BI and the Portfolio: Improving Annual Planning

Andy Jordan is President of Roffensian Consulting S.A., a Roatan, Honduras-based management consulting firm with a comprehensive project management practice. Andy always appreciates feedback and discussion on the issues raised in his articles and can be reached at [email protected]. Andy's new book Risk Management for Project Driven Organizations is now available.

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Topics: Business Case, Business Intelligence, Estimating, Portfolio Management, Risk Management, Strategy

If we consider annual planning at the most basic level, it’s about investing money, time and effort into a series of projects in the expectation that they will deliver the benefits that we need to achieve. Some of those benefits are “housekeeping” type items--necessary updates, compliance projects, etc., and some of them are aimed at moving the organization forward through increased revenue, better market penetration, reduced costs or some combination of all three.

We spend a lot of time and effort producing business cases, discussing the merits of Project A over Project B and coming up with high-level estimates of cost and time for the projects. We may even conduct some kind of portfolio modeling to help us understand what the impact on the organization might be if we pursue a particular combination of projects.

The problem that I see with all of this is that it is all fairly subjective. Initial planning estimates for cost and duration are not much more than educated guesses because we have little information to go on, and benefits realization estimates are likely even more uncertain--no one can be confident in predictions of revenue that may be three or more years out. There is no silver bullet that will allow us to remove all of this uncertainty, but it seems to me that we can apply some business intelligence practices to the concept of annual …

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