Lecture Project management in practice - Chapter 3: Organisational strategy and project selection

In this chapter, the learning objectives are: Further develop and understand the importance of the methods that define and align an organisation’s project activity, understand the features of portfolio management systems and the role of a typical Project Management Office (PMO), be able to identify what information and support a PMO should be providing to your project environment,...

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Pearson, Larson, Gray, Project Management in Practice, 1e

CHAPTER 3

Organisational Strategy and Project Selection

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Learning Elements

3.1 Further develop and understand the

importance of the methods that define and align an organisation’s project activity.

3.2 Understand the features of portfolio

management systems and the role of a typical Project Management Office (PMO).

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Learning Elements (cont)

3.3 Be able to identify what information and

support a PMO should be providing to your project environment.

3.4 Understand the project manager’s

responsibilities in relation to supplying information to a PMO.

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Why Project Managers Need to

Understand Strategy

• Project managers must respond to

changes with appropriate decisions about

future projects and adjustments to current projects.

• Project managers who understand their

organisation’s strategy can become

effective advocates of projects aligned

with the firm’s mission.

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• Trying to solve customer issues with a product or

service rather than focusing on the 20% with 80% of the value.

• Engaging in a never-ending search for perfection only the project team really cares about.

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The Strategic Management

Process: An Overview

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Key stages

1 Define and review the organisational mission,

vision and values.

2 Set the organisation’s strategic objectives.

3 Analyse the strategic objectives and identify

the ‘ideal’ investment mix.

4 Implement strategies through portfolios,

programs and projects.

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Stage 1

D efine and review the organisational mission,

vision and values

•T

he mission identifies ‘what we want to

become’ or the raison d’être.

•A written mission statement provides

focus for decision making when shared

by organisational managers and

employees.

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Stage 2

S

et the organisation’s strategic objectives

•S trategic objectives translate the organisation’s

mission and vision into specific, concrete,

measurable terms Strategic objectives set

targets for all levels of the organisation.

•R emember SMARTA!

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Stage 2 (cont)

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Stage 3

A nalyse the strategic objectives and identify

the ‘ideal’ investment mix

•T

he portfolio of investments identified in support

of the strategic objectives is a result of a

complex process.

•T his potentially involves business managers,

program managers and other subject-matter

experts.

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Stage 3 (cont)

The business case includes:

• Strategic alignment criteria

• Definition of the business problem

• Benefits identification and analysis

• Options analysis, do-nothing option,

deferred option and three other options

• Business risk analysis

• Funding summary

• Milestone summary

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Stage 4

I mplement strategies through portfolios,

programs and projects

•I

mplementation answers the question of how

strategies will be realised, given available

resources, equipment, change tolerance and

a host of other factors

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Stage 4 (cont)

These factors include:

1 Completing tasks requires allocation of

resources

2 Authority, responsibility and performance – the organisation’s structure

3 Planning and control systems must be in place

4 Motivating project contributors will be a major factor for achieving project success

5 Prioritising projects

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The Need for an Effective

Portfolio Management System

Problems in implementing include:

• The implementation gap

• The organisation’s politics

• Resource conflicts and multitasking.

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Benefits of Portfolio

Management Systems

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A Portfolio Management System

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• To develop an enabler product, which by its

introduction will increase sales in more

profitable products

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Selection Criteria (cont.)

Checklist models

•The most frequently used method in selecting

projects has been the checklist

•This approach basically uses a list of questions to review potential projects and to determine their

acceptance or rejection

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M ulti-weighted scoring models

•A weighted scoring model typically uses several

weighted selection criteria to evaluate project

proposals

•W eighted scoring models will generally include

qualitative and/or quantitative criteria

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Multi-weighted

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• Pair-wise criterion (Analytic Hierarchy

Process)

• Nominal Group Technique (NGT)

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Applying a Selection Model

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Project Portfolio Management (PPM)

Benefits include:

• Strategic alignment across project portfolios

• Better collaboration across organisational silos

• Improved decision making and accountability

• Streamlined PMO processes and templates

• Improved organisational productivity

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Key Terms

• Benefit Cost Ratio (BCR)

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Key Terms (cont)

• priority system

• priority team/project portfolio office

• Project Management Information Systems

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