| One of the challenges of project portfolio | | | | organizations take to do it manually. Plus, they get |
| management is planning and maintaining an | | | | a much better return for their investment |
| optimized portfolio of projects over the long term | | | | because they have optimized for it. |
| as you launch new projects, finish successful | | | | Let's take a look at what this might look like in |
| projects, and kill unsuccessful projects. Maintaining | | | | practice: |
| an optimized portfolio means consistently working | | | | Jane has 40 potential projects entered in Optsee |
| on a set of projects over time that delivers | | | | that she has ranked by value to her firm, but she |
| maximum value to your firm from your financial, | | | | can only start a few of them each quarter |
| resource, and time investments. | | | | because of her resource constraints. She wants |
| To start, you will need a process and a project | | | | to get her most important projects started first |
| portfolio management tool that allows you to | | | | as well as several other projects that need to be |
| prioritize each of your projects by value to your | | | | started early because some later projects depend |
| company (higher value = more important project) | | | | on their completion. She also wants to maximize |
| and then be able to optimize your portfolio against | | | | the return from her marginal resources. |
| financial and resource constraints to find the set | | | | So here is what she does: |
| of projects that will give you the maximum | | | | |
| return from your investments. | | | | 1. Assigns level-loaded resources and costs on a |
| Why is optimization important? | | | | quarterly basis to all her projects |
| Consider that for a portfolio of 20 projects, there | | | | 2. Sets up her project dependencies ("and," "or," |
| are over 1 million possible sub-sets of projects to | | | | "not," and "both or neither") |
| choose from. For a portfolio of 40 projects, there | | | | 3. Sets some projects as mandatory (forced-in) |
| are more than 1 trillion possible sub-sets of | | | | for a first quarter start and others as |
| projects to choose from. So trying to choose the | | | | not-to-be-included (forced-out) |
| right set that will deliver the highest value | | | | 4. She opens the optimizer and enters her |
| manually using spreadsheets is virtually impossible. | | | | finance, resource, and risk constraints for each |
| And it is made even more complex when you're | | | | quarter using drop-down menus (no programming |
| trying to manage multiple resource type | | | | or equations) |
| allocations across different projects. | | | | 5. She clicks "Optimize" |
| So you need a project portfolio management tool | | | | After several minutes, Jane will have an optimal |
| like Optsee that can prioritize projects and | | | | first quarter (Q1) portfolio mathematically selected |
| optimize portfolios to maximize portfolio value | | | | from more than a trillion possible portfolio subsets. |
| without exceeding your financial (cost) and | | | | If she wishes, she can easily try other different |
| resource (people) constraints over a series of | | | | combination's of constraints, dependencies, |
| time periods (such as quarterly). Then, you will | | | | resource allocations, etc. to compare different |
| want to use this system periodically to optimize | | | | portfolio results. |
| such that: | | | | Once she is satisfied with her Q1 portfolio, she |
| - The most valuable or urgent (high priority) | | | | repeats the process for the remaining quarters in |
| projects are always queued first and | | | | sequence. Note that costs and resources allocated |
| - Projects that need to be completed as | | | | to incomplete projects started in earlier quarters |
| prerequisites to priority projects can be moved | | | | are handled automatically in each subsequent |
| up to earlier in the queue | | | | quarterly optimization, and completed or dropped |
| Your optimizer will also need the following: | | | | projects similarly free up their allocated money |
| - Capability to handle specialized resources (skill | | | | and resources. |
| sets) so that they can be handled as individual | | | | Modeling this way requires two assumptions: |
| constraints | | | | |
| - Capability to optimize on a per time period basis, | | | | 1. Costs and resources are level-loaded over the |
| e.g. quarterly | | | | selected time period and |
| - Capability to set dependencies between | | | | 2. Projects can only start at a beginning and stop |
| projects. | | | | at an end of a selected time period |
| - Capability to "force-in" or "force-out" individual | | | | In practice, neither of these assumptions is a big |
| projects from the portfolio | | | | deal. In fact, the opposite is true for any |
| These capabilities allow the manager to optimize | | | | significant portfolio: trying to find optimal portfolios |
| his or her portfolio so the most valuable or urgent | | | | against resource allocation constraints at the task |
| projects are always queued first. Using Optsee, | | | | level becomes a fool's errand as the complexity is |
| for example, PMOs can get answers in minutes, | | | | enormous and the uncertainties are huge. |
| rather than the days or weeks that many | | | | |