Resource - ITM Platform | Projects Programs Portfolio

Choosing which projects to invest in is a strategic decision to be taken based on objective data. In this article, we explore the problem of subjectivity and analyze the solution that allows management to make decisions based on a business plan, in a rigorous and transparent way.

The Problem

In businesses where the source of income comes from making projects for clients, it is easy to decide which ones are to be put in place: (usually) those of greater profitability. And in some cases, all, if sufficient resources are available.

However, internal projects, such as those of transformation, tend to not offer such an obvious criterion as their value to the business is less evident and often more subjective to anticipate.

The fact that an expected value is subjective does not mean that its effects are not going to be real. It means that the benefits are hard to predict, and investment decisions can be based on perceptions.

This is a challenge that managing directors have always tried to address. The most used resource as a solution has been that of the "business case", which requires promoters to express the profitability or value contribution of their initiative in measurable terms, either in sales increase or in cost reduction.

The main difficulty presented by the business case is the human factor: a promoter of an initiative that has a strong motivation to give positive figures and show that their idea is profitable. Though it is desirable to have intrapreneurs on your team it is essential to validate their figures through a homogenous and and objective process.

The second difficulty of requesting profitability to internal projects arises from each promoter having limited vision to their area of competence, defending their plot without considering the overall vision. In turn, management considers these business cases as if they had been generated with the same criteria, which is not usually the case. Each promoter applies with different degree of ingenuity the data to the same template.

The issue at hand is knowing when to recognize, in an objective fashion, what initiatives will bring more value to the business when the projects deliver their expected benefits.

The Approach

When it comes to value, it is not always possible to apply a purely financial standard via project profitability based on forecasts in isolation and in comparison of each other.

The value contribution of a project to a strategic plan may be broader than profitability, even if the savings or earnings have been realistically calculated. For example, a process automation project can throw modest savings, but positively influence a priority target of customer quality perception.
Strategic project planning should not consider initiatives in isolation, as the result of the set may be greater than the sum of the parties. It is common for the result of some projects to enable others, and its set to offer strategic value. This is why program and portfolio management exceeds project management.

The strategic management of projects lies in the competence of the management and must be facilitated by the Project Management Office (PMO) to the extent that their objectives are the maximization of value and not only the transversal coordination.

Thus, the strategic planning approach to the composition of the project portfolio should consider two main elements:

A strategic plan that exposes the objectives of the Organization
A list of project proposals (initiatives)

With these two elements, we can prioritize initiatives that will order them from higher to lower value, generating an orderly list of approved projects (portfolio backlog).

Strategic management of project portfolios

A great advantage that offers prioritization of projects by value is that it supports applying resource constraints as a cut-line to its output. If we have a list ordered by value and – for example-a budgetary limitation, we will be able to establish the approval of projects based on those that contribute more value and that are within the available budget.

The Process

Once we have the two main elements (objectives and demand), we can start two classification processes that can run in parallel or go in sequence. What is important is to isolate each other to ensure objectivity and ease of adaptation to the general standard.

Process 1: Prioritization of Objectives

Participants: Board of Directors
Objective: To put some objectives in front of others, with specific weight of each one on the total.

Sometimes strategic plans already specify priorities, but in others they do not give explicit weight by objective. For example, how much more important is "to grow in sales by 20%" than "to increase operating efficiency by 15%"?

There are several techniques that can be employed to achieve a table like the one above. From something as simple as an agreement amongst the Board of Directors to the most sophisticated such as an Analytic Hierarchy Process (AHP). The latter could be considered more rigourous, though its execution could be simple if you have a Pairwise Comparison Tool, like the one provided by ITM Platform.

This simple table will generate an orderly and quantified list of objectives.

As an added feature, ITM Platform calculates a "consistency ratio" that indicates how logical and objective the prioritization is. In this article, you will find an explanation of how this index is calculated.

It is possible to make different sets of the same objectives through scenarios, and even use different objectives for different programs. The reality is complex and there is not always a single combination or scenario.

Process 2: Contribution of project value to objectives

Participants: The Project committee and promoters

Objective: To determine how much each project contributes to each objective

Ignoring for now the relevance of each objective on the strategic plan, this step will assign a weight to the contribution of each initiative to each objective. This weight will be translated to a number base on 100, but if you use ITM Platform you can also use the comparison by pairs previously used or use a qualitative methodology based on ideograms such as the image (Harvey balls), providing a visual support.

Process 3: Analysis of the optimal selection of the Portfolio

The two previous phases provide the necessary parameters for the system to calculate the value of each project, based on 100 and depending on the value of each objective.

List of initiatives orders by value

If money wasn't a problem, then we would probably carry out all “reasonable" projects. But in a real organization, the resources available are finite and the previous list of initiatives is not enough to make a good selection of project portfolios.

Thus, it is not only enough to select the most valuable projects, but it is also necessary to filter those that fall within the constraints, be it economic, technical and human resources, or temporary.

In this article, we will use the available budget as an example of a main constraint because this is the most frequent case. Imagine that we should select a portfolio of projects that does not exceed $900.000. Taking the previous list into account, the "New Star Product" ($ 1.5 M) exceeds that amount and also provides a similar value to other more economical projects.

So, with the data we have, we choose the combination of projects that are closer to the available budget: a total of $885.400 and a value of 61% accumulated in three projects.

With this selection achieve the given criteria. But note that the efficient central border graph is indicating the selection is not optimal (value/cost) and that there are better combinations: similar value for less money or greater value for the same sum.

And, indeed, with a portfolio of a total of $528.840 we achieved a contribution of value very similar for 35% less in cost.

If you are interested in understanding how the calculation scheme is made,

Download the guide here.

Conclusion

It is possible to apply rigorous standards in the selection of a portfolio of projects, basing the selection on the value they bring to the business strategy.
Key points to consider:

A separation of work between the management team that defines and prioritizes objectives, and the teams that analyze the benefits by project.
A process sponsored by management requiring rigorous standards when making investment decisions and implementing transparency between teams.
An integrative platform that combines information and exposes the results.

If you want to know more about the management of organizations by projects, download the white paper, where you will learn to:
- Connect management of your Organization with that of projects
- Manage portfolio of projects to create competitive advantage
- Agile Portfolio Management

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In the set of good practices in the Project Management Book of Knowledge (PMBOK), the sixth area of knowledge refers to human resources management within a project.

It is fundamental to perform human resource management of the organization to the highest standard. Good management will allow you to create high performance teams in each phase of the project. In this way, the maximum productivity of any company will be achieved: the efficiency of the available resources to achieve the proposed objectives.

In the field of projects, teams are created over a given period to collaborate intensively in the production of given objective. Due to the brevity of project teams, it is fundamental to master the processes to be able to manage resources, according to the following obligations:

Correctly estimate the amount of human resources needed, based on task estimates
Selecting staff with the right skills
Plan the costs derived from the allocation of these resources
Ensure that resources have sufficient time to devote to the project
Control the time deviations to avoid any delays that can lead to non-expendable costs

Plan the allocation of your resources to all your projects with ITM Platform

Next, we review the steps for project resource planning.

1. Estimating resources

In estimating your resources, firstly a forecast of internal and external resources is made that will be needed for the management of the project. It is necessary to contemplate the active estimation for each task, activity and phase of development, so that the deployment is carried out efficiently.

Among the most common techniques for estimating resources is the consultation of experts, that is, based on the experience that has been acquired in previous projects. Data and results achieved in the past will help improve the accuracy of the current project.

2. Data collection

It is this phase in which the available resources for subsequent management are detailed, and usually includes information regarding:

Available resources.
Resource demand.
In what way the available resources will be able to satisfy the demand raised.

3. Resource Plan

In project management, a plan should be prepared that addresses the different aspects, from the needs of the demand, the assignment of roles and responsibilities, and the desired results.

As head of the project you can create a list sorted by hierarchies in which the resources necessary for the execution and management of the project are displayed so as to be able to divide, delegate and assign responsibilities and functions.

Learn how to plan your resources here with ITM Platform

4. Development planning

All the information gathered in the initial phase will lay the foundations for further development planning. In this phase a schedule is created which indicates the establishment of the starting point and completion of all tasks, activities or works that will be developed in the project. This will create a final schedule, which will also include time management, which happens to be the third area of knowledge of the PMBOK referred to in the Guide.

The resource plan prepared before the development phase provides information on the hierarchical breakdown of the available resources, which are related or matched with the list of resources necessary for the development of the project. This exercise improves the efficiency in resource allocation that is needed for each activity.

5. Resource verification

The project manager is responsible for the project, so make sure that the assignments made allow the creation of high-performance teams capable of executing each phase of the plan correctly and efficiently. Taking into account remote workers, which is a typical occurence today.

In managing the human resources of a project, talent management is essential. Experience is a plus, and it is important to know the skills, competencies and abilities of all team members in the work group, which will improve the assignment of roles and responsibilities while achieving greater commitment and involvement.

In addition, as the project manager, director or coordinator, you must seek the balance between functionality and profitability. The allocation phase is fundamental, since if more resources are allocated than necessary, to a certain task or activity, it could implicate the financial resources of the company.

6. Negotiation of resources

Typically, companies use internal human resources to carry out smaller plans. At this point, the project manager must be able to negotiate if he wants to incorporate external resources into the project, for example in the case of a project where high specialization is required and the company has a more profitable to contract in place to create a team.

In any case, it is becoming more common for corporate human resources teams to focus on identifying talent within the same organization to improve the profitability of the activity and each new venture.

The management of project resources at a portfolio level

Project teams can never be managed in isolation, because members often spend their time among various projects. Therefore, it is imperative that someone in the organization has a centralized view on the use of all resources. In the case of conflicts, there must be criteria for deciding which project is allocated critical resources, so that the most important projects suffer the least delays possible.

Often, portfolio planning tools are used by a professional figure with greater authority than project managers, such as a PMO director, a project program director, or the portfolio director.

This article belongs to a series on the 10 areas of knowledge of PMBOK. Take a look at the articles already published:

The 10 areas of knowledge. 1: Project integration management

Integration with the ITM Platform Project Menu

The 10 areas of knowledge. 2: Project scope management

The 10 areas of knowledge. 3: Project Time Management

The 10 areas of knowledge. 4: Project Cost Management

Managing Project Quality: Insurance case study

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In addition to the "weather station" and the "control tower", Casey and Peck distinguish a third type of Project Management Office: the "pool of resources". Often, this type of PMO is more simply named by its directive capacity.

In fact, the fundamental difference with the previous types of PMO are its managerial features, since it is dedicated to coordinate projects, components and programs of an organization.

Its direction can have two different reaches:

The most ambitious, is where the PMO extends to all projects of an organization.
However, it can also be more targeted, and focus only on transversal projects involving several departments, leaving more routine or restricted projects in the hands of a specific project manager.

How to organize the structure of a directive PMO

In a directive PMO, the project managers work directly for the PMO: the PMO assigns the projects, to which they have to direct the reports, and is the one that supervises their actions. Therefore, the directive PMO must diversify and prioritize its team of project managers: those who work for the PMO will have a more marked profile as supervisors and managers, while the subordinates will be closer to the daily execution.

On the other hand, the employees of the company can be organized in two ways:

One possibility is that they are part of the PMO itself. This system is valid in cases where all or almost all the work carried out by the company is in the form of projects.

The other possibility is that they are formally non-project workers, even if their work contributes to some. This approach is used in companies with a more operational profile and a smaller proportion of the work is devoted to projects.

Functions of a directive PMO

The most characteristic functions have to do with the coordination of talent:

Develop and maintain a sufficient and well-formed project manager template to manage all the company's projects.
Organize contributions from independent workers.
Assign the necessary human resources to each project, prioritizing in case of conflict according to business criteria.

Although these are the most defining functions, the directive PMO shares functions with other, simpler types of PMOs. These include:

Reduce costs by centralizing services.
Ensure adequate communication between team members and the organization of project management through the regular issuance of structured and complete reports.
Encourage the adoption of methodologies, standards, processes and tools that allow the management of projects to be completed efficiently.

How to control the efficiency of a directive PMO

Since the directive PMO is in charge of managing all the projects, it is difficult to evaluate if the work is being carried out properly. If it is the PMO itself that has to evaluate its performance, it is possible that bias will appear in the assessment and, although this is not the case, there can always be doubt about the potential conflict of interest.

There are some solutions that can be adopted in these cases.

Contract the services of an external audit. This way, you are guaranteed to obtain bias exempt reports in which both the positive aspects of project management and the negative ones are evaluated.

Generate an independent audit within the organization itself. To do this, a group of project managers should be set up outside the active projects, that can evaluate their efficiency in management.

Develop a rotating system for project managers. This is a methodology widely used in companies that have adopted the ISO 9000 quality standards. When a director does not take care of the management of a particular project, he can be assigned to the evaluation of the active projects. This is a very complete option, since the rotation of project managers ensures that they keep the two points of view constantly.

Should I incorporate a directive PMO in my company?

There are divided opinions among experts when recommending this type of PMO.

On the one hand, some argue that it is the best solution for the management of a company, since it guarantees maximum efficiency in all departments and projects. In case other systems already exist, a gradual evolution towards a leading PMO is suggested, since it is the most complete management method.

On the other hand, the directive PMO runs the risk of being invasive of existing work systems and appear as a structure that seeks to appropriate all departments or aspects of management within a company.

Therefore, prior to the implementation of a directive PMO in a company, it should be assessed if its profile and that of its employees allow for an appropriate introduction. Otherwise, one solution is to adopt other less demanding type of PMO and progressively evolve towards this type of PMO.

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There are more and more companies that, regardless of their size, are applying strategies to optimize the management of their portfolio. This fragmented macro-unit welcomes the set of projects, programs or operations opened by the company to respond to its business demand. Such elements may interact with each other or not, but in any case require the allocation of resources to be carried out.

To begin with, it is important that we narrow down the scope of each of the segments in which we bring together our creative or commercial initiatives. If a project is a temporary effort to achieve a unique result, a program would be a set of projects, that pursue a common outcome. Even though there is no functional relationship between projects that are under one umbrella, sharing strategies, components and business structures involves managing resources at a higher level.

These competencies are under the control of the PMO (Project Management Office), a department that has gained importance in recent years due to the innumerable advantages it brings to the company that manages it correctly. One of the greatest advantages it brings is the aerial perspective that contributes to managers when it comes to assessing the efficiency of their business processes due to the close connection between corporate governance and portfolio management.

Centralized Portfolio Management

Portfolio management allows organizations to identify the deviations that occur within programs and correct them by reallocating human resources, technological resources or priorities. Constant evaluation of ongoing operations is the basis of project optimization, especially if these are related and pursue a specific purpose. Some responsibilities of a PMO are:

The establishment of a general methodology that supports portfolio management practices.

The creation of a structure in which to carry out this methodology.

Advice on the allocation of resources and priorities in order to maintain the corporate orientation.

Selection of components of the organizational structure that will accommodate the resources and provision of the tools appropriate to each position.

Provision of internal protocols to evaluate, measure and monitor the distribution of competences.

Reassignment of resources, analysis of constant priorities and optimization of decisions.

Value analysis of the portfolio through the use of economic indicators designed to measure the success of business initiatives such as ROI, VAN or PP.

Assignment of Human Resources at portfolio level

The employees who give life to our projects must be managed as an investment portfolio, that is, as a group of high value assets that have a specific weight in the company.

To do this, it is essential to start with a holistic view of resource allocation, which functions as a centralized project management office for this purpose.

Now let’s look at an example with the planning view of the ITM Platform resource management area.

This view shows aggregate data on demand and supply of resources in one place.

General view

At the top of the view, for each project you can check:

The total demand for hours for this project
The total number of hours allocated
The deviation between the two

Demand view

These three factors are also broken down periodically. For example, you can view the weekly demand, allocation and deviation segments over the next quarter and act on them:

Identify problems of over-allocation
Break down the details of the assignments until you find the over-allocated professional categories
Identify default deviations and allocate new resources

At the bottom of the view, the project entry is replaced by resource categories. Typically, here will be the analysts, divided, for example, between external and internal.

Supply view

Similarly, to the top, each professional category is shown; the total capacity, hours allocated and availability.

This view shows:

Display when a resource is over-allocated or underutilized.

Resolve divergences between capacity and allocations.

To see more precisely the demand and supply of resources and its different views, try a free trial of ITM Platform.

Two other important actions that can be framed within the human resources management at the portfolio level would be:

Diversification of talent to eliminate the risks of a hiring policy based on non-flexible profiles.

Perform integration actions that increase the value of a set of employees that alone would be less effective. Fostering synergies and redistributing them is vital in order to find the combination of human resources that best suits the needs of each project and, in short, the goals of a particular program or general business strategy.

It should be noted that not all assets have the same value and each of them has a rating given by the importance of their contribution to the common purpose. This rating should not have a permanent character, but rather be an indicator of the evolution of the employee's performance and since the management of portfolios must be counted on. The management of professional resources must establish a protocol based on a deep analysis of the results of each individual or group and apply corrective measures that include internal recruitment, promotion of employees or their training to improve their contribution to the segment of the project in which they work.

Not all employees are the same

Portfolio management must be able to identify those resources, which, because of their special talent, must occupy a key place in a project. There are techniques that allow managers to reliably track their future managers.

Among them we highlight:

Evaluation center: An affordable group of participants is selected and placed in management situations involving agile decision making.

Workforce Review Committee: This is a kind of roundtable held at the highest corporate level that takes into account performance reports and evaluations of all kinds to define the career of its future managers.

Finally, we emphasize the importance of having portfolio management tools that provide a comprehensive view of the processes opened by the company and allow to act, precisely, on each assigned resource.

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The management and planning of resources is an essential process in business, since it allows the monitoring of projects and their results, as well as anticipating the emergence of risks.

The best way to handle the management of resources is to use some kind of assistant that helps to know, plan and manage the economic and human resources that are available, with the goal of achieving maximum efficiency. For this reason, many companies consider resource management as a priority.

Here are some practices that resource management can bring to your company.

Understand the difference between occupied time and utilized time

If you realize that the employees are working all the time but are not reaching the goals set, there is something that is not working well: there is a mismatch between the time spent and the use of time efficiently. They may not be using the right procedures; they do not have the necessary technology or they need to update their training.

Are you ready to own your time? Start tracking your estimates live with ITM Platform for free.

Of course, it is also possible that project managers are not taking into account precautionary measures when estimating. Here are the 3 keys to estimating realistic times for your projects:

Two out of ten working hours are not productive

In most countries, you have 8 working hours. However, keep in mind that if you have resources in France, for example, then there are 7 working hours.

However many hours there are in a working day, not all of those hours are productive. Employees will have to participate in meetings, interact with clients or engage in unplanned tasks.

Therefore, it is advisable to calculate that around 80% of actual hours worked will be productive. This is not a guarantee, on the contrary: although the efficiency of your equipment will exceed this threshold, a lot can happen that may reduce the amount of hours dedicated to a project.

Find out how many resources are assigned to each project

Although it would be most efficient to have your analysts dedicated exclusively to a project from start to finish, there are plenty of reasons why this is neither usual nor practical: from small projects where only specific participation of certain experts is required or highly specialized tasks concentrated in certain phases of the project, to very complex projects that displace some resources from their usual projects.

It is logical that effectiveness decreases as the number of projects to which a resource is allocated increases.

via GIPHY

For example, if you only assign one hour a day for a critical task, it is very possible that your project will be delayed: the employee assigned to the task is likely to perceive that there are more important things to do, unless you properly communicate that this task is your top priority.

Calculate how much time will be spent on learning

Estimates are usually based on the time spent on a similar project. But, as it is said, the devil’s in the detail.

It is possible that some of the differences in the new project will hide challenges that team members will have to learn before overcoming, either in a planned or on-the-job process. Detecting these critical points will allow us to better identify if there are more suitable team members for the project than others or if it is worth outsourcing some parts of the process.

Support estimations with applications

Adequate project management begins by identifying these problems before undertaking new projects. Whether it be short-term or business operations, which can become problems to estimate and correctly allocate the times.

That is why it is so important to use applications that monitor the exact state of all projects of the company in real time.

For example, with ITM Platform Teambot, you can make it easier for your team members to:

Consult active projects, reducing the transit from one project to another
Report time spent on a task in real time, improving your future estimates
Send feedback from a contrasting chat environment, such as Slack

Once the results of the analysis are known, the reasons for deviations can be detected and decisions can be taken to make production processes more efficient.

If you want to discover how to better control the time management of your team with ITM Platform, we invite you to request a personalized demo, where you can speak to one of our experts.

Juan Delgado

Blogger

ITM Platform