Troubled Portfolio, Troubled Projects

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Good portfolio results depend on a collection of integrated projects that align with and support strategic objectives. Obviously, poor project performance will hurt a portfolio's goals. What is not so obvious is that troubled portfolios can cause projects to fail. 

A troubled portfolio environment often results from an organization's misguided knowledge about portfolios. A bunch of projects thrown together doesn't make a portfolio. Through portfolio management, a portfolio should ideally consist of carefully selected, prioritized, monitored and controlled projects, and well-managed resources. If organizations don't have structured portfolios with guidelines and governance, they may, in fact, be creating projects doomed to fail. So the next time you face a troubled project, first assess if the portfolio is the problem. 

A good sign that you have a troubled portfolio is when you are facing troubled projects repeatedly. If more than 30 percent of your projects are troubled or challenged, you probably have a troubled portfolio. Other signs of a troubled portfolio include:

  • Lack or no support by senior management
  • Unclear strategic goals
  • Lack of objective selection and prioritization criteria
  • Poor guidelines and structure
  • Lack of standardized project and portfolio management processes
  • Resource allocation issues 
  • Poor key performance indicators (KPIs)
However, it's not enough to identify a troubled portfolio. You have to know how to fix it. Do you have a troubled portfolio because the projects are troubled, resulting in poor portfolio performance? Or do you have troubled projects because the portfolio is not well-structured, giving birth to projects troubled from the start? 

It would take many posts, maybe even a book, to discuss and analyze the answers to the questions above. However, here are some straightforward first steps for fixing a troubled portfolio. 

An executive should:

  • Define accountability and ownership of the portfolio
  • Provide visibility and transparency of the portfolio's performance
A portfolio manager should:

  • Obtain senior management approval and support for project portfolio management
  • Define processes and guidelines for portfolio management, including steps to approve project investments
  • Clearly outline measurements and KPIs for portfolio monitoring and controlling
To what extent do you think bad portfolio management can doom projects to fail? What first steps do you take when conducting portfolio recovery?

Posted by Mario Trentim on: June 12, 2013 02:38 PM | Permalink

Comments

Bernadine Douglas
You bring up some good points, Mario. For recovery, I would suggest conducting a portfolio alignment exercise. This would consist of asking at a minimum these two important questions. 1) How does this project fit into our company's strategy; and 2) what benefits does the project offer us. These questions can and probably should be presented at the start of initializing the project as well. The responses to the questions help to gain focus for the project and stabilize direction for projects.

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