Wednesday, 28 July 2010 00:00

Pushing on a Wet Noodle - Demonstrating the Value of PPM

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Project Portfolio Management (PPM) has been around for at least thirty years and over the last decade there has been a proliferation of standards, publications, and conferences on the practice.  While a significant amount of emphasis has been placed in these knowledge sources on understanding PPM critical success factors, good practices and processes, the same plethora of documentation is not available about assessing the benefits achieved by adopting PPM practices.

Don't get me wrong. In product development organizations, there is a direct linkage between good PPM practices and improvements in overall return on project portfolio investments.  But what happens if your company does not develop products or services?  Even worse, what happens if you have decided to take a phased deployment to PPM practices by rolling them out within a single department instead of doing an enterprise-wide approach?

If you are a year or two into your PPM initiative and senior management is beginning to ask tough questions about value realized, what can you do?  You could spend time interviewing stakeholders to gauge perceptions of PPM capability and benefits but these will be subjective and intangible - valuable to document, but not helpful towards developing a cost justification.

In the absence of a good baseline of past history, you could focus on quantifying the benefits of specific instances in which the application of PPM practices made a difference.  If a project request that might have been launched historically was rejected by your governance committee, try to quantify the impact and costs if that project had been launched.  If a project  that in the past might have been allowed to continue through to completion, was terminated "in flight" to continue through to completion, assess the opportunity costs. Which other projects might NOT have been resourced?  If information about a project that resulted in the "right" decision being made in a timely fashion had not been available at that time, what could the costs have been?  On the cost side, assess the organization costs of PPM - staffing costs, training and coaching costs, and tool implementation and support costs.

As you can see, this type of retrospective value justification can be challenging and effort-intensive, so how can you proactively avoid this dilemma?

  1. Identify key organization performance indicators (financial or otherwise) that the PPM initiative will improve.
  2. Capture a baseline of data about these indicators over a quarter or two.
  3. Develop realistic, achievable targets for changes to these indicators.
  4. Develop a business case based on these improvements taking into account the hard and soft costs of the PPM initiative.
  5. Secure appropriate executive sponsorship to provide you with both the funding and visibility for the project.
  6. As PPM changes are rolled out, measure these indicators on a regular basis (as well as the costs of the initiative) and provide annual (or better yet, quarterly) updates to senior management regarding the benefits achieved.

Quantifying the value of PPM is a true example of the saying "if you fail to plan, you'll plan to fail!".

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Kiron Bondale

Kiron D. Bondale, PMP, PMI-RMP has worked for over thirteen years in the project management domain with a focus on technology and change management. He has setup and managed Project Management Offices (PMO) and has provided PPM consulting services to clients across multiple industries.

For more of Kiron’s views on project & change management, please visit his blog or contact him directly at kiron_bondale @ yahoo.ca.

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