In good times and bad, we tend to take on far too much. This then inevitably leads to an overload of the resources used, stress, delays in implementation and correspondingly higher costs. It is actually easy to understand that we should set clear priorities. But why do we then only do this in the very few cases? This is not as obvious during operational hectic, when new activities are constantly being added and deadlines are postponed, then this seems acceptable at first glance and a normal consequence of the constant flow of orders. Only when the system is overstrained to process the orders properly, when people and machines are overloaded, then the managers take a closer look at the situation. Or if the delay in projects gets out of hand and customers complain in rows, then action is taken. Now, in times of the corona crisis, when we suddenly must switch from “business-as-usual” to a crisis mode, then it quickly becomes clear to everyone that we have to prioritize activities, find a new focus if necessary. This is where (project) portfolio management can help.
What is (project) portfolio management (PFM) all about? On the one hand, it ensures that all activities are aligned with the strategy and, consequently, that only those activities are launched that contribute to the strategy. On the other hand, PFM is also used to prioritize activities based on resource availability (scarce resources can be finances, materials, employees, etc.) and criteria that are oriented towards strategic as well as dynamically changing circumstances. Strategically, these can be activities for particularly important markets, customers and projects. In operational terms, prioritization is based on the need to maintain liquidity, for example. All this must be decided, communicated and then consistently applied. Otherwise we will lapse into “operational hectic” or spontaneous gut decisions.
In the Handbook of Project Portfolio Management, all state-of-the-art approaches are illustrated with practical examples. The aim is to constantly monitor the continuous flow of activities and to systematically evaluate, select and prioritize them. For this purpose, the activities should be described in a standardised form. In the first stage, it is checked whether these are mandatory activities, e.g. due to a legal regulation. Here, one will probably have few options and must implement them. In the next stage, an assessment is made using predefined criteria of importance, e.g. how much does the project contribute to the strategic objectives or what added value and benefit does it provide? Many of the activities will certainly fail at this hurdle or end up further down the list. A subsequent check will see whether the resources are available to carry out the activity. If necessary, activities will first land on the “parking lot” before they can be threaded into the current portfolio of activities. In my opinion, the last stage of the check is even the most important one, because it allows you to react flexibly, which is especially important during these times. Once you’ve started a project, it’s very difficult to redirect resources to another project, to cancel it or put it on hold.
Whether you use a Kanban board for this process, an appropriate software or just a simple whiteboard… this doesn´t really matter. It´s ultimately about decisions. For this flow of decisions, it is important to have the right decision maker or the right group of decision makers together, to go through the above-mentioned process regularly and to communicate the decisions with the corresponding criteria transparently. In addition, a continuous learning process also helps to constantly adapt and optimise this process. It is useful not to plan for all resources, but to deliberately plan for reserves so that you can react to unforeseeable events later.
Author: Reinhard Wagner, CEO of Tiba Managementberatung