Portfolio Analysis in Project Online: Engagements Edition

I started writing about the mechanics of the portfolio analysis module of Microsoft Project Server back in 2010-2011 with Microsoft Project Server 2010.  That resulted in this somewhat comprehensive (at the time) white paper that’s probably due for a couple of minor updates.

Over the last several years, I’ve made a couple of attempts to correct some of the errata and omissions in the paper as well as bring it into line with Project Server 2013 and the Project Online cloud based release.  That has resulted in the following posts (organized in chronological order):

  1. Original white paper (See errata in the comments)
  2. Generic Resources and Portfolio Analysis
  3. Resource Plans and Portfolio Analysis (Note: As of writing, Resource Plans are effectively retired in the Online version of the product)
  4. Prioritization with Custom Fields

And now this.  In this episode, I want to get you caught up on how Resource Engagements impact the resource analysis functionality in the Portfolio Analysis module.  Turns out, this is quite easy.  You’ll note in tenants with the features activated, you will now see this option in the setup screen:

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So as you can see, you have the option of selecting whether resource engagements decrement from available capacity.  One important thing to note is that if I have assignments that don’t map to an approved engagement – those assignments may not be part of the portfolio analysis if the second option is not selected.

Hence, if you want portfolio analysis to work the way it “used to” work, you would probably want to select the second option, i.e. don’t require resource managers to approve work before it shows up in the resource analysis calculations.

Portfolio Analysis in Project Online: Engagements Edition

PMOs: You’re Either With Them….Or Against Them

It’s an oft repeated joke about PMOs that the difference between “policy” and “police” is only one letter.  (The other joke being that PMO’s are like potato chips; you can’t have just one.)  Preparing for the webinar we delivered this week on annual planning caused me to reflect on this statement.  Specifically, what is the role of the PMO in a responsive Mode 2 method of annual planning?

We defined this responsive mode of annual planning as having three main characteristics:

  • Segmented Portfolios
  • Program Based Allocations
  • Frequent Rebalancing

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It’s basically moving from a model where annual planning is an exercise in work authorization to where it becomes an exercise in work allocation.  Goals are defined as well as key metrics and KPIs.  It’s then up to the program and asset managers to best define how to get to those goals.

What is the PMO’s role in this?  Once we defer the goals to a specific program manager, the PMO’s job is to support the program manager to achieve these goals.  The fundamental relationship of the PMO to the organization has now shifted.  Instead of being a roadblock in the name of process compliance and risk mitigation, the PMO takes on the role of a support office, providing the analytics, tools, and know how to assist program managers in achieving their goals.

This is the fundamental realignment required to support a responsive annual planning model.

PMOs: You’re Either With Them….Or Against Them

Annual Planning, Mode 1 Management and Circular Logic

Gartner introduced an interesting concept at the PPM Summit in Dallas last May: Mode 1 and Mode 2 planning.  Mode 1 planning, as they described it, is the traditional planning approach to projects.  Each project is scoped out, estimated, a business case is built, and then approved in some sort of an organizational cadence.  When performed annually, this process is called “annual planning.”

The alternative to Mode 1 planning is Mode 2.  Mode 2, as presented, is much more agile and responsive.  As the request is identified, the project is approved, funding and resources allocated, and the project team is off to the races.  The challenge, Gartner presented, is for IT organizations to move from the Mode 1 planning model to Mode 2.  Or rather, it’s to determine when Mode 1 is appropriate and when Mode 2 is appropriate – and then shift back and forth as required by the organization.

We’ve written on that topic in this blog before, specifically here and here.  In that latter post, I theorized that the farther ahead of starting the project that the planning and the resource allocation takes place, the more complex are the systems required to support the planning.  For example, if I have an annual planning process where all resources are planned, funded, and resourced prior to the beginning of the fiscal year, I’ll need a system to support the resource modeling of all projects throughout the fiscal year – and to model the cascading impacts of delays in one project.

Knowing that planning so far ahead requires increased management complexity, why do we plan so far ahead?

That’s when it hit me.  We plan so far ahead, because we believe that we need to take a Mode 1 approach to project management.  Why do we take a Mode 1 approach to project management?  Because we plan so far ahead, we need to take a Mode 1 approach to support the annual plan.  It’s a tautology.

How do we break that logical loop?   How do we short circuit the time spent between planning/approvals and actually kicking off the project, i.e. moving to a rolling wave portfolio planning approach?  We switch to Mode 2 planning, i.e. moving towards an asset or program based allocation model.

Of course, that may not work in all cases.  There are certainly some projects that require extensive approvals and a Mode 1 planning approach.  Off of the top of my head, I might identify the following criteria for these projects:

  • The project will have significant impact on the future operational expenses of the organization, i.e. a large capital project to build a new facility or an IT project that will deploy a new application into production.
  • The project belongs to the category of infrastructure and ongoing maintenance that may be easily planned for far in advance, i.e. the retirement of a given application, the upgrade or replacement of equipment within a specific facility.
  • The project is so large and significant that it requires a major reshuffling of the overall funding allocations within the organization, i.e. we need to divert significant resources to this project.

That’s my criteria for when annual planning makes sense at a specific project level.  What are yours?

Annual Planning, Mode 1 Management and Circular Logic

Project Impermanence: The Sign of an Infant PMO

Object permanence is that step in infant development where the infant comes to realize that an object returning to the field of vision may actually be the same object that left several minutes ago, i.e. leaving the room is no longer an existential threat.  (Think a variation of the Schrodinger’s Cat experiment, but hypoallergenic and with less moving parts.)

I was chatting with a friend/new parent/portfolio manager the other day, and we started joking around that PMOs tend to go through the same development milestones as newborn infants.  In fact, his particular PMO was struggling with the concept of project permanence.  The problem was that the PMO would often accept a certain number of projects for execution as part of the annual planning process and then simply ignore anything not approved.  This meant that as funds freed up throughout the year, they would be made available only to the latest and newest requests – the shiny objects that captured the organizational attention at the moment.

More significantly perhaps, when it came time to start planning for next year, the list of projects that didn’t make the cut this year was no longer available and it was up to the business to come up with a new list.  In essence, these become all net new projects.

Instead of this simplistic approach, we see our clients keeping a running backlog of projects that reprioritized on a regular cadence.  As funds are made available (say, through a monthly reforecasting mechanism), they may be allocated to the next project in the queue.  Similarly, when it comes to planning for the next planning period, we already have a list of projects that are in the queue.

From an epistemological standpoint, we can periodically review this growing backlog to spot the emerging trends and categories that we should be focusing on as an organization.  If we see a trend of projects emerging around improving the customer experience, we can call that out as a high level portfolio category and then actually sit down to plot out the capabilities and projects that really would be required to meet those needs. (Building a sensing mechanism)

We find that project permanence may also be fostered through simply moving planning to a higher level, i.e. moving to an asset based planning model (or here for a discussion of the push vs. pull model).  In this scenario, planning is performed at the asset level.  In the case of IT, where an application is considered an asset, I can create a long term roadmap of the projects I will need to support an application – as I know every year will have a project to enhance it and then I’ll need to run an upgrade project in 5 years.  In this case, we don’t treat each year as an exercise in net new planning, but instead already have a good understanding of what our cost base looks like several years in the future.

In the end, what does this mean for the PMO?  This means the PMO is no longer simply focused on planning for this year, but setting up a framework to support decision making, planning and project approvals over a multi-year planning horizon.  That then supports the fundamental underpinning of portfolio analytics, i.e. that the PMO can assist in assessing the long term cost implications of any project that gets chartered today.  More importantly, that repositions the PMO from supporting the simple transactional process of an annual planning process (mapping resource capacity to demand, keeping everything in one place, etc.) to functioning as a trusted advisor on the implications of chartering a specific project.

Project Impermanence: The Sign of an Infant PMO

[Webinar] Annual Planning Got You Down? Make it Fun Again

Join us for a webinar (presented by yours truly):

  • Learn how portfolio analytics, coupled with appropriate portfolio segmentation and business case development, can be successfully enabled using Microsoft’s suite of PPM tools.
  • See real usage models across Project Online, Office 365, and Power BI.

http://www.umt.com/events/webinar-annual-planning/

[Webinar] Annual Planning Got You Down? Make it Fun Again

Building the Business Case for Optimized Portfolios

That summer trip to Kyrgyzstan is but a distant memory.  The kids are back in school.  The Houston temperatures are dipping into the merely tolerable range, and the swimming pool is no longer unpleasantly warm.  That can only mean one thing.  Fall is upon us.  And with Fall, comes its evil twin sister, annual planning season.  For many of our clients, the dreaded ritual of annual planning rolls around and starts to heat up precisely when the outside temperatures are cooling off.

This year, with oil prices circling the drain, many of our regional clients are wrestling with the question of how to optimize the annual portfolio of projects, i.e. how to build the business case to support centralized prioritization vs. the traditional suboptimized prioritization by business unit – topics we’ve visited on this blog here and here. That got me to thinking, can we leverage some of the tools in our PMO toolbox to quantify the impact of changing how we perform annual planning?

This post represents a bit of a thought experiment then.  I’ll leverage the AHP process built into Microsoft’s PPM technology platform to illustrate a method of quantifying the difference between siloed and shared planning.  (And if you really want to know how the mechanism works, feel free to check out our white paper from a couple of years ago.)

The first step is to define the different portfolios.  In this case, I’ll repurpose some demo environment data to generate four specific scenarios…

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Each of these scenarios has its own strategic drivers that have been decided by the BU leadership.

What we’ll do is to first go through an exercise where each Business Unit prioritizes its own projects within a preassigned budget.  Then, we’ll throw all of the projects back in the hopper and prioritize everything against the same organizational priorities.

Doing so, yields the following projects for BU A, with a budget of $10MM….

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And then again, with a different selection of projects for BU B (also $10MM):

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And finally, for BU C (also $10MM):

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Hence, for a total of $30MM, allocated evenly across 3 business units, we estimate that we’ll plan for a total of 41 distinct projects.

Now, let’s perform the same exercise, but across all of the business units, i.e. using a central pool of $30MM, where I am ignoring that projects are coming from different business units.

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Note that this calculates 37 projects for a total of 35% of the total potential strategic value.  I’ll now run the same simulation, but force in the projects that each of the business units selected as part of their individual portfolios.

See how I ended up with more projects (41), but my strategic value dropped to 16%?

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Basic conclusion, if I pick projects within each silo, and then aggregate the budget, I ended up losing 19% of the overall strategic value from the overall perspective of the organization.

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Again, I acknowledge that this is a bit of an artificial thought experience.  I also acknowledge that there are totally valid reasons to keep budgeting separate by business unit.  That being said, if you’re looking to make a business case for improving your annual planning processes – and at least attempting to include the perspective of the overall organization, then this may be a valid approach.

Still interested in this topic?  Go ahead and register for our upcoming Webinar on Making Annual Planning Fun AgainSeptember 24, 2015 @ 11:30 PST.

Building the Business Case for Optimized Portfolios

Would You Wear a Winter Coat on a Hot Day?

As the Houston summer heats up and the mosquitoes launch their annual siege, the concept of summer safety comes up.  We lecture the kids on what they should wear, and how they should slather themselves with repellent and sun screen.  One thing we don’t do however, is break out their winter coats and warm mittens.

Why?  Because it’s just not appropriate.  (And I guess it could potentially kill them).

The trick is to dress appropriately to the environment you’re in.  The same is true of the PMOs that we regularly talk to.  In this time of plummeting oil prices, cost cutting, and workforce layoffs, how receptive will executive management be to the tired old trope of “We either need to get more resources to meet your requests…..or you have to stop asking us for so much stuff.”

The traditional resource management discussion will fall on deaf ears in this downturn.  In this environment, the discussion is not how to do less – but how to do more with the same or less resources.  How do we strategically cut resources but ensure the important stuff still gets done?

That’s the business case for an PMO when times are tough….and in reality, when times are doing well.

Would You Wear a Winter Coat on a Hot Day?