SR.NO. 1. 2.

GROUP MEMBERS MAYUR RANE RAMESHWAR VHATKAR

ROLL NO. 02 07

SUBMITTED TO: PROF. BHARTI VALECHA SUBMITTED ON: 23rd august, 2011 GROUP NO. : 0 CLASS : T.Y.BCBI SEM (V )

INDEX
SR.NO 1. CONTENTS INTRODUCTION. DEFINATION WHAT IS PPFM FRAMEWORK? WHY A FRAMEWORK? HOW THE FRAMEWORK HELP? FRAMEWORK COMPRISES 5 SECTIONS 2. PPFM OVERVIEW. BENEFITS & DRIVERS OF PPFM PREREQUISITES OF PPFM? WHERE IS PPFM POSITIONED? 3. PORTFOLIO MANAGEMENT PROCESS.

ACKNOWLEDGEMENT
We are grateful to our Prof. Mrs. BHARTI VALECHA for the guidance and constructive suggestions which were helpful for us in the preparation and execution of this project. We would also express our thanks to our group members who have helped in successful completion of this project.

MAYUR RANE RAMESHWAR VHATKAR

INTRODUCTION
A Working Definition
In the context of a Local Authority delivering key services and improvements, Project Portfolio Management (PPFM) is viewed as a corporate, strategic level process for coordinating successful delivery across a Local Authoritys entire set of programmes or projects. It provides a
1 in 3 firms have no project selection criteria 1 in 3 firms do not explicitly align projects with strategy
source Gartner 2004

structured method of decision-making that enables an Authority to select and run the optimal set of Programmes and Projects. In particular it considers alignment with Public Sector Agreement (PSA) and CPA targets and other corporate policies/objectives and overall achievability based on the Local Authoritys capacity and capability to deliver.

What is PPFM framework?

The Project Portfolio Management (PPFM) framework has been developed by Cambridgeshire County Council and partners to help other Local Authorities improve the management of change by selecting and running the optimum set of projects and programmes to support their strategic priorities. It is the response to the demand from Local Authorities for support with developing the skills, capabilities and knowledge required for managing and delivering successful business change projects.

The framework provides guidance based on experiential learning and existing practice and identifies the building blocks on which to start developing a PPFM function within a Local Authority. It is designed to complement and build on existing guidance provided by Central Government already in the public domain and should be read as a framework for an approach and not a prescriptive implementation path or standard.

Why a Framework?
Unlike Project and Programme Management, there isnt a de facto standard for PPFM, and in practice the maturity of PPFM is relatively low within many Local Authorities. Much of the material that can be purchased or is in the public domain does not have a Local Authority focus and can be both difficult to absorb, too advanced or lacks relevance for the present levels of project, programme and change management maturity within Local Authorities. There is only so much change an organisation can manage efficiently at once, so this framework suggests a staged and phased approach to develop the PPFM function. There is no magic wand or big bang approach, and it is intended the approach will be towards incremental improvements in developing the capabilities.

How will the Framework help?

This framework is designed to be as generic as possible, although the look and feel of the PPFM function is likely to vary from Authority to Authority depending on individual preferences and tailoring.

It has been established to help Local Authorities develop their own portfolio management function through a method of: Promoting the benefits of PPFM within their Authority Developing an understanding of the barriers to establishing a PPFM function Identifying the processes and capabilities required to be effective at different levels of maturity Understanding of the organisational structure and governance arrangements that support a PPFM function Having access to tools and guidance that will support the development of the required capabilities, infrastructure and processes Reflecting, reviewing and planning based on experiential learning.

The framework comprises 5 sections here is a brief synopsis of each section.

Sections 1
About the framework This section defines what Project Portfolio Management is and puts the framework and its components into context

PPFM overview

This section provides summary guidance, an overview of the Project Portfolio Management function and a definition of 7 core Portfolio Management processes. The content of this guidance has been developed from a blend of practical learning and research and is aimed at helping departments understand the principles and value of Project Portfolio Management and how to get started.

Maturity Assessment Model

The model sets out the transitional states of PPFM maturity. It provides a framework for an Authority to assess and plan how it will develop its own PPFM function through improving the Authoritys level of capability in key practices. The overall framework provides links to a range of useful guidance or tools that will help in developing a more detailed understanding of the basic and underlying capability

PPFM Experience in Cambridgeshire County Council This section provides a vignette of PPFM implementation in Cambridgeshire County Council and using the outputs of Cambridgeshires experiential learning assessment, the lessons learned in developing each capability are described. The experiential learning assessment was completed using a set of questions on which to reflect, review and plan the Authoritys progress against key PPFM practices it is developing. This tool was developed by Cambridgeshire, and can be used or modified by any Authority that wishes to use experiential learning as an approach. Tools

This section provides some useful tools in the form of guidance or techniques to help develop the necessary capabilities and infrastructure of the PPFM function. Some of these tools have been developed by Cambridgeshire, others are freely available using the OGC Successful Delivery Toolkit or via other web sites where you may need to register first. These tools are signposted using links or are embedded in this document

PPFM OVERVIEW
Benefits & Drivers of PPFM.
Many Authorities are in the process of developing, or have already established project management as a method for managing and delivering change. Whereas the methods, standards and benefits of project management are more widely understood, the value of PPFM is less well known and viewed by some with certain cynicism as just another distraction, more bureaucracy that will consume more time across an already overstretched workforce. Although Project Management is now becoming a well-established practice across many Authorities to an acceptable standard, it doesnt necessarily mean we are investing in the right projects. The investment in developing
In short we might be investing our time and energy in managing and delivering the wrong projects well.

excellent project management capabilities could be devalued as a result of approving projects that dont deliver real value or are not aligned with the real priorities of the Authority. The project focus to deliver on time, budget and to quality although valid, may do little to improve the overall performance of the Authority and in the areas it wants to improve most. PPFM is about weighing up the relative merits and value of its projects, with consideration of the risks, benefits and resource constraints. It provides an approach for selecting and sustaining the most advantageous projects by improving the organisations decision-making process through access to better information, and having the means and capability to support this.

The case for PPFM is about ensuring any investment decisions will be made with the necessary and appropriate attention given to the short and long-term value the change will deliver.

The benefits are summarised:

1. Increase visibility of the Authoritys demands risks, issues, resourcing, budgeting 2. Create an understanding of the capability requirements to meet resource and financial demands 3. Maximise use of scarce resources 4. Matching projects needs with right skills 5. Improve financial control with a clear understanding of costs and strategic value of the projects 6. Better management information on which to make more informed investment decisions 7. Establish a common understanding and targets energy and money on the key priorities. 8. Creates visibility of the deliverables and outcomes expected, and a vision of what success will look like.

Whilst this framework does not attempt to provide a generic cost benefit analysis for PPFM, the following sub sections clearly identify the areas where any Authority could benefit from PPFM practices.

What are the prerequisites of PPFM?

PPFM is not dependant on the use of any specific methodologies, but the extent to which the strategic level process of PPFM matures is Dependant on how well an Authority develops and matures the supporting capabilities and infrastructure. Each level of maturity therefore has its own set prerequisites, and that higher level of maturity will only be achieved if lower maturity behaviours and characteristics are achieved. You can view each maturity level as pre-conditions for the next level. However, in order to begin implementing PPFM practices the following preconditions are seen as supportive and highly influential to the successful implementation at any level.

Where is PPFM Positioned?

PPFM is both a support Function and decision making process which requires people to carry out necessary activities. However, it also draws on other inputs, outputs and activities across other functions and its this bringing together that becomes the object of the PPFM framework that positions PPFM as an organisational practice and way of working. PPFM, as it has already been mentioned, extends beyond those core strategic PPFM processes for selecting, prioritising and maintaining a portfolio of strategic projects. This framework defines the inputs to these core processes as the underpinning capabilities and infrastructure that also span other management functions and processes.

The multidimensional view of the PPFM framework is illustrated by a number of overarching high-level processes that interact across 4 management functions Corporate Strategic Management Portfolio Management Programme / Project Management Service (operational) Management

PPFM is a practice that affects the organisation on many levels.

The

traditional view that PPFM is a series of corporate level processes for aligning organisational objectives and projects to produce identified business outcomes, is limiting from a Local Authority perspective. A more rounded PPFM approach incorporates a range of capabilities, processes and methods operating effectively at all levels.

The Corporate level defines the strategic direction and priorities of the Authority

The Portfolio level ensures that projects and programs are aligned with the Authoritys strategic priorities, have the capacity and capability to meet the strategic objectives without compromising operational service levels and ensure programmes & projects are meeting or exceeding planned

contribution to the overall objectives The Project & Programme level focuses on defining and delivering benefits and managing the Authoritys resources and risks.

Portfolio Management Process.

At the heart of Project Portfolio Management (PPFM) function there is a defined set of processes for collating and analysing a range of business information, and assessing the relative value of each change programme or project in meeting corporate strategy and business outcomes. The value measure used for prioritising projects and programmes will typically include The costs that will be incurred. Expected benefits The alignment of those benefits with corporate strategy and performance measures The level of risk inherent to achieving the benefits and outcomes. In assessing the priorities, the process will assimilate information about the capacity and capability of the organisation to determine what is achievable within these constraints. The important step towards realising that goal is
The evaluation technique used to determine value is likely to be a fairly simple logic (gut feel almost) when first implementing PPFM, which can be refined into something less rudimentary as the PPFM function matures.

to develop a method for providing a relative measure of each project and implementing some repeatable processes for prioritising and initiating projects and programmes, which may start for example by an evaluation of the strategic fit between projects, programmes and organisational goals or desired outcomes. The end product of the Portfolio Management level process is to establish the Authoritys optimum portfolio of programmes and projects that will deliver business benefits appropriate to the needs and priorities of the Authority.

This objective, unbiased decision-making process is not achieved at a programme or project level and it ensures funding, resources and benefits are targeted at the priorities of the Authority, rather than individual services.

The 7 Portfolio Management processes defined below are:

1 Collect Information 2 Analysis 3 Assess & Prioritise 4 Authorise 5 Monitor & Review 6 Agree Corrective Action 7 Track Benefits

Collect Information.
Each programme and proposed project that may contribute to the overall change agenda needs to be examined and evaluated to enable informed decisions to be made. Before this can happen a process of information gathering and analysis needs to be completed. The information collected will be used to support portfolio selection, planning and performance tracking. There is no single definitive list of information that is collected for each project, and the type of information each organisation collects may vary to suit individual requirements, but it will generally fall into these broad areas:

Benefit/ Value Cost Achievability Capacity. Skills etc Complexity Project Profile

This process will also develop and maintain a register of resources that match the core skills sets required by the organisation for delivering programmes and projects. This register will contain details of the resource pool, which a project manager can search to identify appropriate resources for their projects. It also provides the basis for further analysis when looking at the organisations ability to match supply with demand, and where potential resource conflicts exist.

Analysis.
Information analysis produces and presents findings on the unapproved, approved and in-flight projects to support the decision makers in deciding which projects provide the most balanced and blended portfolio. Using the information collated earlier, the analysis process provides assurance that the right projects are selected and that the organisation chooses a portfolio that is achievable: It will aim to answer the following questions. Are we doing the right programmes and projects, and at the right time? Are there sufficient resources with the right capabilities? Is there sufficient time? Is there sufficient budget? Are the benefits linked to the desired business outcomes?

Note the more information that is collected and analysed the more likely you will need automated tool to do the job. This process comprises the following sub processes

2.1 Balancing 2.2 Strategic Alignment 2.3 Benefit 2.4 Capability

Assess & Prioritise process.

With the analysis complete, assessing the portfolio provides the opportunity to evaluate the relative strength and fit of the projects within the portfolio, to re-evaluate or realign proposals and then prioritise the change programme, based on the organisations ability to deliver, whilst at the same time, maintaining the overall balance and ensuring not all eggs are in one basket. The assessment will help answer questions such as: What alignment issues are there and can these be corrected? Is there sufficient resources, and of the right quality to meet demand and how can we overcome any constraints? Do we have the right mix and balance of projects to achieve our objectives? Are there any significant risks and complexities that are unacceptable? Are new projects required to reduce or manage these risks? What is the best sequence of projects to reduce risk, deliver returns and benefit and optimise the use of resource pool As project and programme management cannot answer these questions, portfolio management provides this unique view in support of the organisation wide change agenda. The objective of this process is not to simply identify all the projects that will deliver the most benefit and demonstrate the strongest strategic fit. The objective of this process is to prioritise and find the right

balance that is achievable and delivers the desired value. The outputs of the analysis are used in the assessment to explore issues and options for fine tuning and optimising the portfolio. The portfolio can be structured by rankings, ratings, weightings and measures to aid the decision making process, and place all the relevant information into context. At the mature stage of Portfolio Management, tools can be used to complete scenario tests and what if analysis. However, rudimentary, but effective methods, tools and techniques can be used in the early stages to help an organisation establish and embed the principles of portfolio management within its decision-making process. In summary, evaluation needs to weigh up the benefits to be achieved in relation to the costs in delivering them, their alignment with the corporate policy and objectives and the level of risk the programme or project will carry.

Authorise Project.
Once the project portfolio has been assessed and prioritised, the authorised process will confirm decisions based on sound judgement and a rationalised approach to selecting the optimised portfolio. This process is not just about giving the green light to projects, as it may decide to halt, de-scope or cancel projects in favour of improved proposals, new initiatives or changes in organisational strategy and priorities. Authorisation is the investment decisionmaking process for committing, distributing and managing the project portfolio funds and resources. From the strategic and business planning process new programmes and project are defined and compete for a place in the portfolio. This top down process will require a number of approval gates to commit resources and/or funding in

order to define the programme and constituent projects. This early definition stage work will produce sufficient information in an outline benefit and business case to facilitate the portfolio management decision-making process. The authorisation process and its governance arrangements will also include and consider projects and programmes proposals created outside the top down planning cycle, through innovation or policy directives. When an organisation first establishes portfolio management, an inventory of projects currently in progress will also come under review as new programmes and projects compete for funding and resourcing within the portfolio. The review may conclude that existing projects are not strategically aligned or provide limited value in comparison to other programmes and projects. This is where the authorising process may decide to halt, de-scope or cancel projects and redistribute budget and resources into more value-added programmes and projects. Authorisation is an iterative process supported by the output from the analysis and assessment processes, and is the process by which formal approval to initiate a programme or project is given. The scope and the proposed investment is formally authorised to enable the governance arrangements to be implemented and the management of the programme to begin.

Monitor & Review.

This process provides a helicopter view of the organisations delivery and investment commitment and is designed to maintain the optimum portfolio of projects. This process will monitor and review all programmes and projects up to the point they produce the outcomes or capability they were designed to deliver. Once a project has delivered its outcome, it is likely to remain within the portfolio, but as part of the continued tracking process for the realisation of the overall

programme benefit, which may be profiled over many months or years. The tracking of the overall benefit and return on the investment is a separate portfolio management process as this will span a period beyond the life of a project and perhaps programme. All programmes and projects should be scrutinised and challenged at appropriate stages or gates. The monitoring and review process should be completed as an iterative process to ensure that any variances and gaps that appear in project schedules, funding estimates, capacity and resource utilisation, outcomes and benefits are reviewed. Where variances or gaps are reported or evidenced, this will trigger portfolio management to provide analysis and assess the impact on the portfolio and replan if necessary for investment decision makers to make stop, start or hold decisions if necessary. Adhoc reviews will be initiated where circumstances change that may have an impact or influence on the balance or viability of the portfolio. Whilst changes in strategy will cause a review of the existing portfolio, good practice suggests portfolio management should also initiate a review of corporate strategy as a means of providing corporate level assurance the existing vision and strategic direction is in line with current thinking. Once authorisation has been given to initiate a programme or project through the portfolio management process, any changes to the original costs, benefits, timescales, sequencing and resourcing will need to be updated in the business case. The revised business case will be the reviewed through this process and validated against the authorised business case to ensure no unacceptable variances have occurred.

Periodic reviews will consider progress against:

Key output and milestones Risks Budgets Resource utilisation and capacity plans Changes in dependencies across project or programmes Expected benefits Project outputs post implementation.

Agree Corrective Action.

Corrective action is the process through which portfolio management identifies or recommends any necessary intervention strategies or measures in response to an unexpected shortfall in the desired level of programme or project benefit. This could result in re-scoping a programme or initiating a new project that will cause the portfolio to be re-evaluated in light of the proposed changes. Alternatively, corrective action may be a matter of reviewing the business as usual process, or the way in which a new system is being managed, and the actions may be relatively minor.

Track Benefits.
Whether a project is a constituent part of a programme or just a standalone project, it should remain part of the overall portfolio beyond the original implementation period and for the duration of the investment period until all the benefits or outcomes of the project or programme have been delivered and realised. The investment period may be a number of years and will almost certainly extend beyond the life of a project and in some cases a programme. For this reason the tracking of benefits should be seen as a portfolio management function that can be transferred from project and programme management to another management group for the continuity of benefits measurement and tracking. This process will provide information to investment or senior management teams on the performance and success of the original investment. Smart use of categories will enable these investments and benefits to be filtered out into one or more Portfolios depending on how the organisation wishes to view its performance. The use of dashboards provides an effective means of presenting and reporting benefits, which will be tracked against the measures and performance indicators established and agreed in the Programme and Project Benefits Realisation Plan and Business Case.