1) An effective Project Portfolio does not just happen. There is a process that must be developed and then followed to help ensure a successful portfolio. Let's start this discussion by examining what decisions must be made before a project is actually looked at or considered. So where do you start in the preprocess stage?
2) Define overhead costs in relation to a project, and explain why it is important to the project manager.
3) The process that is used for budgeting is as important as the source of the details of the cost estimates. There are two fundamental processes: Top Down performed by upper management, and Bottom Up performed by representatives of the project team that will be doing the work.
Describe the two processes. Which do you favor and why?
1) An effective Project Portfolio does not just happen. There is a process that must be developed and then followed to help ensure a successful portfolio. Let's start this discussion by examining what decisions must be made before a project is actually looked at or considered. So where do you start in the pre-process stage?
"Project portfolio selection is the periodic activity involved in selecting a portfolio, from available project proposals and projects currently underway, that meets the organization's stated objectives in a desirable manner without exceeding available resources or violating other constraints" (Archer & Ghasemzadeh, 1999, p. 207). Selecting the right project portfolio can often lead to direct success or failure of an organization depending on the financial gains or expenditures required for the projects themselves. The following are a list of steps to take and factors to analyze prior to selecting the right portfolio (taken from Archer & Ghasemzadeh, 1999)
• Determine whether or not the projects within the portfolio all align with the company's strategic goals (short-term and long-term) - In this step, it is recommended that a grouping of individuals from many different departments should look at the same projects to determine which align the most with each of their goals as well as the company's. The notion is that all work being done in each department is also in line with the strategic goals of the organization.
• Determine the Economic Return (Return on Investment) of the project - The company's bottom line is always the most important consideration for any project portfolio. Once it has been determined that ...
The effective project portfolio is examined. The decision to be made by a project is given.
Developing a project portfolio management process
The case study will place the student in the role of a senior manager in charge of one of your company's Strategic Business Units (SBU). Your first task in this new position is to develop a project portfolio management process and then use this process to select projects for your SBUs portfolio. The case study will involve the application of the tools and techniques of multi-project/program management and will deal with the analysis and establishment of project management systems based on the structure of the project.
The senior management of your company has already made the strategic decisions to allocate annual funding to each of the Strategic Business Units (SBU) within the company. You have been hired to manage one of the companies SBUs.
Your new company is a mid cap company with revenues of approximately $350 million dollars a year. This company, like many others, is struggling in today's economy. It realizes in order to survive it needs to both expand and control costs at the same time. You are new to this industry. This company's vision is to become the "go to" support or the "provider of choice" for the cruise ship industry throughout the world.
This company currently is in the travel and hotel support industry. As such, you supply support services to the travel and hotel industry such as linen services to cruise ships and major hotel chains in the Southeastern United States. Most of your new company's revenues are derived for the cruise ship industry versus the hotel industry. This company is home based in Tampa, Florida, as most of your business is in that geographic area.
You are in charge of the Operations SBU and responsible for the management of a product portfolio in this strategic business unit. The Operations SBU is the SBU that provides all the company's services to its clients. There are a number of projects already in progress, but there has not been a good portfolio management process in place.
The parent company has set the following strategic goals for the entire company:
Expansion goals are to grow the company 10% per year, specifically to include the following:
Expand into new markets in Alaska and Europe
Expand services provided to current customers
Increase revenues by 10%
Increase customer satisfaction by 15%
Cost Control goals include the following
Reduce operating costs by 10%
Reduce overhead and warehousing costs by 5%