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Portfolio Assurance - just big project assurance?

A programme is a big project and a portfolio is a big programme? NOT! There is a fundamental discontinuity between the three, mainly in skills. This is the same for portfolio assurance.

From the Assurance SIG we heard that project and programme assurance fundamentally takes a risk based approach. Should the same be true for portfolios?

Let’s explore programme assurance first. I would expect this to focus not only on the risks around delivery to time, cost, performance, benefits, etc. but also on how the potential benefits can be maximised and are there opportunities to be exploited that are being missed due to changed internal and external circumstances? 

Is programme assurance about assessing strategic fit and addressing strategic risk? The strategic objective might be to enter a new overseas market rapidly - and the chosen approach is to grow organically using ex-pat resource from the HQ. So in this case the strategic fit is good. However the "strategic risk" to the business of this approach might be high, distracting the management team from their focus on the home market.

Back to portfolios. I think portfolio assurance should be more about asking the question "is the portfolio optimised in terms of best achieving or exceeding the enterprise strategic objectives, balancing risk, resources, change capability, etc." Risk is only one criteria to be considered – and could be considered too inward looking.

What about an "opportunity based approach" - looking for a bigger bang for one’s buck. A balanced portfolio should contain a number of projects - some low risk / low return, but some more speculative high risk /high potential return in the portfolio (but no high risk / low return ones!). The balance of low / high would depend upon market conditions and business performance over time. But the question of portfolio balance will come down to the risk and opportunity appetite of the Board - both need to be considered.

Thus portfolio assurance should comment on this balance and the opportunities to better achieve or exceed the objectives in light of the market. It should also review adoption of portfolio governance and processes.

The assurance analysis of a portfolio should surface risks beyond the natural appetite of the Board, and opportunities that are not being capitalised upon. The outcome of the assurance exercise might be to launch new projects whose primary objective is to mitigate a particular risk or seize an opportunity.

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  1. David Webb
    David Webb 03 March 2011, 09:53 PM

    I guess the optimum portfolio is a balanced one with all types of risk, though I'm not sure how this works with a programme, or how easy it is to have a group of balanced projects iin a programme.Dawleylad

  2. Martin Samphire
    Martin Samphire 03 March 2011, 11:28 PM

    I would rather say that an optimum portfolio is one that seeks to best meet or exceed the strategic objectives of the business - risk of course is inherent and I would expect to see projects of varying risk categories within the portfolio.I can envisage situations where a strategic programme has a number of high risk projects within it - and in that respect does not necessarily include a balance of low and high risk projects.  However whereas the failure of  a project (whether high risk or not) within a programme can cause cancelletion of the entire programme, this is less / unlikely with a corporate portfolio. 

  3. David Shannon
    David Shannon 02 March 2011, 07:42 PM

    All good points Martin, some reinforced bythe findings of the APM 2010/11 Study just being completed by  our Governance SIG.  We have particular feedback from Norway and the UK on how governance sees portfolio risks, the practice rather than the theory.We will present at Knowledgeshare, but for those who cannot wait we will review our study and its findings at the Governance SIG meeting on 9th March.   

  4. Patrick Weaver
    Patrick Weaver 27 February 2011, 06:47 AM

    The fundamental difference is portfolio management is about selecting the right projects or programs to start or continue.  If you take no risks on the possible future for your organisation you will quickly end up with no organisation. This is a collective responsibility for the C-Suite.Program and project management are focused on doing the selected work as effectively as possible. There are significant differences between projects and programs (see: http://www.mosaicprojects.com.au/WhitePapers/WP1002_Programs.pdf) but overall the approach to change and uncertainty is focused on minimising unnecessary change.

  5. Roger Hankey
    Roger Hankey 01 March 2011, 10:47 AM

    Martin stated - A programme is a big project and a portfolio is a big programme? NOT! There is a fundamental discontinuity between the three, mainly in skills. So was the Man-on-the-moon-by-the-end-of-the-decade a project, a programme or a portfolio - because you could make an argument for any of those. It would be my contention that projects/programmes/portfolios (PPP) form at least a two dimensional domain and the skill set required maps against that. The mix of skills used for assurance or management of any particular entity in the domain is unique but is often similar and many of the skills are transferable between PPP or at least used in the assurance or management.  The existing APM Competence Framework IS an expression of project management competence when considering the indicators for a particular competence. The IPMA ICB3 Framework although similar is much less rigid and applicable to the competences of the full range of PPP. The PMI and GAPPS are/have drawn the distinction between the different PPP requirements competencies but there is a considerable overlap. And, I would like to say IT DEPENDS, on the type of project/programme/portfolio, the environment in which its performed, the management style used and how academic you want to be! Roger

  6. Martin Samphire
    Martin Samphire 01 March 2011, 10:27 PM

    RogerThanks for your input ot the debate.I do agree that there is a good overlap of skills in practicing all the 3PMs - however if we are to search for excellence then we need to hone both the common - and the different skills. Likewise for assurance of the 3PMs, in my view.It's like saying that cricket, football (soccer) and rugby are all ball games and that many of the skills are transferable - but we know that few people can excel when asked to play all three - at the top level.  I beleive that to excel we need to go in search of the elements that make a real difference to performance.I'd also be interested in hearing your view on the risk vs. opportunity issue as well.Oh and for me - the "man on the moon by the end of the decade" was a programme.  But I'm sure that will stir a hornets nest!Martin

  7. Roger Hankey
    Roger Hankey 02 March 2011, 10:28 AM

    Martin I think (to use a phrase common on the Newgrange discussion group) we are probably in violent agreement. Because I do believe we need to go through the process of analysis/deconstruction/identification/synthesis at our level of maturity of the discipline of project (PPP) management. We need to develop our art. However, I think there is strong common bedrock between the three Ps and some of the distinctions are artificial. You challenged me on the risk/opportunity issue.  I now work in the public (UK local authority) sector. No single project or programme is likely to challenge the continued existence of the organisation. The shape of the portfolio may (for example the demise of the old GLC) but is more likely to influence the ongoing transformation/development of the organisation and the career of the individuals concerned both officers and politicians. Having said that I think organisational risk is often poorly understood, especially the impact of reputational risk.  Opportunity is also problematic as many projects/programmes have drivers that are in the must do zone either because of governmental diktat, because of accepted policies or political imperatives. The STOP/Terminate decision for underperforming, too difficult or no-longer required projects becomes embedded in the quantum mechanical world of politics. (In my view it becomes, spooky action at a distance). The political support/organisational imperative to deliver the project, and its entry into the portfolio can be manifest very early certainly well before the Project is defined in accordance with Pat Weavers definition between project/programme i.e. Projects are about delivering a product to meet stakeholder needs and expectations with unnecessary change minimised. The key element in project management is efficiency, given that the function of the product that the project has been created to produce is (or should be) known at the start in reasonable detail, and often the nature of the product is also defined. As a Western educated, centrist, command and control orientated, mud-on-the-boots engineer, I agree with Pat and thats my mindset as well! Life has rounded off the edges a bit. As an engineer I KNOW my models are a representation of reality, I try not to confuse the map with the ground. So is portfolio entry/project continuation dependent on an assessment of opportunity and risk well it should be, and we should AT LEAST go through the motions. And, in my view try and do it rigorously, and the decision making output should be based on a clear evaluation of the business case. As a Gateway Reviewer, I really like (and believe) in the staged gated process including independent review/assessment based on continued confirmation of the Business Case, and deliverability. But I guess (speaking from a career that includes 14 years working in SE Asia) sometimes the project deliverable may not be the road/hospital/etc but a source of pocket money, a political thank you or a promise.  So to go back to Pats Mosaic paper and the GAPPS work (and others) there is a recognition that there is more than one type of project, or one type of programme. And maybe an organisation has many criteria for entry into its portfolio(s). So for a PPP practitioner be clear between what is and what should be!

  8. Martin Samphire
    Martin Samphire 28 February 2011, 08:05 AM

    I agree - and would reinforce that the 'C-suite' has the collective responsibility for the corporate portfolio - whether it be transformation, change, investment, etc.  The corporate portfolio is intrinsic to achieving the business strategy - hence assurance of such, in my view, needs a different approach to assurance of programmes and projects.