Bringing LOE Activity into Portfolio Management

In an article at Projects@Work, Tom Mochal discusses how enhancement work not directly related to a project should be added to the managed portfolio. This way, the business can ensure that the dollars are being spent in the most effective way on these non-project activities.

I agree with what Tom is saying. A point I'd like to add is that value judgment is in the eye of the beholder, and incentives are different for a portfolio manager than they are for a developer or department. The "enhancement" being worked on by a few individuals may take a lot of effort, but is the work being subjected to cost-benefit analysis beforehand? If it is not being managed with the rest of the portfolio, maybe not.

For instance, a developer may have a great idea about migrating an internal support application from one platform to another. There are many benefits of doing so, it will be faster and he can also make it look nicer while he's at it.

But what if it works great just the way it is? What if the changes will create dissatisfaction for the users within the company? What if the business processes already have slack time for the application because the user is doing something else, and the increased speed will not result in overall improvement because it's not the bottleneck in the first place?

These are questions a portfolio manager may want answered. A department head or manager may be more concerned about holding on to their budget than doing ROI analysis with all of these support activities. It's all about incentives. The department head may be able to say we "doubled the application speed" and that looks great on a quarterly report.

Bringing some of these decisions into a portfolio with defined projects would certainly help ensure that the incentives of the decision-maker is more in line with the incentives of the business as a whole.





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Point 1 - Deming in Project Management

Commitment from the top to continuous improvement as a way of life

Deming’s first point is an important one. There needs to be commitment from the top to make continuous improvement a priority. To do it right, most firms would probably implement a Project Management Office from which continuous improvement activities can be based, one that has dominion over methodology and training at a minimum. The PMO should implement systems to ensure best practices and lessons learned are gathered and implemented. Sharing them will not be enough; they must actively be incorporated into the methodology.

Fully embracing this point should also include a strategic basis within the PMO, or even a separate portfolio project management group. Don J. Wessels, PMP does a great job of laying out the vision of a truly strategic focus on projects in the 2007 ISSIG Review, Volume XI No. 1. The article is titled “The Strategic Role of Project Management” and is a wonderfully insightful read. In this work, he references the PMI’s Standard for Portfolio Management by saying, “While project management and program management have traditionally focused on “doing work right,” portfolio management is concerned with “doing the right work.” It is like allocative efficiency versus productive efficiency in economics. As I read this article and thought about the concepts more and more, I realized it is very true that much of project management today is very tactical and without strategic basis. Embracing Deming’s first point requires viewing continuous improvement from the perspective of the whole system.

In a large company like the one that I work for, various groups have their own versions of a PMO. While this may not be optimal, it does allow for groups with a specific subject area focus to tailor their approaches. This is fine, as long as the group or individual overseeing projects has made a long-term commitment to continuous improvement, and they are committed to ensuring projects are in alignment with organizational goals. So often, the alignment comes at a departmental level at best, and can actually be detrimental when looking at the whole organization. A long-term thought process is required. The leader of the project group must have the ability to not let fire fighting overpower the improvement strategy.

(Back to Deming's 14 Points)