Danica Michaela MancaoProject Portfolio Management Specialist| Aboitiz Power CorporationLey, Philippines
Hello!
I would just like to ask if anyone here has an established PPM in their organization? How can we do post investments review? and when can we evaluate if the investments have been returned?
Are there any standards or resources we can use regarding this? Saving Changes...
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Thomas WalentaGlobal Project Economy ExpertHackenheim, Germany
Danica,
yes, I have implemented PPMs. There are different functions that should be established, like a project selection process, resource allocation framework, portfolio health assessment, strategy alignment and of course benefits tracking.
All of these are ongoing activities, maybe 2-4 times a year or at best in real-time.
I would recommend to do benefits tracking as a continuous task, not as a one-off review. Depending on the business case (or better investment/benefits case) the planned ROI might be achieved at different stages. With a continuous tracking you ensure to identify problems early on, be able to take corrective action (or even kill a project) and give operations a tool to measure progress.
This is an interesting and important question as it is easy to manage a cost improvement portfolio without ever determining whether the ROI (or ANY positive ROI) was ever achieved on the individual projects.
The means for capturing the cost and value should be established up front, and it may require buy-in from several external organizations. Here are some examples of challenges I have encountered:
- Individual projects are charged against a large over-arching budget for product improvements rather than discretely charged, making it impossible to determine what was spent on each one. This is also a problem when multiple vendor changes are bundled into one contract.
- For office related improvements such as process flow reduction, it may be difficult to measure how much reduction actually occurred. I recall a major software implementation were we were able to identify a significant overhead reduction in a large department, but couldn't really explain where the savings actually occurred or how, other than probably the software.
- If you achieve a cost savings, do you actually get to take credit? In a factory setting, you may reduce the effort of some task, but if the production bar-chart assigns it a fixed time, you must negotiate with the factory to reduce their flow-bar or it is planned and accounted as the same time regardless.
- Detailed cost data may be restricted by organizations preventing your access, or completely unavailable. Some organizations simply lack high resolution data, or they are unwilling to share it.
For these and other reasons, you need to start with the plan for how you will collect costs and benefits prior to the project. If you cannot do that robustly, you can only guess at the actual ROI for a portfolio, let alone the individual projects. Saving Changes...
To address your question about standards, you can look to PMI's Portfolio Management Standard as well as the Benefits Realization Management practice guide.
Ideally, the business case (and if not, the charter) for a project should state some specifics about the expected benefits including when they would start to be realized (and hence could be measured), how they should be measured (an objective, operational definition) and who will be responsible for reporting on them over the life of the project and once the project ends.
Kiron Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
To put this in the framework of the PMI standards to evaluate if a solution is achieving the objectives is a responsibility of the business analyst. In fact, there is a process called Solution Evaluation inside the PMI´standard on the matter. Saving Changes...
Danica Michaela MancaoProject Portfolio Management Specialist| Aboitiz Power CorporationLey, Philippines
Thank you for everyone's input.
I was also wondering if this should be done in the portfolio level or just the project level.
For projects we have a lookback meeting and report that is done 3 to 1 year after the implementation of the project to see if it has delivered what it's supposed to deliver.
But in portfolio level, should it also be done and at what detail? Saving Changes...
Definitely, although I usually have seen that done as part of the portfolio governance committee's responsibilities re: understanding what the ROI has been on the portfolio investments since the last review and deciding whether there is a need to re-balance investments or even terminate some.
