Reference no: EM132685902

BPP2123 Project Portfolio Management - Muscat College

Portfolio Management Process and Challenges

Case Study:

Portfolio management process

Nowadays, more than ever before, an implementation of Project Portfolio Management function is becoming a business necessity. But what exactly is Project Portfolio Management and why only the right approach to it can bring measurable benefits to an organization?

Introduction
Let us consider how often we encounter a situation of frequent changes in project priorities, one-sided decisions made by senior management regarding the start of a project, regardless of the availability of resources or lack of a clear connection between the implemented projects in the organization and the company's strategy. This is exactly what happens if a Project Portfolio Management does not function properly or has been implemented only partially.
For a company to successfully implement projects, thereby increasing its value, it is necessary:
1. to conscious and properly select projects from among several dozen or hundreds of possible ideas,
2. to maintain an appropriate balance between the number of projects carried out and the company's resources,
3. and finally, to execute each project according to the best-practices and methodology chosen. How to reconcile all this in a world that is rushing with ever-increasing speed? On what basis should we make conscious decisions about discounting some initiatives, thus making it possible to start new ones? And how to avoid fights and force trials, used in the battle for the green light to start the project?

Case study
XY's customers are looking for solutions to help them make the right development decisions in order to accelerate growth and optimally allocate resources. Similar requirements were set by one our customers, a world leader in the production of equipment, systems and comprehensive solutions for the maritime sector, with revenues of up to 5 billion EUR per year, employing approximately 20,000 people in various locations.
The company's strategy is based on the creation of intelligent, energy-efficient, and eco-efficient technologies. The company competes in terms of product innovation and added value for its customers, therefore maintaining its leading position on the global market requires specialist engineering skills and intensive R&D activities (New Product Development) in particular.
In order to meet this challenge, the organization initiates from several dozen to several hundred new projects each year. The effectiveness of decisions in the area of R&D projects portfolio is one of the critical factors of medium and long-term success for the entire organization.

Challenges
As in the case of most companies, the organization described here also operates in limited capital and human resources. Given the large number of ongoing projects and new projects initiated each year, the analysis of the situation and the prioritization of the portfolio was a huge challenge for the client. The original challenges identified before the implementation of Project Portfolio Management were:

1. Lack of a consolidated and up-to-date view of the portfolio, enabling a quick and dynamic analysis of the situation in terms of prioritization and decision making. For example:

• "Which projects are more important, and which are less important?"
• "What kind of EBIT do we expect from a given market segment in the coming years?"
• "How do the individual products contribute to the assumed strategic objectives?"
• "What expenses do we have to incur for a given product family next year?"

2. Difficulties in accessing up-to-date and consistent information and its transparency in the portfolio of projects. For example:

• "Which version of the business case calculation is current?"
• "What were the changes in the assessment of the project compared to the previous revision?"
• "Where are the current files?"

3. General uncertainty regarding the consistency of assumptions and decision criteria used as the basis for all decisions. For example:

• "Is the NPV sufficient to accept the project?"
• "Are the assumptions surely up-to-date?"
• "Isn't the life expectancy of this project too long?"

Attachment:- Project Portfolio Management.rar