The path to Project Portfolio Management: from PMOs to Prioritization

Cost cutting triggered by the 2008 recession has accelerated the evolution of project management in many organizations by shifting their focus from learning how to increase efficiency to learning how to prioritize.

Slalom Consultant Heather Bridges leads change management processes and imparts leadership and organizational knowledge that it is endemic to the change process. She finds that strategic planning walks hand in hand with improvements in project management.

When the 2008 recession hit most Enterprises made substantial cuts in their payrolls. But the recession didn’t freeze technological change or reduce competitive pressure. On the contrary, recessionary pressures made it imperative for organizations to retool with new business processes and technologies for the increasing velocity of business.

In the 2008-2009 period most organizations sought to deliver the same number of projects using fewer resources by streamlining processes and improving efficiency. Thus a common complaint we heard in 2009 was “we don’t know how to get more efficient!” To improve efficiency many organizations formed or revamped internal Project Management Organizations (“PMOs”), pooling project managers, business analysts, and functional analysts across projects organization-wide. Where these resources previously had been siloed within functional areas, PMOs enabled a fixed number of resources to handle more projects than before.

In the 2009-2010 period, however, many organizations discovered that the increased efficiency delivered by their PMOs still couldn’t close the gap between project resources and demand. The reason for this was typically a little of everything: efficiency gains were not enough to offset resource cuts; urgent opportunities created by economic conditions, such as falling interest rates, mandated new projects; and the combined pressure of competition and technology change made new projects critical just to retain competitive parity.

Thus the common complaint we started to hear in 2010 became “we don’t know how to prioritize.”

Project Portfolio Management (“PPM”) is the process by which resources are allocated to projects according to their importance. “Portfolio management” draws its name from the field of finance, although PPM involves allocating project resources to a mix of projects rather than allocating financial resources to a mix of investments. But with a project portfolio resource allocation is sometimes lumpy rather than fluid. The secret to progressing from leveraging PMOs to effective PPM is Read more of this post

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