This is the first in a series of articles on agile project portfolio management. In this article, we explore the concept of project portfolio management and how it relates to projects that are executed with agile delivery methods like Scrum, Kanban, LeSS etc.
According to the Project Management Institute (PMI) project portfolio management (PPM) is the management of a collection of projects and programs in which a company invests to implement its strategy in order to maximize value.
So in order to use this as a start for our exploration, we have to define project, program, and portfolio as well. Here PMI uses the following definitions:
A project is a temporary endeavor undertaken to create a unique product, service, or result.
A program is a group of related projects managed in a coordinated way to obtain benefits and control not available for managing them individually. Programs may include elements of related work outside the scope of discrete projects in the program.
A portfolio is a collection of projects, programs and other work that is grouped together to facilitate the effective management of that work to meet strategic business objectives. The projects or programs of the portfolio may not necessarily be interdependent or directly related.
Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat. – Sun Tzu, the great Chinese general, The Art of War c. 500 B.C.
Personally, I really like the definition of Cooper et al in «Portfolio Management for new products» (2006). They define project portfolio management as a dynamic process, whereby a business’s list of active projects is constantly updated and revised. In this process, new projects are evaluated, selected and prioritized; existing projects may be accelerated, killed or de-prioritized; and resources are allocated and reallocated to the active projects.
They state that portfolio management is used to select a portfolio of projects to achieve the following goals:
– Maximize the value of the portfolio;
– Seek the right balance of projects, thus achieving a balanced portfolio;
– Create a strong link to strategy, thus: the need to build strategy into the portfolio;
Is Agile PPM any different from traditional PPM?
When we define agile PPM as managing a portfolio of projects that are delivered/managed with an agile method the answer would be no. It does not matter how you manage your project, it is still a project, i.e. a temporary endeavor undertaken to create a unique product, service, or result. Hence all PMI definitions hold up. The same for the definitions of Cooper et al.
What we do have to ask ourselves is what we do with the outcome of such an agile project. Many times the outcome is actually a new product, and a product may need an initial ramp-up to get it started, but it does not end after it was built. There is a maintenance and upkeep element to products that often get ignored. I see many projects deliver substandard products and then leave businesses in a world of pain.
Is there a distinction between a portfolio of projects delivered with agile methods and a portfolio delivered with traditional methods (Waterfall, SDLC)? Personally, I do not think so. A company-wide PPM should accommodate both kinds of delivery types since both have proven their value under certain conditions. So I will work with the assumption that a project portfolio will contain both kinds of projects.
So the difference between agile PPM and PPM (if there is one) can be only in how we manage a project portfolio.
Project Portfolio Management Process
PPM according to PMI basically exists out of the following nine processes.
1. Identification: this process creates an up-to-date list, with sufficient information, of ongoing and new components that will be managed.
2. Categorization: this process categorizes identified components into relevant business groups to which common decision filters can be applied for evaluation, selection, prioritization, and balancing.
3. Evaluation: this process identifies pertinent evaluation factors and then evaluates components.
4. Selection: evaluated components are formally rejected or selected for further consideration based primarily on their value.
5. Prioritization: this process ranks components within each strategic or funding category according to established criteria.
6. Portfolio Balancing: this process creates the portfolio component mix with the greatest potential to collectively support the organization’s strategic initiatives and achieve strategic objectives.
7. Authorization: this process formally communicates portfolio-balancing decisions and formally allocates financial and people resources required for selected components.
8. Portfolio Review and Reporting: this process gathers performance indicators, provides periodic reporting on them, and reviews the portfolio periodically for continued alignment.
9. Strategic Change: this process enables the portfolio management process to respond to changes in strategy. Activities here are as many and varied as the organizations using portfolio management.
In the following articles, I will discuss each of them and will analyze if we could use the same, a similar or a different process for a portfolio containing projects that are delivered with agile methods without hindering the benefits of agile methods. The second thing I will look at in these articles is if we could make the overall process in such a way that it is (more) aligned with the agile values.
The next article will be about demand management and will cover the first step of the process.
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
