This is the seventh article in our agile project portfolio management series. The first article explored the concept of project portfolio management and how it relates to projects that are executed with agile delivery methods. The following articles discussed demand management, categorization, evaluation, funding, and alignment. This article is about portfolio authorization and the role of the Portfolio Owner. Let’s start with the latter.
Portfolio Owner
The Portfolio Owner is responsible for maximizing the value of the portfolio, seeking the right balance of projects and creating a strong link to strategy. How this is done may vary widely across organizations.
The Portfolio Owner is the sole person responsible for managing the Project Backlog and the Portfolio Backlog. Management of these backlogs includes:
– Clearly expressing Backlog items;
– Ordering the items in the Backlogs to the aforementioned goals;
– Ensuring that the Portfolio Backlog is visible, transparent, and clear to all, and shows what the organization will work on next; and,
– Ensuring the organization understands items in the Backlogs to the level needed.
The Portfolio Owner may do the above work, or have the Portfolio Team do it. However, the Portfolio Owner remains accountable.
The Portfolio Owner is one person, not a committee. The Portfolio Owner typically represents the desires of a Portfolio Committee in the Project and Portfolio Backlog, but those wanting to change a Backlog item’s priority must address the Portfolio Owner.
The reason for having a Portfolio Committee is that the decisions that need to be made usually cannot be made by a single person. For the Portfolio Owner and Committee to succeed, the entire organization must respect their decisions.
A Portfolio Owner should understand and monitor changes in the organizational strategy and objectives and be aware of how the portfolio supports them. Both financial and nonfinancial benefits and risks to the organization need to be taken into account. The Portfolio Owner typically does not create organizational strategy and objectives but may participate in the process depending on the specific organization. However, the Portfolio Owner does play a key role in creating the portfolio strategic plan and implementing the strategy by monitoring the execution of initiatives in support of the plan and by communicating progress and results.
Portfolio Owners are responsible for the execution of the portfolio management process as defined in this article series. This includes demand management, categorization, evaluation, funding, alignment, authorization, and monitoring.
Portfolio Owners receive information on portfolio project performance and progress, and they convey to the Portfolio Committee how the Portfolio Backlog items as a whole are aligned with the strategic goals, then provide appropriate recommendations or options for action.
They also ensure that timetables for portfolio management processes are maintained and followed and that the managers/owners of the Portfolio Backlog items (projects, programs, and operations) receive and provide the information required under the portfolio management processes.
The Portfolio Owner will schedule regular (monthly for example) portfolio review meetings. Participants in these meeting are the Portfolio Owner, Portfolio Committee and invited guests (for example the Product Owner of a large initiative to give a detailed update).
Other responsibilities of the Portfolio Owner include:
– Establishing and maintaining a framework (a conceptual and communicable structure of ideas) and methodology for portfolio management within the organization;
– Establishing and maintaining relevant portfolio management processes (strategic management, governance management, communication management, performance management, and risk management);
– Guiding the categorization, evaluation, selection, prioritization, balancing, and termination of Portfolio Backlog items to ensure the alignment with strategic goals and organizational priorities;
– Establishing and maintaining appropriate infrastructure and systems to support portfolio management processes;
– Continuously reviewing, reallocating, reprioritizing, and optimizing the portfolio to ensure ongoing alignment with evolving organizational goals and market opportunities and threats;
– Providing key stakeholders with timely assessment of Portfolio Backlog items selection, prioritization, and performance, as well as early identification of (and intervention in) portfolio-level issues and risks that are impacting performance;
– Measuring and monitoring the value to the organization through portfolio performance metrics and targets, such as benefit ratios, return on investment (ROI), net present value (NPV), payback period (PP), internal rate of return (IRR), and scorecards.
– Meeting legal and regulatory requirements;
– Achieving the information needs of current or future stakeholders;
– Supporting senior-level decision making by ensuring timely and consistent communication to stakeholders on progress, changes, and impact on Portfolio Backlog items;
– Influencing active executive sponsorship engagement for the portfolio and each Portfolio Backlog item as it is initiated;
– Participating in program and project reviews to reflect senior-level support, leadership, and involvement in key decisions.
Portfolio Committee
Portfolio governance is established by a Portfolio Committee to make decisions about investments and priorities for the portfolio and ensures the portfolio management processes are followed to sustain the organization. The Portfolio Committee is made up of one or more individuals with the requisite authority, knowledge, and experience to ensure the alignment of Portfolio Backlog items with organizational strategy. The Portfolio Committee has the authority to evaluate the portfolio performance and to make resourcing, investment, and priority decisions as needed.
Recommendations may include new Portfolio Backlog items, the suspension or change of existing Portfolio Backlog items, and the reallocation of resources among Portfolio Backlog items. The recommendations may be complex with significant organizational constraints especially concerning reallocation of resources.
Portfolio review meetings
Portfolio review meetings are held by the Portfolio Owner and the Portfolio Committee in order to review the current status of the portfolio and to determine if any decisions need to be made regarding the portfolio and its backlog items. These meetings are typically recurring, formal in nature, scheduled around significant portfolio milestones, or triggered by external events such as financial drivers, regulatory changes, and completion of significant portfolio backlog items or deliverables.
The portfolio is updated as a result of decisions made by the Portfolio Committee during their formal or informal portfolio review meetings. For example, when the Portfolio Committee decides that a Portfolio Backlog item needs to be added, terminated, or changed in some fashion, the portfolio is updated. Once the Portfolio Committee makes a decision that changes the current portfolio in some way, the decision is communicated to stakeholders, sponsors, and portfolio backlog item owner (Product Owner, Project Manager or Program Manager). The method for documenting and communicating the governance decisions may be a spreadsheet, a text document, or found within the portfolio management information. The decisions made in the portfolio review meeting are called portfolio authorization.
The danger of slow decision making
Slow decision making, even with a well-defined and robust project portfolio, can dramatically impact performance. On top of slow decisions, organizational inertia can make it much easier to continue projects than to kill them. The larger the project in terms of budget, people, or strategic aspirations, the harder it can be psychological to say that you were wrong, or at least that forecasts weren’t accurate. This problem is particularly acute for external projects.
If the CEO has stood on a podium and listed the praises of a key multimillion-dollar project to customers, partners, suppliers, and the media, then reversing course becomes harder. Ironically, these can be the projects when changing course is most valuable. This is not to say that big projects are any better or worse than smaller projects. The point is that big projects can be harder to kill than small ones, given the reluctance to accept large-scale failures when there is always the hope that things might turn around next year.
When managing your portfolio, pay particular attention to projects that are ongoing, relative to new projects. If anything, you should be more rigorous on existing projects, because you have actual data rather than mere projections on your hand, so you should be able to form a better view on whether continual funding is merited. It shouldn’t be a foregone conclusion. No one enjoys failure. However, spotting failure early can be much less expensive than another year of unjustified optimism, especially when you understand the trade-off you are making in funding your low-performing projects at the expense of the others.
Better management of your portfolio makes the whole portfolio more efficient. The risk of funding an underperforming project is lower if you know you can identify compelling opportunities elsewhere, rather than just replacing an underperforming project with a similarly underperforming one.
So, as stated before, for the Portfolio Owner and Committee to succeed, the entire organization must respect their decisions, and they have to decide quickly and regularly.
Other articles in this series
1. Agile Project Portfolio Management?
2. Agile Project Portfolio Management? Demand Management
3. Agile Project Portfolio Management? How to categorize your project backlog
4. Agile Project Portfolio Management? How to evaluate your portfolio
5. Agile Project Portfolio Management? How to fund your projects
6. Agile Project Portfolio Management? How to align your portfolio
7. Agile Project Portfolio Management? How to authorize your portfolio
8. Agile Project Portfolio Management? How to monitor your portfolio
9. Agile Project Portfolio Management? Conclusion
