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Topic: Overall Project Portfolio Success
Order Description
Write an analysis of the potential impact of the early and front-end part of the PPM process on ‘overall project portfolio success’. For your analysis, assume that this part of the process includes ‘ideation portfolio management’ (Heising, 2012) and the ‘pre-screening’ stage in Archer and Ghasemzadeh’s (1999) framework for project portfolio selection.
Key Concept
Programme/p ortfolio f ormulation
The focus of this week is programme/portfolio formulation. You will consider two key
issues involved in programme/portfolio formulation: the need to ensure a
programme/portfolio is set up in the right way and the need to ensure the correct
projects are selected and appropriately prioritised. In the next two sections you consider
each of these issues in turn. You end by analysing aspects relating to success criteria;
as, in order to effectively formulate and manage programmes and portfolios,  you need a
clear idea of how their success will be measured by the key stakeholders.
Strategic alignment and programme formulation
Regardless of the actual details of the process adopted for formulation of a programme,
organisations should recognise the overall premise of a successful programme.
Organisations need to ensure strong alignment between the implementation of the high-level strategy of the organisation and the forming of the programme. This issue of
alignment is analysed in a study by Ritson ,  Johansen and Osborne (2011). The authors
developed a theoretical model and set of hypotheses that proposed a number of
interrelationships between the successful delivery of a programme and six core
concepts: 1) program governance; 2) systems, sub-systems and processes; 3) learning
and innovation; 4) internal and external environments; 5) continuous alignment; and 6)
corporate strategy. This model is shown in diagrammatic form in Figure 1, page 22. In
their explanation of the model, the authors emphasise the multi -dimensional nature of
‘success ’,  which can be viewed from a number of perspectives (see ‘Theoretical
background and model ’ section pp.22- 25).
Ritson ,  Johansen and Osborne use a mixed-method research strategy to investigate the
important of alignment, with the main element of their approach being a survey (n=110).
Data collected were analyzed using structured equation  modelling (SEM), and from this
analysis a validated model was generated ( Figure 4, p.32). In terms of the findings of
their research, the authors conclude that programmes need to be formulated in their
design and management as ‘complex, adaptive systems’ (p.33). Such systems have
both deliberate (planned ) and emergent strategies and ‘program design and structure
[is]  …  a dynamic process that [needs] to be continually assessed from program
formulation through to programme close’ (p.33).
This issue of structural alignment is also pertinent in the context of formulating project
portfolios—see the paper by Kaiser, El Arbi and Ahlemann (2014) in the Optional
Resources for the week. Here, the authors analyse three cases from the German
construction industry and conclude that having a strong structural alignment is an
antecedent to the successful formulation of a portfolio.
The project portfolio formulation process
Just as organisations need to ensure that programmes are aligned with the wider
organisational environment at the strategic level, they need to be cognis ant of the
interrelated processes at the organisational level when formulating a portfolio. These
processes have been identified by the Enterprise Portfolio Management Council
(EPMC) as follows:
1. Strategic planning process
2. Program and  project management processes
3. Tac tical planning processes (budgets and schedules)
4. Business unit alignment  and  interface process
5. Policies  and  procedures process
6. Acquisitions, mergers  and  divestitures process
7. Long-range business planning process
(Enterprise Portfolio Management Council , 2009, p.106 )
The authors  at the EPMC document a 12-step process for project portfolio management
(PPM) where 8 of the 12 steps relate to the forming of the portfolio (see  pp.106-114).
The two fundamental principles that guide the PPM process, as articulated o n p.105
Principle 1: PPM works with other business processes and disciplines—it doesn’t
replace them.
Principle 2: PPM provides the forum, discipline and decision-criteria for
effectively managing a portfolio of projects.
Key words in Principle 2 are ‘forum’ ,  ‘discipline’  and  ‘decision-criteria’  and they highlight
the fact that successful PPM formulation involves addressing both ‘hard’ and  ‘soft’
issues. At the harder end of the issue spectrum is the need to have a formalis ed forum
whereby potential projects are analysed in a disciplined  way. Characteristics of the
process typically include the establishment of stop/go/no-go gates and use of using
clear, consistent and transparent  decision-criteria.  Organisations then produce
management deliverables, such as a written Project Proposal, Business Case and
Project Management Plan for the individual projects, at appropriate points in the
process. At the softer end of the spectrum is the need to ensure people within the
organisation adhere to the established processes. Such adherence is critical for the
successful implementation of the PPM process. People in the organisation should not
try to circumvent processes in order to get their own ‘ pet’ projects selected or prioritis ed
because a discipline is only useful if individuals follow it. In order to implement PPM
effectively, organisations must have the right culture in place.
In broad terms, approaches to portfolio formulation can be classed as top- down,
bottom-up (or a mix of the two). Rayner  and  Reiss (2013) provide a brief overview of
each of these three different approaches. The authors conclude that a top- down
approach is typically characteristic of a mature organisation and a bottom-up approach
of one less mature (a mix of the two approaches often being characteristic of an
organisation in transition from low to high maturity). Rayner and  Reiss regard each
approach as having merit, though often, especially with bottom-up approaches, they
have limitations. For example, for a top- down ap proach to be effective, the organisation
must have a clear and meaningful strategy that can be translated into programmes and
projects. Effective bottom-up approaches are compromised by less than perfect
information being presented by individual project sponsors about the likely costs,
timescales and risks. They also introduce a fourth approach which they class as
‘Anarchy’; here, ‘anyone in the organization is permitted or even encouraged to develop
ideas, gather support and run their own projects’ . They g ive an example of an
organisation that seems to thrive in such an environment but end by stating the general
belief in the programme management community that in most cases ‘almost anything
else is better’ (p.54).
Project portfolio selection and prioritisation
Decision-criteria templates for assessing the potential value of a project to the
organisation and, hence, deciding whether to add it to the portfolio, can have varying
degrees of detail and complexity. A simple template is provided by the EPMC (2009) on
page 109 ( Figure 8.3). This template is a weighted scoring model that assesses projects
in terms of their ‘ value’, contribution to ‘strategy’  and  ‘balance’ in terms of planned
benefits versus risk versus available resources (required). Regardless of the level of
complexity and detail of the template, an important point to note is the need to ensure
that whatever model is used, it is done so consistently and uniformly, so that projects
are considered on an equal footing.
The early and front-end part of the PPM process whereby ideas are taken forward and
end up as Project Proposals has been conceptualized as ‘ ideation  portfolio
management ’ (Heising, 2012). Heising makes the point that much of the emphasis in
PPM is on allocating scarce resources to the ideas that have the most promise (as per
the decision-criteria) and then prioritizing those ideas according to the strategic
objectives. What is missing though, according to the author, is an equal emphasis on
the fuelling of the project pipeline with a steady flow of the right ideas: the  ideation
element of portfolio management. Success is sustainable over time by maintaining the
flow through the pipeline.
Heising’s paper outlines a conceptual research framework that proposes a series of
concepts, constructs and relationships between project portfolio success, front- end
success and ideation portfolio management (see Figure 1, p.592). He validates this
framework by conducting a series of practitioner interviews using the empirical case of
new product development. According to the author, ideation portfolio management is
constructed from  five  dimensions:
1. Strategic positioning of ideation
2. Formalization/institutionalization of ideation
3. Integration mechanisms
4. Stakeholder management
5. Ideation  culture
(Heising, 2012, pp.558- 591 )
As shown in Figure 1 of the paper, effective ideation portfolio management leads to
‘front end success’, which is made up of ‘ideation effectiveness’,  ‘front end efficiency’
and  ‘degree of innovation’; which in turn is an antecedent of ‘overall project portfolio
success’, a construct comprised of ‘economic success’,  ‘strategic fit’ ,  ‘portfolio balance’
and  ‘preparing for the future’.
An overall framework for project portfolio selection is provided by Archer and
Ghasemzadeh in a paper from 1999. The authors provide a simplified framework by
decomposing the selection process into a number of discrete stages starting with
strategic development consideration through to successful completion. Five major
stages are identified (see Figure 1, ‘Framework for Project Portfolio Selection’, p.211),
which are: 1) Pre-Screening, 2) Individual Project Analysis, 3) Screening, 4) Optimal
Portfolio Selection, and  5) Portfolio Adjustment. If you study Figure 1, you will note that
these  five  stages are initiated by a stage labelled ‘Project Proposals’, which relates to
the concept of ideation, discussed above; as it is through ideation portfolio management
that the pipeline of projects feeds into the project portfolio selection process.
Archer and  Ghasemzadeh (1999) further provide a useful summary of the activities and
supporting tools at the different stages of the process. The authors make the point that
such a framework can be integrated into a decision support system (DSS), whereby
computerised modelling and databases can be used to support project portfolio
selection. However, they also emphasise that such systems will typically provide only
partial support. The authors advise that individuals responsible for selecting and
prioritising  projects should have the flexibility to choose the techniques and models at
the different stages that those individuals deem the most appropriate and useful.
Programme success criteria
As with project success, there is widespread agreement amongst theorists that
programme success is a multi-dimensional construct. Shao,  Müller and Turner (2012)
identify  six dimensions to programme success: 1) ‘program efficiency’,  2) ‘impact on
program team’,  3) ‘stakeholder satisfaction ’,  4) ‘business success’,  5) ‘preparation for
the future’ and 6) ‘social effects’. In their research paper, the authors collected data
relating to each of these dimensions in order to develop a measurement construct for
program success, which includes measurement dimensions and scales. A survey was
undertaken which resulted in 172 responses from program managers working in the
industry areas of engineering, information and communication, and organisational
First, Shao ,  Müller and Turner (2012) used exploratory factor analysis (EFA) to identify
the latent structures of programme success. They then analysed the impact of
contextual variables, including industry area, program size, program nature, and
program type using analysis of variance. In addition, they completed a correlati on
analysis to explore the associations between programme success and context
measures. The EFA produced four factors that the authors labelled as shown in T able 1
Factor  Focus of measurement
Delivery capability  •  Successfully delivering what is supposed
to be delivered
•  Stakeholders are satisfied with the
•  Expected business results are achieved
© 2014 Laureate Education, Inc.  Page 6  of 7
Organis ational capability  •  Contribution to the improvement of
organi s ational capacity ( both ‘ hard”,  i.e.
efficiency of processes and  ‘ soft ’, i. e.
influencing organi s ational culture)
Marketing capability  •  Interconnection between programmes and
organi s ational strategies  ( marketing
Innovative capability  •  New technologies developed
•  Preparation for future opportunities
Table 1: Underlying structures of programme success (based upon  Shao, Müller
and Turner,  2012)
The results of the ANOVA suggested that the measurement construct of four factors
was stable for the different programme contexts. Finally, a significant finding from the
correlation analysis was that delivery capability is shown to be the most important of the
four factors. The authors conclude that this finding reflects a key difference between
managing a programme compared to managing a portfolio. Whilst both involve the
management of multiple projects, the main focus of portfolio management is on
optimi sing the outcomes and resource allocation of the individual projects; whilst for
programme management the focus is on delivering planned benefits or strategic
(Note:  The complete references used in the Key Concept Overview can be found in this
week’s Learning Resources.)