PROJECT MANAGEMENT METHODOLOGY

PMBoK, is considered to be the most complete theoretical description of all project management
issues, focused on the process of preparing and executing projects as a final standalone unit.

The new sixth edition of PMBoK introduces program and portfolio management sections. Depending
on the size of programs, projects and portfolio management, the relationship between them can be in
several levels. the relationship between portfolios and projects can be depicted using the diagram
shown in Figure 2.1.
The fourth edition and the subsequent revisions to the sixth PMBoK provide the definition of different
features of projects, programs and portfolios (Table 2.1).

The main function of the project office is to support project managers,

which include:
− Distribution of common resources among all projects within the competence of the project office;
− Definition and development project management methodology, best practices and standards;
− Consulting, tutoring, instructing and training;
− Control compliance with project management policies, standards, procedures and templates through
project management audits;
− Development and management of project management policies, standards, procedures and templates;
− Coordination of communication between projects.

According to the fourth edition of PMBoK, Project managers and the project office have different goals
and therefore meet different requirements.

Example:
1. The project manager focuses on the implementation of the specific project, and the
project office manages major changes in the volume of programs that can be considered
as potential opportunities to better achieve business goals;
2. The project manager controls the resources made available to the project for the best
 fulfillment of the project goals, while the project office optimizes the use of the
collective resources of the enterprise for all projects;
3. The project manager manages the constraints of one project (content, schedule, cost,
quality, etc.), and the project office manages methodologies, standards, overall risks and
opportunities, as well as enterprise-wide project relationships;
4. a distinction is made between project management and operational management.

The project summary is an expanded and refined version of the project mandate that has been agreed
with the project board. This document is an input for the project initiation phase. The project summary
sets out the project objectives, functional and operational requirements for the completed project.
Based on the project summary at the project initiation stage the project team develops all project plans.

In the Japanese standard P2M , more attention is paid to the place of project management in strategic
management. Moreover, more attention is paid to the personal qualities of the project manager. The
requirements for the project management specialist in this standard are very high, because he is
responsible not only for the implementation of the project but also for its impact on the state of the
institution, and in case of large projects, on the state of society and the environment also
 Introduction to IT Project Portfolio Management(PPM)

When a business wants to get control of its IT projects, two paradigms collide: the world of financial
portfolio management and the world of IT project management.

The opportunity that IT PPM presents is how to combine the benefits of both approaches to best
support an IT project-centric organization. We shall start by making a brief review of modern portfolio
theory(MPT) and basic review of IT project management.

Maximizing return, alignment with strategy, balance between investments, and properly leveraging
resources are just some of the commonalities for IT PPM rollout.

Modern Portfolio Theory(MPT)

Financial Investments
When an individual or a company buys a stock or bond, it does so with the hope that the investment
will increase in value. These investors are also more comfortable when their level of confidence in the
investment’s return is based more on certainty than on hope, they want to place their bets on sure
winners.
This gives us two basic principles that guide most financial decisions: maximize return for a given risk
or minimize risk for a given return. An investor will look at a particular investment instrument,
establish a level of risk, and then set a level of return they would expect if they decided to go with it.
Investors understand how unreliable an economy or a business can be, they mitigate their risks (or
reduce their uncertainties) further by making several other investments. This set of purchases can be
referred to as a financial portfolio.

In order to better ensure the two main goals of any portfolio (high and dependable returns), the
portfolio manager must not only diversify investments across risk levels but should also tailor the
investments to the particular strategy of the investor.
They must build investment portfolios that:
1. Maximize return for a given risk.
2. Minimize risk for a given return.
3. Avoid high correlation.
4. Are tailored to the individual company.

Cash assets kept by companies are usually invested in a financial portfolio and managed by some
organization that reports to the chief financial officer (CFO). An organization does its best to fit its
portfolio into the four criteria out lined above. These criteria are used to prioritize individual
investments so the CFO will quickly know which ones to sell and which ones to keep, and this
information also allows structured way to react to immediate strategic shifts. Risk and rate of return are
the most common metrics used in prioritizing a financial portfolio.

Investors will first look at what they can earn if they placed their money in a zero-risk investment( such
as a U.S. Treasury bond), such a bond yet includes the risk associated with unpredictable inflation rates
though it is considered risk free because it won’t default.
After understanding the level of risks the expected rate of return is the zero-free rate plus some risk
premium.

With the inflation premium included in the risk-free rate, the extended risk premium is made up of four
risks:
1. Maturity risk (The longer an investor keeps their money in a security, the more likely that
security will change in an unwanted direction).
2. Default risk (Bond rating agencies rate how likely a bond will default, or stop paying what was
promised).
3. Seniority risk (Securities have different rights to the cash flows generated by a company).
4. Marketability risk (If the security can’t be sold very quickly, then the investor will get a higher
risk premium)
Project Investments

When dealing with project investment other than financial portfolios, there are new variables
introduced. There are different constraints regarding projects such as management expertise, human
skill sets, physical production capabilities and other factors that come into play.
Understanding the types of risks projects may encounter:
• Market (or commercial) risks
◦ when unforeseen changes in market demands cause executives to change the strategy, and
thus the scope, of an ongoing project.
◦ The deliverables can be rejected, therefore the IT portfolio will need to be reprioritized
quickly to meet such fluid demands.
• Organizational risks
◦ This refers to how well the stakeholders embrace some new IT solution to a business
problem,
◦ The down side of this risk is the chance that the target organization rejects the IT-based
solution (a cause for project failure).
• Technical risks
◦ This about meeting a predetermined set of functionality. Designs, implementations,
interfaces, verification and Q/A, maintenance, specification ambiguity, technical
uncertainty, technical obsolescence, and bleeding-edge technology are all examples of
technical risks.
◦ can be mitigated through the aid of central IT architecture and IT asset management offices
• Project (or process) risks.
◦ This about meeting a predetermined budget and schedule.
◦ Other risks that fit in this category include gathering the correct requirements from project
stakeholders and managing human resources efficiently.

The core goal of any project is for project investors (or sponsors) to realize their expectations for the
money, assets, and human resources they invested in the project. IT projects have a set of risks that can
expand or diminish what the sponsor envisioned.
IT Project Management

A project: is a temporary undertaking to create a unique product or service with a beginning and an
end are more strategically focused as opposed to ongoing corporate operations.

In general IT can be classified as either systems that address day-to-day operations or project-specific
initiatives. IT-based projects specifically involve the implementation or modification of a business
unit’s access to information using some technical medium, such as computers, cables, or phone and
switches. The methods used to manage IT projects can vary between countries, companies, and
specialty groups. We will start by looking at some basic elements of an IT project and there after
incorporating more some of the concepts.

PMs is all about triad of functionality versus schedule versus cost (see figure below)

As one of these points change,the other two are affected. Such as, if cost goes up,schedule may increase
and functionality may decrease. With time and technological changes since the 1970s the Project
Management Institute’s (PMI) PMBOK added risk and splits functionality into scope and quality, this
is to mitigate risks and ensure quality of the functionality( see figure below). Further modifications PM
can be done by adding weights by stressing on “quality, schedule, and budget in that order”

The triad may be modified for each project, but it still serves as a good springboard for reviewing
project management concepts.
Variable Schedule

The timing of a project deliverable can be critical to how the return on investment (ROI) was calculated

As an example,
customer relationship management (CRM) system that needs to be modified to handle a larger
amount of customer feedback for a marketing campaign. If the CRM system isn’t delivered by certain
date, then the marketing department could incur added expenses from postponed contracts with
advertisers and print shops.

No matter what the changes to functionality are, the PM will try to get the project back on schedule
using methods from previously successful projects. Many IT departments will have a staff member
maintain a knowledge base of successful project collateral that can be accessed by future PMs.

Variable Cost/Budget

Time buffers are included in a project’s original schedule, so are cost buffers included in the project’s
original budget. These buffers help keep the final cost, and thus the ROI, of the deliverable within the
bounds of the original investment.

Other hidden or unforeseen costs that could result from delays include strategic misalignment,
resource reallocation delays, salvage costs (if the project is ultimately scrapped), ruined business
relationships, and lawsuits.

But if a project plan includes well-designed time and cost buffers, it should be able to adjust to many
of the blind sides inherent in IT-based projects.

Variable Functionality/Scope/Quality

Project investors may want to change the final functionality to accommodate a market shift or to
increase the calculated ROI, a deviation from original cost/timeline.
a. A midstream shifts in scope can result in timeline and cost changes.
b. If the project sponsor sees an increase to potential project ROI by rolling it out earlier than
planned, then the functionality or quality of the project may decrease.

The quality of project management can not to be constant.“It changes with the projects and the people.
It may be good one year,bad the next”. With such variability comes an increased risk of a sponsor
getting a PM that mismanages the project. Solution is to ensuring quality across the project
landscape; and also improve to the quality of the project management staff .

Risk

Risk exists in the variances of cost, functionality, and schedule. If any of these three points runs into
trouble, then other points of the triad can be affected through “side effects of the project and its
unforeseen consequences”. Risk management is a critical piece to any IT project’s success.

Risk can be generalized into two types:

a. technical risk, which is the probability that a project will not complete successfully, and
b. commercial risk, which is the probability that the project’s end product or service will not be
successful in the marketplace
Two additional risks that we can add to this are
c. the risks associated with budget, cost, and methodology(project/process risk), and
d. the risk associated with the customer not getting involved with the development process
(organizational risk).
The total risk at any phase in the project is a summation of the various types of risks.

An IT PMO, interested in normalizing the risk levels across all projects establishes an auditing team
that can review a random sampling of projects to ensure they are calculating their risk levels the
same as other projects. This would create a common set of metrics to be used by each project to
measure risk and to use in the prioritization process.

The IT PMO will need to:

1. Provide risk management support to individual projects.

2. Mitigate risk of the portfolio by reviewing the initiative pipeline.
3. Normalize risk assessments through a project audit team.
4 Use risk levels as a metric in prioritizing projects.
Governments are passing regulations that require, or strongly recommend, formalized risk management
processes, these makes IT risk management to take on a new urgency.

3. Portfolio Selection

MPT shows how to manage the risk of a financial portfolio by selecting the proper range of
investments, but managing the risk for project portfolios can be more complex.
Three criteria can be used to select and prioritize projects that can be easily mapped to MPT:
maximization, balance, and strategic alignment (see Figure below).

Project portfolio selection is the periodic activity involved in selecting a portfolio, from available
project proposals and projects currently underway, that meets the organization’s stated objectives in a
desirable manner without exceeding available resources or violating other constraints.

3.1 Maximization

As the project progresses, the expectations of the project stakeholders tend to change. Managing these
changing expectations falls under the category of project scope management and project rollout
marketing.

The PM needs to make sure that:

1. The acceptance of scope changes does not adversely affect the success of the project (scope
management).
2. The rejection of scope changes does not adversely affect the enthusiasm of the stakeholders
(rollout marketing).
The combination of these two above make up what we can refer to as expectations management. The
individual project’s end results is to satisfy the ultimate expectations of the stakeholders, therefore
attaching auditable metrics to the business case, the project portfolio team will ensure that future
auditing teams will be able to gauge whether stakeholders will embrace the end result.

For example, a business case could state that an IT implementation will reduce the costs of tracking
inventories of certain items. After confirming that this is what the end users truly need,the project
portfolio team may approve the initiative. Then, during a mid-project audit, if the portfolio team
discovers that the end users have changed their needs (e.g., they now want to reduce the costs of
tracking the inventories of different items), then the project could be rated as unhealthy.

3.2 Strategic Alignment

This is to ensure that the suite of projects furthers the goals of the corporate strategy.

An example:
If a group of related projects (a program) is focused on building better swimming pools while the
executive staff wants to focus on building railroad tracks, then this group of projects would be
considered to be out of alignment with the corporate strategy.

◦ A company’s resources can be allocated among business units through centralized corporate
planning.
◦ The corporate strategy can evolve by developing business unit level strategies
◦ A business unit can implement its strategies for growth or productivity gains by developing
detailed plans. This could be in the form of a portfolio of initiatives (or business cases) for
projects.
 • A periodic review process for all initiatives that get funded as projects can be established ,
• once the portfolio is determined, it can then be maintained through “decision-making,
prioritization, review, realignment, and re-prioritization ”

3.3 Balance

Another major goal of portfolio selection is to create and manage a balanced portfolio . The portfolio
should first be balanced between what the company needs and what the company is capable of
achieving. Balancing capability and need generally results in defining the best that can be achieved
with the limited resources available, this applies for all projects.

3.4 Resource Allocation

Most IT projects have a threshold of resources they need in order to satisfy their cost/time/functionality
requirements.
For an IT-based business initiative, minimum requirements should be set for: hardware, software
licenses, human resources, and facilities. Financial portfolio managers, have more control on how
their resources can be distributed among investment instruments.

Focusing on the human resources, we see that many large companies allow strategic business units
(SBUs) (e.g., marketing, manufacturing, and finance) to have their own quick-response team of
technicians. The central IT department will have a more expansive set of IT resources specializing in
help desk, database design, systems integration, and IT project management, just to name a few
specialties.
For a PMO to better leverage IT resources among the various projects, it may be better to categorize
those resources into manageable subsets(as shown in Figure 1.8)
4.0 Rollout

Tthe same expectation management techniques used when rolling out an IT program or project, To
maximize the value.

The keys to failure focused on four areas :

1. Strategic alignment;
2. Resource leveraging;
3. Prioritization;
4. Quality control.

Reasons given for failures are such as :

PMO initiatives hadn’t created and maintained a portfolio of projects that accurately reflected the goals
of the corporate strategy or that efficiently leveraged existing resources. Further the , the project and
initiative prioritization process was inadequate.

Assignment 2

1. What are the features of programs and project portfolios?

2. What is PMBoK?
3. How is the Japanese standard P2M different?
4. How would the project be affected by varying each on of this triad factors of functionality,
schedule and cost.
PROJECT MANAGEMENT METHODOLOGY

PMBoK, is considered to be the most complete theoretical description of all project management
issues, focused on the process of preparing and executing projects as a final standalone unit.

The new sixth edition of PMBoK introduces program and portfolio management sections. Depending
on the size of programs, projects and portfolio management, the relationship between them can be in
several levels. the relationship between portfolios and projects can be depicted using the diagram
shown in Figure 2.1.
The fourth edition and the subsequent revisions to the sixth PMBoK provide the definition of different
features of projects, programs and portfolios (Table 2.1).

The main function of the project office is to support project managers,

which include:
− Distribution of common resources among all projects within the competence of the project office;
− Definition and development project management methodology, best practices and standards;
− Consulting, tutoring, instructing and training;
− Control compliance with project management policies, standards, procedures and templates through
project management audits;
− Development and management of project management policies, standards, procedures and templates;
− Coordination of communication between projects.

According to the fourth edition of PMBoK, Project managers and the project office have different goals
and therefore meet different requirements.

Example:
5. The project manager focuses on the implementation of the specific project, and the
project office manages major changes in the volume of programs that can be considered
as potential opportunities to better achieve business goals;
6. The project manager controls the resources made available to the project for the best
 fulfillment of the project goals, while the project office optimizes the use of the
collective resources of the enterprise for all projects;
7. The project manager manages the constraints of one project (content, schedule, cost,
quality, etc.), and the project office manages methodologies, standards, overall risks and
opportunities, as well as enterprise-wide project relationships;
8. a distinction is made between project management and operational management.

The project summary is an expanded and refined version of the project mandate that has been agreed
with the project board. This document is an input for the project initiation phase. The project summary
sets out the project objectives, functional and operational requirements for the completed project.
Based on the project summary at the project initiation stage the project team develops all project plans.

In the Japanese standard P2M , more attention is paid to the place of project management in strategic
management. Moreover, more attention is paid to the personal qualities of the project manager. The
requirements for the project management specialist in this standard are very high, because he is
responsible not only for the implementation of the project but also for its impact on the state of the
institution, and in case of large projects, on the state of society and the environment also

1. What are the features of programs and project portfolios?

2. What is PMBoK?