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Project Portfolio Alignment &

Strategic Objectives
Jim Peters, PMP
jmpeters@softwarematters.com
Practical Tips In Aligning Project Portfolios With Strategic Objectives

Presentation Abstract
Practical tips in Aligning Project Portfolios with Strategic Objectives
Practical techniques to help establish and maintain the alignment between projects and
organizational strategic objectives. The presentation focuses on the perspective of project
managers and PMOs in understanding and maintaining strategic alignment.
The issues addressed came from implementing PPM software for large organizations. PPM
solutions include assessment of customer requirements and the design of business processes
used to manage projects, project portfolios, and resources. Often during the requirements
process a gap is identified between the project and project portfolio data available in
the organization and the ability to link that data to the strategic objectives of an
organization. Many projects and programs begin with clear strategic alignment, but that
clarity often fades as work on the project begins. This limits the ability of an organization
to reassess and respond to changes in their industry. And it often results in decisions made
on perceived importance or priority. Effective project portfolio management processes
and metrics can help everyone keep the priorities in focus and allow resource managers
to make objective decisions in utilization of resources.
1/13/2012

2012 SoftwareMatters.com, Inc.

The Problem with Alignment


What are some of the issues with lack of alignment of projects to the strategic plan of an organization?

Symptoms of alignment problems that often exist include:

Strategy at high level not clearly linked to project and operational plans

Inability to link projects to strategic objectives in quantifiable ways

Gap in project and project portfolio data available versus balanced scorecard requirements

Initial clarity on strategic significance of a project diminishes over time (the world moves on)

Inability to assess the ongoing value of a project as it relates to the strategic objectives.

Decision making on the basis of perceived importance instead of the strategic importance.

Lack of visibility of the project portfolio in terms of strategic objectives (i.e., no clear link
between the data shown in the balanced scorecard and the portfolio management data)

Evaluation criteria created with the preferred outcomes in mind

1/13/2012

2012 SoftwareMatters.com, Inc.

Exploring the Problems


The symptoms of alignment issues fit into four problem types:
Differing Agendas Alignment is a matter of perspective. Establishing a common framework keeps it
clear.

Change - It happens not just to projects but to strategies and strategic plans as well. Including assessment of

the impact on projects as part of the change management process allows for more objective and transparent
decision making.
Data Availability of data necessary for controlling projects is a base requirement for PM/PPM systems.
Applying the same design process to the data required for strategic planning can result in close to real time
assessment of project portfolio alignment.
Decision Making Failure to have a consistent method for identifying the relationship of projects to the
strategic plan often results in repeated negotiations for resources or other project commitments. Making
strategic priorities clear at every level provides an objective basis for approaching project trade-offs and
resource allocation.
1/13/2012

2012 SoftwareMatters.com, Inc.

Perspectives & Goals


Or
Why do I care?

What can I do about it?

Why do PMs care?

What can PMs do about it?

Why do you care?

What can you do about it?

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2012 SoftwareMatters.com, Inc.

Overview
Organizational Strategy & Objectives

Operational
Planning

Strategic
Planning

Initiatives

Project Portfolio
Strategic and Operational
Programs & Projects
Comprehensive Portfolio View
The Standard for Portfolio Management, Second Edition
(Project Management Institute 2008)

1/13/2012

Foundational Terminology
Projects, Programs, & Project
Portfolios
Strategy & Strategic
Objectives
Tactics & Tactical Objectives
Operational Programs
2012 SoftwareMatters.com, Inc.

Projects & Project Portfolios


For Definitions and standard practices see PMI
Standards, Max Widemans PM Glossary, and
numerous PM text books.

Projects are at the core of most strategic plans. Numerous


terms are used to refer to the collective work of the
organization. For this discussion Project Portfolio
Management will be used as the common term.

Project

Project Management (PM)

Project Portfolio

Project Portfolio Management


(PPM)

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2012 SoftwareMatters.com, Inc.

Jims Simplistic Overview of

Strategy & Alignment


Strategic
Plan. All
projects should
support the
organizations
strategic
goals.

Strategy

Strategic Plan

PMBOK Guide, Fourth


Edition 2008 Project
Management Institute

Strategic Plan captures the strategy in a form that can be used in managing how the organization
can implement the strategic objectives and evaluate the results.
Balanced Scorecards, KPIs, and dashboards are used to visualize and monitor the Strategic Plan
during implementation.

Alignment

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Mission/Vision & Goals summarize the strategy.


Organizational values & principles provide guidelines on how the Mission/Vision and Goals are
transformed into a clear strategy.
Strategic objectives express the method to be used to implement the Mission/Vision and/or the
goals. The objectives may have multiple levels or variations based on department or product
area.

Alignment is the process of ensuring that the work performed and the products or services created
by the organization match the work, products, or services specified in the Strategic Plan.
Alignment is ongoing, requiring that project and operational initiatives are monitored to determine
if the strategy as defined in the strategic plan will be achieved.
2012 SoftwareMatters.com, Inc.

Five Attributes of Strategic Objectives


Tip #1

Identify the
specific,
measureable,
attainable,
responsible
person, and
time specific
attributes of
your
organizations
strategic
objectives.
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Strategic objectives should be SMART:


1.
Specific
2.
Measureable
3.
Attainable
4.
Responsible Person (Accountability)
5.
Time Specific
This version of the SMART mnemonic from Strategic Planning for Dummies (Wiley
Publishing 2007, page 240). Numerous other sources including citations
referencing the original source. See Wikipedia article for some other variations on
the words used to make up the mnemonic device.
2012 SoftwareMatters.com, Inc.

Projects & The Strategic Plan


Tip #2
Learn your
organizations
strategic
planning
process, the
cycle, and the
methods used
to select and
monitor
projects.
1/13/2012

Projects and Programs interact with the Strategic Plan


in many ways. Some specific uses include:
Projects/Programs are used to implement strategic
plan objectives
Project Portfolios are created to manage major
elements of the strategic plan
Project performance and status data feed balanced
scorecards
Projects created to support measurement
requirements
2012 SoftwareMatters.com, Inc.

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Alignment Made Practical


Organizational Activities

Project Manager Activities

Update/Create the Strategic Plan


Identify the Strategic Drivers(objectives or
subcomponents of the objectives)
Identify the Projects & Programs that are
included in the project portfolio
Identify the standard metrics required to
support Balanced Scorecard, KPIs or
dashboards used in monitoring strategic
alignment.

1/13/2012

Map the strategy to the project


Determine how that measurement data will be
collected Collect the measurement data
Review / Verify data from other systems used for
metrics
Distribute data for dashboards / Balanced
Scorecards
Identify any follow-up or ongoing measurements
required after implementation
Include alignment status in the final project status
report, stakeholder and sponsor closeout

2012 SoftwareMatters.com, Inc.

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Implementing Strategy:
A Project Perspective
Three Phases of Implementing Strategy (From a Project Perspective)
Strategic Plan Defines strategy and determines criteria used
for decision making
Budgeting, Resource Forecasting & Project Selection Maps the
strategy into a plan for implementing the strategy
Strategy Implementation Executes the projects selected to
implement the strategy monitors the implementation of the
strategy
Three Roles of Implementing Strategy (From a Project Perspective)
Executive Management Responsible for Strategy
PMO / Project Oversight Group Responsible for Alignment
Project Management Responsible for Project Execution
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Strategic Planning & Execution Process: A Project Oriented Perspective

PMO

Executive Management

Strategic Planning

Create Strategic Plan


and Objectives

Assign weights to
evaluation criteria

Create Evaluation
Criteria

Review Selection
Criteria and rating/
ranking approach

Transform
Evaluation Criteria
into measureable
Selection Criteria
with methods for
rating / raking
projects.

Project
Management

Add Selection
Criteria as part of
Business Cases
Development

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Budgeting, Resource Forecasting & Project SelectionPhase

Set Budget Target


(Cost and Labor
Projections)

Review and Select


Project Portfolio
Alternative

Determine Resource
Capacity

Update Business
cases with ratings/
values for each of
the evaluation
criteria

Update Evaluation
Criteria ratings for
proejcts

Strategy Implementation

Create / Update /
Review estimates
for each project

Provide estimates
(both cost and
schedule)

Create Project Portfolio


Alternatives (applying
weights for evaluation
criteria to the
proposed project list)

Monitor Strategic
Plan
Implementation

Review Business
Cases for
consistency /
accuracy of
estimates

Create Project
Portfolio
Execution Plan

Update Project
Schedules /
Resource
Commitments

Review Projects with


Sponsors/
Stakeholders

2012 SoftwareMatters.com, Inc.

Review Strategic
Plan
Implementation
Status

Monitor Project
Execution

Initiate Projects /
Monitor Status

13

Project Selection Processes


A project
selection
process
bridges the
gap between
a strategy
and the
implementatio
n of the
strategy.
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Effective project selection processes:


Help insure that projects are launched that are in alignment with
the strategic plan.
Provide a framework for project teams and project managers to
make decisions in alignment with the strategic plan.
Facilitate creation of objective measures for all projects,
avoiding reinventing KPIs and dashboards for each new
initiative.
Keep the strategic objectives visible and connected to the work
performed of project teams.
Provide a natural forum for realigning or balancing of the
project portfolio.
2012 SoftwareMatters.com, Inc.

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Project Selection Process Example


Objective
project selection
requires that the
selection criteria
be established
independently
from the
development of
the business
cases.
A Quick Guide to
Enterprise Project
Management, J.
Peters (MTA 2008)

1/13/2012

Strategic
Plan
1. Create
selection
criteria

2. Develop
measures

3. Weight
the selection
sriteria

4. Rate
projects

6. Rank
projects

5. Set budget
& resource
capacity
2012 SoftwareMatters.com, Inc.

7. Establish
cut line

Prioritized
Project
Portfolio
15

Project Selection Process


The result of this
process is a list
of projects that
can be
sequenced from
highest priority
to lowest.
Applying the
available budget
(or range) shows
whats included,
whats not
included, and
what may be
included in the
project portfolio.
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Cut Line Established

Projected budget
$2.5-$3.5 Million
In
Maybe
Out

Changes in the weighting factors


for the selection criteria result in a
different prioritization.
Changes in selection criteria
ratings / values should only occur
if an error was made.
2012 SoftwareMatters.com, Inc.

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Alignment From the PM Perspective


Project
Managers
need to
understand
how their
projects fit into
the
organizational
Strategic Plan.
This directly
impacts
communication
planning and
status
reporting.
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Things to keep in mind as a PM:

Strategic Planning is not a project management activity.


The PMBOK Guide references the Strategic Plan as a reason for a project to exist
to support the organizations strategic goals (PMBOK Guide page 75).
Project Managers rarely participate in the creation of the organizational strategic
plan.
Project Managers, in their role as PMs, are not responsible to achieve the strategic
goals of the organization. But it is critical that PMs in inform stakeholders when the
project will fail to achieve the goals the project was intended to satisfy, presumably
the project is a part of the strategic plan of the organizations.

Project Managers role Strategic Planning:

Manage Projects used to implement the strategy


Provide data to support balanced scorecards, KPIs, and Dashboards
Manage project resources committed for implementation of the strategy
Ensure alignment activities are planned for and performed during project initiation,
planning, execution/control, and closeout.
2012 SoftwareMatters.com, Inc.

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Stakeholder Mapping
A starting point for Project Alignment
Tip #3
Map the
relationship of
your project to
the
organizations
strategic
objectives
including the
measurements
necessary to
ensure ongoing
alignment.

Projects
Project A
Project C

Project Y

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Project B
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Projects

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ABC Project X

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Project Z
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Impacts
Suppliers

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Impacted By

Users
Governance Boards/
Steering Committees

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Alignment Mapping

Strategy to Project Alignment Mapping is a visual approach for a project


manager to understand the relationship of a project to the strategy.
It does not replace the a strategy map that may have been created as a
part of the strategic planning process. In fact, if there is a strategy map
that clearly ties to the projects then this alignment exercises may be
unnecessary.
The result of the process should assist the project team in being effective in
responding to project or environmental issues that may affect the strategy.
The intent is not to create a new project artifact. More than 30 minutes is
probably too much.
Use flip charts, Post-Its, or napkins.

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Strategy to Project Alignment Mapping


Steps 1-3: Set the context
1.
2.

3.

Strategic Plan

Create a Stakeholder Map for the project.


Review the Strategic plan and strategic objectives for your
organization.
Identify systems and data utilized to support dashboards or
balanced scorecards used to monitor execution of the strategy
and/or the status of the project portfolio.

Organizational Strategy & Objectives

Balanced
Scorecard
KPIs
Dashboard
Other
Systems &
Data

1/13/2012

2012 SoftwareMatters.com, Inc.

Operational
Planning

Strategic
Planning

Initiatives
Project Portfolio
Strategic and Operational
Programs & Projects
Comprehensive Portfolio View
The Standard for Portfolio Management, Second Edition
(Project Management Institute 2008)

2010 SoftwareMatters.com, Inc.

20 20

Strategy to Project Alignment Mapping


Steps 4-5: Identify how the strategy drives your project
4.

5.

Identify the strategic objectives driving your project.


Identify the components of dashboards or balanced scorecards
used to monitor and report performance relative to the strategy.

Strategic Drivers

Strategic Plan
Organizational Strategy & Objectives

Balanced
Scorecard

Operational
Planning

Strategic
Planning

Initiatives
KPI
Dashboard

Project Portfolio
Strategic and Operational
Programs & Projects
Comprehensive Portfolio View
The Standard for Portfolio Management, Second Edition
(Project Management Institute 2008)

1/13/2012

2012 SoftwareMatters.com, Inc.

2010 SoftwareMatters.com, Inc.

21 21

Strategy to Project Alignment Mapping


Steps 6-7: Identify how your project impacts the performance reporting
6.

7.

Identify the measurements used to monitor implementation of the strategy.


Map the flow of data from your project to the balanced scorecard or
dashboards.

Measurement
Data

Balanced
Scorecard

Strategic Plan
Organizational Strategy & Objectives

Operational
Planning

Strategic
Planning

Initiatives
KPI
Dashboard

Other Systems
& Data
1/13/2012

2012 SoftwareMatters.com, Inc.

Project Portfolio
Strategic and Operational
Programs & Projects
Comprehensive Portfolio View
The Standard for Portfolio Management, Second Edition
(Project Management Institute 2008)

2010 SoftwareMatters.com, Inc.

22 22

The Problem with Metrics


Project Status Focus:
Project status
metrics used in
monitoring
projects differ
from metrics used
to monitor
strategy. Some
projects require
strategy specific
metrics. For other
projects the
generic PM
metrics such as
earned value
may be
sufficient.
1/13/2012

Addresses the process of implementing one component of the Strategy.


Focus is on the project performance and outcomes in terms of cost, resources,
schedule, scope and quality.

Strategy Implementation Status Focus:


Addresses the result of putting the strategy in place.
Focus is on the strategic objectives (e.g., new products, improved efficiency, etc.)
and monitoring the outcomes of the implemented strategy.

Project Alignment:
Identifies the elements of the strategy the project supports.
Establishes methods to gauge both the impact of a project on strategy during
project execution.
Establishes methods to gauge the impact of the results of a project on strategy.

2012 SoftwareMatters.com, Inc.

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Alignment from the PM/PPM Process &


Tool Perspective
Other considerations for maintaining alignment:

Include strategic planning process data requirements in PPM solution design Availability

of data necessary for controlling projects is a base requirement for PM/PPM systems. Applying the same
design process to the data required for strategic planning can result in close to real time assessment of project
portfolio alignment.
Include monitoring of strategy as a part of project change Management Change
happens, not just to projects. Monitoring changes in the organizational strategy has very little cost and can help
project teams be proactive in assessing the impact of and responding to change.

__________________________________________________________

__________________________________________________________

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2012 SoftwareMatters.com, Inc.

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Alignment and PPM solution design


Tip #4
When setting up
the project
repository a new
project / program
or configuring a
PPM system,
include strategic
plan attributes
and measures as
fields and ensure
processes are in
place that result in
ongoing
maintenance of
this information.
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Project Selection Process output

Attributes of selection process useful in standard


project / program reports
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Applying Strategic Planning to PM/PPM


Tools Example Project Selection Process
The project selection process of many organizations results in clearly stated selection criteria,
approaches to express the value of projects whose benefits are often intangible, and final ratings
as to the relative priority of projects relative to other projects. Some opportunities to help maintain
alignment related to project selection processes include:

Include the results of the Project Selection processes as attributes of projects or


programs in the PM/PPM tools Often data used as the basis for the selection of projects is not moved from the
spreadsheet or PPM optimization tool into the PM/PPM software used for planning and tracking. Prioritization criteria values,
assumptions, savings/benefits targets, etc., are useful from a tactical perspective in managing project portfolios.

Use the results of the project selection process as part of the project decision making process
Making strategic priorities clear at every level provides an objective basis for approaching project trade-offs and resource
allocation. Failure to have a consistent method for identifying the relationship of projects to the strategic plan often results in
repeated negotiations for resources or other project commitments.

Create Project / Program level metrics tied to the Project Selection Process Even organizations that

use a rigorous project portfolio selection or balancing processes often fail to use the result of these processes to monitor the
implementation of the overall strategy. Project metrics that correlate to these criteria can streamline the monitoring of the strategy
implementation. This helps project managers speak the language of business and not just the language of project management.
1/13/2012
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2012 SoftwareMatters.com, Inc.

Revisiting The Problem with Alignment


Some specific ideas on the problems we started with.
Strategy at high level not clearly linked to project and operational plans

Integrate strategic plan related project selection criteria and metrics into the
PPM system.

Create project selection process that forces strategic alignment

Inability to link projects to strategic objectives in quantifiable ways

Create user defined fields used for every project/program in the portfolio

Implement audit process for strategic alignment fields and related measures
prior to every strategic planning sessions

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2012 SoftwareMatters.com, Inc.

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Revisiting The Problem


Gap in project and project portfolio data available versus balanced scorecard
requirements

Create views in PPM system that mimic balanced scorecard data

Integrate non-PM/PPM system data used for balanced scorecard with


PPM system data via standard reports or data integration
Initial clarity on strategic significance of a project diminishes over time (the
world moves on)

Create views in PPM system that mimic balanced scorecard data

Integrate non-PM/PPM system data used for balanced scorecard with


PPM system data via standard reports or data integration

1/13/2012

2012 SoftwareMatters.com, Inc.

28

Revisiting The Problem


Inability to assess the ongoing value of a project as it relates to the strategic objectives.
Include the project value determination method in regular project/program
reviews with stakeholders
Reassess project / program value as part of project change management and
risk assessment processes
Reassess project portfolio and resource optimization as a result of project
changes
Decision making on the basis of perceived importance instead of the strategic
importance.
Implement measurements that are automatically maintained and independently
verifiable
Allow for management overrides of automated project optimization techniques
and tools and capture the reasons for this as part of the project selection process
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2012 SoftwareMatters.com, Inc.

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Revisiting The Problem


Lack of visibility of the project portfolio in terms of strategic objectives (i.e., no clear
link between the data shown in the balanced scorecard and the portfolio management
data)

Automate the creation of reports at the project level that include the raw
data fed to dashboards and scorecards

Eliminate Excel as the basis for project selection or optimization (or implement
rigorously consistent, auditable methods)
Creating evaluation criteria with the preferred outcomes in mind

Separate the development of project selection criteria from the weighting of


the criteria (if weighted criteria are used)

Validate the selection criteria

Use a proven method such as Analytic Hierarchy Process


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2012 SoftwareMatters.com, Inc.

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Tips to Help PMs Focus on Strategy


Tip #1: Identify the specific, measureable, attainable, responsible person, and
time specific attributes of your organizations strategic objectives.
Tip #2: Learn your organizations strategic planning process, the cycle, and the
methods used to select and monitor projects.
Tip #3: Map the relationship of your project to the organizations strategic
objectives including the measurements necessary to ensure ongoing
alignment.
Tip #4: When setting up the project repository a new project / program or
configuring a PPM system, include strategic plan attributes and measures
as fields and ensure processes are in place that result in ongoing
maintenance of this information.
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2012 SoftwareMatters.com, Inc.

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Jim Peters Bio:


Jim is President of SoftwareMatters.com, Inc., lives in Ventura (Los Angeles area), and delivers PM/PPM
training & consulting, Microsoft Project mentoring, project start-up consulting and software development
services in LA and Silicon Valley. He partners with Fort Systems (www.fortesys.com) of Alexandria, VA, to
provide Project Portfolio Management solutions using Microsoft Project Server and Portfolio Engine (EPM
Live) for clients nationwide. He has over thirty years of experience in project management consulting,
software development, and training. He designs and implements project and project portfolio management
software solutions. He has worked with multiple enterprise project management software products. He
served as Technical Editor for books on Microsoft Project from Wiley, Microsoft Press, and McGraw-Hill.
He is one of the developers of RAS 5.0 a project portfolio management reporting solution, and Provision
BI, a business intelligence framework for SQL Server Reporting Services (www.ras-reporting.com).

Questions? Contact me at jmpeters@softwarematters.com