Michael Tvermoes: Myths about project portfolio management

There are many myths associated with project portfolio management. Here, Michael Tvermoes shares his take on five of them and reveals whether they hold true in reality.

Watch the video on YouTube here
https://www.youtube.com/embed/__wlXePIOdo

Myth 1:

“Implementing an IT portfolio management system is a good lever for introducing project portfolio management”

IT portfolio management systems work well for creating an overview of project portfolios and generating management information. BUT successful use of project portfolio management requires robustness in other key parts of the organisation’s structure. Without an understanding of the organisation’s fundamental need for project governance, robust project and portfolio processes, and a reasonable level of competence among decision-makers, such implementations often miss the mark.

There are at least two reasons for this:

If we start from the system’s many immediately attractive capabilities, decision-makers and those responsible for project management are often tempted to request far too advanced overview and management information. Ultimately, this creates additional work for project managers without materially improving the basis for decision-making.
A fundamental prerequisite for many IT portfolio systems is consistent use of the associated project management tools. This requires a high level of discipline and a uniform level of competence, which is rarely present in the organisation.
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Therefore, it is better to start far too simple than slightly too complex! Before the IT portfolio management system is selected and configured, it is important to get clarity on:

Which problems portfolio governance is intended to solve, and thus the need to digitise these governance processes.
Which processes and level of competencies are thereby brought into play. At a minimum, these processes and competencies must be built in parallel with the system implementation—and preferably a little beforehand.

Myth 2:

“Project portfolio management is primarily about getting ‘the right’ projects delivered efficiently”

Project portfolio management is, of course, about delivering “the right” projects safely. BUT it is predominantly about ensuring the right level of project load and balancing projects and resources in relation to the projects’ strategic importance. If the sole objective is to deliver “the most important” projects efficiently, then for most organisations it would, to a large extent, be smarter to allocate resources and the most capable employees to these “must win” projects. The resources (money and time) that would be spent on designing, implementing, and sustaining portfolio management could instead be used to free up the right employees, hire the best project managers, and give them easy access to decision-makers at the highest level.

Myth 3:

“The executive management and leadership can readily understand, interpret, and make decisions based on overview dashboards”

The difference between operational management decisions and project portfolio management decisions is that, on the operational side, there is often one or a few correct solutions to choose from, based on a generally secure understanding of both the problem and the consequences of one choice or another. When it comes to portfolio management decisions, decision-makers must choose between many alternatives that typically have considerable consequences. However, this must be done on the basis of a far more uncertain decision foundation. In most cases, leadership teams and executive management must learn and practise participating in this type of decision-making process, where there is a strong need to focus on learning from unfortunate decisions as well as good ones, rather than focusing on right and wrong decisions.

Myth 4:

“Portfolio management and the resulting transparency dismantle political battles”

Project portfolio management brings transparency around resources and decision-making processes, which moves some of the political manoeuvring from behind the scenes into the open. However, it is naive to believe that this in itself dismantles such manoeuvring. The battles are simply played out in a new arena, and the players quickly learn the new rules of the game. If a leadership team or organisation wants to put an end to political battles, it should instead address the players and start there.

Myth 5:

“A good portfolio management system leads to good decisions”

Good decisions come with discipline in using the system, calibration of reporting, development of project managers’ competencies to produce high-quality decision material, and decision-makers’ understanding of their own role and ability to interpret management information.

It is important to create alignment among the involved managers and employees regarding the meaning and use of the management information produced and the resulting feedback to the projects. In this context, it is essential that the implementation and sustainment of project portfolio management is used as an opportunity to continuously learn about, strengthen the organisation’s capabilities in, and adjust decision-making processes related to the delivery of projects/development initiatives. In this way, the organisation must learn to make good decisions and sustain good practice.