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Welcome to the PMI Houston Conference & Expo and Annual Job Fair 2014
• Please set your cell phone/pager to silent mode
• Q&A will be taken at the close of this presentation
• There will be time at the end of this presentation for you to take a few moments to complete the session survey. We value your feedback which allows us to improve this annual event.
Portfolio Optimization Techniques & Practices Speaker: Tony Castronovo, PMP Company: UMT Consulting Website: http://umt.com
About the Speaker
About UMT
‘Winner of Microsoft Partner of the Year’
‘Visionary’ in Integrated IT Portfolio Analysis Applications
‘Cool Vendor’ in Gartner’s Cool Vendor Report 2012
PPM Experts 25 years of experience
With
About UMT IT Governance and Management (IT G&M) Comprehensive EPM Resource / Demand
Management APM PMO PM Training
Innovation Process Management / New Product Development (NPD) Comprehensive EPM Capacity Planning /
Resource Management PM CoE / CoP
Program / Corporate PMO Project / Program
Management Reporting and
Dashboard Resource Management PMO Services
Process Improvement Initiatives • Portfolio Selection and
Management • Project / Program
Management • Resource Management • PM Training
Consulting Services Enterprise Project and Portfolio
Management Enterprise Application Portfolio
Management and Analytics Project and Portfolio Financial
Management Consulting New Product Development (NPD)
Portfolio Management Program Management Office (PMO)
Product Offerings UMT 360
Financials
Portfolios
UMT Training Institute Managing Projects with Microsoft
Project 2013 and 2010 Training Microsoft Portfolio Server Training
Recent Clients
Regional Focus with Global Presence
Project Management
Global Clients
Russia
Poland
UMT
UMT
UMT UMT
UMT
UMT UMT
UMT
UMT
UMT
UMT
Brazil
France
Sweden Canada
Spain
Colombia
Australia
China
India
Singapore
Malaysia
Indonesia
Philippines
Agenda
Prioritization
Method of determining “value”, usually through a series of questions/criteria with associated weights
Strategic Alignment
Constraints Limitations on resources required to reach full value
Optimization Method for maximizing value within given constraints
Association of the everyday work we do to
the goals and vision of the organization
Prioritization & Optimization Fundamentals Key Terms
Efficient Frontier: the leftmost collection of solution sets that satisfies the constraints and yielding the greatest strategic value for that specific $ threshold
Prioritization & Optimization Fundamentals Efficient Frontier & Modern Portfolio Theory
o
Prioritization & Optimization Fundamentals Value Determination: Strategic Business Driver Alignment
Scoring
Prioritization & Optimization Fundamentals Value Determination: Strategic Business Driver Alignment
40% 20% 15% 15% 10%
Scoring
Prioritization & Optimization Fundamentals Value Determination: Common Question Framework
EXAMPLE:
Scoring
Group 1 Portfolio Project 1 Project 2 Project 3 Project 4 Project 5
Cost: $100K $400K $300K $200K $200K
$1.2MM
• Prioritize the portfolio of work
Group 1 Portfolio Project 2 Project 1 Project 3 Project 5 Project 4
Prioritized Budget: $800K
• Apply constraints
$100K $500K $800K
Value: Derived from scoring methodology
Value: 35% 20% 20% 15% 10%
100%
Prioritization & Optimization Fundamentals Not a Budgetary Exercise
Optimization
Group 1 Portfolio Project 2 Project 1 Project 3 Project 5 Project 4
Cost $100K $400K $300K $200K $200K
• Apply Constraints
Prioritized Budget: $800K
C O S T V
AL
UE
%
0%
100%
75% 80%
• Maximize Value
Value 35% 20% 20% 15% 10%
Cumulative Cost & Value
Prioritization & Optimization Fundamentals Financial Constraints
Optimization
Company Portfolio: Project 3 Project 2
Project 1 Project 3
Project 1
Project 2
Prioritized Relative Value:
9% 16% 9% 7% 2% 30% 5% 14% 8% 100%
Group 1 Portfolio Project 2 Project 1 Project 3
Group 2 Portfolio Project 3 Project 1 Project 2
Group 3 Portfolio
Company Portfolio:
Project 1 Project 2 Project 3 Project 1 Project 2 Project 3
Group Value: 20% 35% 20% 15% 5% 65% 10% 30% 17% 217%
Value: 30% 16% 14% 9% 9% 8% 7% 5%
2% 100%
Prioritization & Optimization Fundamentals Portfolio Blending
Apply Normalization
Optimization
$550K 30%
C O S T V
AL
UE
%
0%
100%
Cumulative Cost & Value
Cost: $550K $200K $100K $200K $100K $100K $300K $200K $250K
$2.0MM
Budget: $1.5MM
Company Portfolio Project 3 Project 2
Project 1 Project 3
Project 1
Project 2
Prioritized Value 30% 16% 14% 9% 9% 8% 7% 5%
2% 100%
• Apply our constraints • Optimize
91%
$750K 46%
$850K 60%
$950K 69%
$1.15MM 78%
$1.25MM 86%
$1.45MM 91%
Prioritization & Optimization Fundamentals Maximizing Value
Process Best Practices 2-Step Prioritization Method For Diverse Organizations
Group Level Priorities (40%)
CXO Priorities (60%)
Process Best Practices Governance Workflow
Process Best Practices Creative Optimization
Process Best Practices Rebalance the Portfolio
2 1. Cost Constraints
1
4
3
5
2. Compare Scenarios
3. Selected / Unselected Projects
4. Force-in / Force-out Projects
5. Efficient Frontier
Tools – Microsoft Project Server
Tools – UMT 360
Overcoming BCM Obstacles
Overcoming BCM Obstacles
Overcoming BCM Obstacles Tips & Suggestions
Engage Leaders and Portfolio Owners in Process Design
Choose a method and stay the course
“Fair” isn’t always what’s best…evangilize broader thinking
Minimize the debates
It won’t be perfect the first time! Agile process design is a must
Conclusions
Portfolio Optimization = “Best Bang for the Buck”!
Prioritization methods are crucial
Governance workflows drive accountability & data quality
Proven tools are necessary to enforce and automate the process
Portfolio Management processes are major change initiatives
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Q & A
• Please step up to the floor microphone to ask a question
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Thank You
Contact Information Tony Castronovo, PMP, MCTS UMT Consulting Group http://umt.com 713-303-0044 [email protected]
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Closing thoughts… Thank you for attending this session. We hope you found this presentation
added value to your knowledge of Project Management.
• Take a few moments to complete the Session Survey. We appreciate and value your feedback.
• Hand in your completed survey to Registration, you will receive a free raffle ticket for one of the drawings to be held in the Vendor Expo (see Conference Program Guide for details).
