The APM defines Portfolio management as “…the selection, prioritisation, and control of an organisation’s projects and programmes in line with its strategic objectives and capacity to deliver. The goal is to balance change initiatives and business-as-usual while optimising return on investment.”
In other organisations, Portfolios are defined as “The totality of an organisation’s investment (or segment thereof) in the changes required to achieve its strategic objectives”.
Increasingly portfolio management is gaining ground in the public sector and, to a lesser degree, the private sector as a tool to manage and prioritise change initiatives. The Portfolio Office ensures that work being done is aligned with your strategy, while assuring the delivery of Benefits.
It’s all about Value and Efficiency
Portfolio Management is not an avoidable overhead: it is the essential tool linking ‘Change’ initiatives (projects and programmes) to ‘Business As Usual’ to ensure that your organisation is taking on the right work at the right time to add value and improve efficiency. Without a Portfolio Management layer, work done under the ‘Change’ banner can become incoherent and out of alignment with the organisational strategy. It is a picture that you might recognise: Initiatives are not coordinated and conflict arises – resulting in waste, re-work and additional cost.
Portfolio Management is a tool of the Executive. Effective Portfolio Management requires an objective understanding of both where Value already lies within your organisation, and what potential Value can be realised through potential projects and programmes. This allows work to be targeted at delivering value for the whole organisation, rather than just the department which has recommended the work. Portfolio Management supports objective decision making by the Executive of what initiatives to take on, to progress and to terminate, fulfilling both Value Management and Delivery Governance roles as shown below.
fig.1: Portfolio Management
Most organisations have gaps between their aspiration for a Portfolio Management capability and the reality: measuring value is difficult while finding the data and knowledge to support that measurement can be even harder.
Two areas of activity are key to achieving a mature Portfolio Office: an assessment of where the value currently lies in the organisation (indicating where Change would provide the greatest benefits); and an assessment of how to understand the potential value of each ‘Change’ initiative.
Portfolio Value Areas
- Organisational Value Assessment
Measuring Value in a unique and complex organisation is not straightforward but it can be done. Following HM Treasury guidelines, is it possible to provide value assessments using multiple techniques, including Value Mapping, Value Streams and Value Engineering.
A blend of these techniques is used to identify where relative value lies throughout each organisation, supporting the assessment of where efficiencies are possible and which parts of the organisation offer the greatest benefits and return on investment from change work.
- Change Value Assessment
Planned Change initiatives must offer a reasonable return on investment (RoI) to be worth undertaking. Additionally, the aim of each initiative must be aligned to the strategic objectives of the organisation. Finally, the initiatives should be prioritised based on the value status of the department or function which will realise the benefits.
Using metrics to measure what constitutes ‘value’ to each organisation, taking into account financial RoI, efficiency measures and targets and the costs and resource use of the initiative, we can produce a value measurement of each change initiative which can be objectively compared with other change initiatives. This supports the objective prioritisation of work, not only before commencement but also through the life of the initiative. This supports both roles of the Portfolio Office: Value Management and Delivery Governance.
Portfolio Management is an important next step from Project and Programme Management: Projects and Programmes assure that the work is being done efficiently, while Portfolios ensure that the right work is being done.
If you are interested in hearing more about Portfolios could help your organisation become more efficient, effective and auditable then please do get in touch!
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