ties up with the decision making about the portfolio so that you don't end up with lots of mid-year reporting to do at the most critical part of the delivery or end up missing the deadlines for budget submissions because you didn't know about them. The goal of the financial management practice is to assure that the portfolio management processes and decisions are aligned to the financial management cycle and that financial concerns form a fundamental part in all decisions regarding the services and ongoing viability of change initiatives, both at an individual and a collective level.

Risk Management: A risk management strategy gives a structured and consistent approach to identify, assess, and manage risk. A risk management strategy can be generated and executed by the smallest groups or projects, or built into a complicated strategy for a multi-site international organisation.

As you perform risk management on projects and programmes, you also have to do it at a portfolio level. It is the same basic strategy, but at this level it looks at consolidated risk and personal risks to individual change initiatives.

• If you think about the number of resources included in a portfolio, this can be a lot ofpeople, so the overhead in getting their availability and making sure that people arescheduled appropriately can be huge. At some level, the amount of resourcesavailable to deliver change initiatives is constrained.

• The purpose of the resource management the practice is to put in place mechanismsto understand and manage the number of resources available and required. Thisstrategy describes how a resource to be consumed by the programme. Finances,people, systems, accommodation, facilities, and specialisms will all be covered by thisstrategy.

The three broad approaches to implementing portfolio management:

1. Big bang ‐ Implementing portfolio management is viewed as a business change programme in its own right and is planned with: a business case; a compelling vision for the future state; a blueprint or target operating model; and an implementation plan agreed by the management board. A time bound implementation phase is followed by live running encompassing all portfolio definition and delivery practices.

2. Evolution ‐ Here a more evolutionary or incremental approach is taken, starting with areas of greatest need or those where rapid progress can be made, and the organisation’s approach to portfolio management then evolves to reflect its needs, opportunities, and lessons learned.

3. Ad hoc ‐ As with the evolutionary approach, there is no detailed master plan, but there is no expectation that the approach will develop and no commitment to capturing lessons learned to inform development. Instead implementation is more opportunistic.

MOP Portfolio Management Organisation

To implement and maintain portfolio management in your organisation, you require to have senior managers who are assigned to portfolio management. The initial step will be the institutionalisation of a portfolio board.


Roles and Responsibilities

Portfolio Direction Group/Investment Committee (PDG/IC)

This is the governance body where decisions of the formation of initiatives in the portfolio are delivered.

No initiative should be involved within the portfolio or funded without the PDG/IC’s approval.

Responsibilities:

Agree with the Portfolio Management Framework

Allow the portfolio strategy and delivery plan

Select on the scope of the portfolio

Assure that the portfolio is well balanced

Assure that resources are properly allocated

Ensure that the portfolio development pipeline contains sufficient initiatives at thefeasibility/concept stage and that initiatives progress through the pipeline at anadequate speed

Review recommendations from the portfolio progress group/change deliverycommittee (PPG/CDC) and make decisions accordingly

Promote collaborative working across the organisation.

Undertake periodic reviews of the effectiveness of portfolio management within theorganisation – and take appropriate action where required

Ensure that any conflicts between portfolio delivery and BAU that cannot be resolvedby the PPG/CDC are addressed effectively

Portfolio Management Organisation

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Portfolio Progress Group (PPG) or Change Delivery Committee (CDC)

This is the governance body accountable for monitoring portfolio progress and resolving problems that may compromise delivery and benefits realisation.

Responsibilities

Agree the processes contained within the portfolio delivery cycle and ensure thatthey work efficiently

Make sure that all programmes and projects comply with agreed delivery standardsinvolving the business change lifecycle

Monitor delivery of the portfolio delivery plan (through the portfolio dashboard)including:

o Spend against profiled budget & revised forecast outturn:

Ensure effective action is taken to address overspends.

Where underspends occur, take prompt action to consider reallocating thefunds to other initiatives including those in the portfolio development

Business Change Director or Portfolio Director

The business change or portfolio director is the management board member who is responsible for the portfolio strategy and provides clear leadership and direction.

Responsibilities:

Provides overall direction and leadership for the implementation and delivery of theportfolio

Portfolio Boards


Ensures that the portfolio management practices are documented in a portfoliomanagement framework and that they are amended in the light of lessons learned

Champions the implementation of portfolio management

Promotes an energised culture that is focused on collaborative working in theinterests of the organisation as a whole

Secures the investment to implement portfolio management, including a portfoliooffice where required

Ensures that the portfolio evolves to reflect changed strategic objectives andbusiness priorities and that resources are reallocated where necessary

Gains relevant management board approval for the portfolio strategy and deliveryplan

Portfolio Manager

The portfolio manager organises the efficient and effective operation of the portfolio management practices and gives support to the business change/portfolio director, portfolio direction group/investment committee and portfolio progress group/change delivery committee – involving ensuring that they receive the information they need to enable them to discharge their responsibilities.

Responsibilities:

Ensures that business case data (particularly costs, benefits, and risks) is prepared on a consistent and reliable basis

Drafts the portfolio strategy and delivery plan for the business change/portfolio director

Prepares the regular portfolio dashboard for the PDG/IC and PPG

Keeps the portfolio management framework up to date

Identifies improvements to the portfolio management practices

Undertakes investment appraisals and reports accordingly to the PDG/IC

Leads on the preparation and implementation of the portfolio stakeholder engagement and communications plan

Coordinates portfolio prioritisation exercises and reports accordingly to the PDG/IC

Ensures that dependencies are effectively managed and where required escalates issues to the PPG/CDC for resolution

Identifies constraints within the portfolio and works to overcome them

Portfolio Benefits Manager

The Portfolio Benefits Manager ensures that a consistent ‘fit for purpose’ approach to


benefits management is applied across the portfolio, and that benefits realisation is optimised from the organisation’s investment in change.

Responsibilities:

Facilitates benefits‐mapping workshops

Develops and maintains the organisation’s portfolio benefits managementframework

Participates in investment appraisals ensuring that business case benefits forecastsare consistent with the organisation’s benefits eligibility rules

Considers and advises the portfolio manager or director on changes to the portfoliobenefits management framework

Provides training and awareness‐building sessions on the application of the portfoliobenefits management framework

Works with the organisation’s (and programme‐based) business change managers topromote more effective benefits management practices

Provides advice and support to PPM and BAU colleagues on the development ofinitiative‐level benefits forecasts and benefits management strategies

Centre of Excellence (CoE)

The following are the functions of a CoE

1. Generate ad manages in‐house methods and standard

2. Internal consultancy/advice

3. Leads forums to share best practices:

o Learning organisation

o Knowledge management

o Lessons learned

4. Conducts training classes and workshops at all levels in the organisation

5. Coaches, mentors, and motivates people (PPM competences and skills)

Multiple Choice Questions 2

1. Which of the following is the first step of the portfolio definition cycle that help business managers to decide what work is in, and what is out?

a. Prioritise

b. Plan

c. Balance

d. Understand


2. Who ensures that a consistent ‘fit for purpose’ approach to benefits management is applied across the portfolio, and that benefits realisation is optimised from the organisation’s investment in change?

a. Portfolio Benefits Manager

b. Portfolio Director

c. Portfolio Manager

d. None of these

3. The portfolio delivery cycle involves _______ practices.

a. Five

b. Six

a. Seven

b. Four

4. Which of the following is a portfolio definition practice?

a. Risk management

b. Energised change culture

c. Management by exception

d. Balance

5. Portfolio management seeks out to ensure the most effective balance of organisational change and what function or activity?

a. Performance management

b. Business as Usual (BAU)

c. Strategic planning

d. Programme management

6. Which is one of the three broad approaches to implementing portfolio management?

a. Delivery

b. Management by exception

c. Evolution

d. Senior management commitment

7. Which is one of the six key functions/activities that portfolio management needs to coordinate to achieve strategic objectives?

a. Vision Statement


b. Procurement

c. Programme & Project Management

d. Human Relations

8. Which of the following best describes the relationship between portfolio management and Business as Usual?

a. Portfolio management and BAU combine to achieve strategic objectives

b. Portfolio management sets the context in which BAU operates

c. Both combine to deliver change initiatives

d. BAU sets the context for the operation of portfolio management

9. An objective of portfolio management is _____.

a. Make certain the delivery of individual programmes and projects

b. Ensure the use of ‘Best Management’ practices

c. Ensure change initiatives are delivered effectively and efficiently at a collective level

d. All of these

10. Which of the following consists of a series of broadly sequential practices?

a. Portfolio management model

b. Portfolio definition cycle

c. Portfolio delivery cycle

d. Portfolio management principle


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