Understanding the Portfolio Management Framework


As I see it, the Portfolio Management Framework starts from strategic portfolio management. Some level of executive management is making a decision about the following: * Which product lines do we pursue?

* What is our financial model?

* How should assets be invested?

Executive management is not involved with projects per se, but they are the source of funding that allows projects to be initiated.

So what do we need to move beyond strategic portfolio management into operational portfolio management?

1. Portfolio planning

* Is the portfolio aligned to strategy?

* Is the portfolio achievable, give our resources?

* Are resources deployed per the strategy?

2. Project planning

* What is the project plan?

* What will it deliver?

* How is it doing?

But this picture is in and of itself unbalanced. Most organizations have these elements in place. What are they missing?

3. Resource planning

Resource planning is the responsibility of the line functional management. Resource planning is absolutely something different from portfolio or project planning, and it's done by different people. Line functional management are responsible for the utilization of resources and their allocation to projects. They are the ones that understand resource demand and resource supply. They should be the data providers, the data owners, regarding utilization and availability of resources.

4. Time/Actuals tracking

Finally, you need some form of tracking. It doesn't have to be done in extremely detailed time sheets, but it can be.

* How have resources been utilized?

* How much has been spent?

Through tracking, you can understand what you've done and whether you've acccomplished your goals.

In our view, successful operational portfolio management requires all four of these elements.

--Peter Heinrich