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The portfolio, programme funnel flow problem: or how do you spend a million pounds?

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I wonder if this is a problem for your programme? 

Many projects are proposed for the programme, but less than expected make it through the feasibility and authorisation process, so you've always insufficient projects in the programme to meet the targets you have for service/asset improvement, and the forecasted spend you made!

Consequently your programme got off to a slow start, and compromises on project selection later on, as the need for more projects intensifies.

Well here's some good news, if this is your programme challenge, you are not alone, I am citing a common programme management challenge we have found in our research work at Leeds Beckett University.

Why is this the funnel flow problem so prevalent? The short answer is that projects that represent valuable investments to the programme, those that have reliably risk free benefits, are not so readily identified.  And most portfolio/programme processes we have found in our research focus on authorisation governance to filter out project proposals that might not offer sufficient benefit. Or that are too risky.

This is a good thing in the main, you don't want to be letting project proposals through that won't offer value in terms for benefit for your buck. 

However, time is running out, and you'll end up doing just that, letting dubious project proposals through when the pressure is on, later in the period. 

Solutions employed to improve the flow of project proposals that we have seen, include: asking the contracting partners to suggest projects; set 'spend targets', to motivate the flow (don't do that though, let me be clear, I'm not recommending this it'd be a desperate move!); perhaps you might trawl the company for suggestions from operations; bring future work forward; put pressure on the project authorising boards to 'lower the bar' (please don't though!).

What programmes don't do so well, is build a programme storage list of possible, viable value adding projects early enough. While portfolio selection governance focuses on de-selection filters, few organisation's put much if any effort into generating processes such as value management and other innovation processes to generate value adding proposals, nor do they realise that many of these will naturally not make it down the funnel through feasibility testing.  Or even realise that this is a 'funnel', instead expecting a even 'flow' through the programme process pipeline.

So what is happening, why is this so common an issue?

Well common decision errors that human beings are vulnerable to, hold some of the explanation.

At the beginning we all have an optimism bias, we anticipate more readily identifying projects than we actually can.  This is so common it's been studied for a while and is called the 'planning fallacy'.  At Leeds Beckett we ask MSc students to partake in our millionaire exercise to demonstrate this:

Imagine you've won the lottery, you have a million pounds to spend, what would you do with it? 

This is the position large programmes are in, with money to burn. Except it's not to burn, it must add value, and be an investment that represents value for money. We imagine this'd be easy, we are optimistic. You've probably just said to yourself: "I'd know what to do with it!"  Have you imagined a new car? A house refurb or move, something for your mum, a holiday?  But with a million pounds you can change your life, instead you (and I) are doing the obvious and easy to think of things, the low value solutions. And a car, incidentally, is not adding value to your life, it is detracting from it!  Because the one you have imagined will likely cost more to run and insure than the one you have now. If you don't have one, perhaps that because you live in central London and actually don't need it, and it'd be a problem parking it!

Now, once you have done the obvious spending, and come back from that holiday, what are you going to do to use the rest of the money to change your life for the better? Tricky? But worth the thinking effort, not because you might win the lottery, but because you might find that you don't need a million quid to achieve that change you do want! 

Personally in doing this exercise a lot with students, I myself have decided I don't really want a yacht, though I still want to sail. (The solution is hiring).  And I put money I already had into Physio, so I can do more hiking, money I'd previously thought was an indulgence. That nagging sports injury has gone! That changed my life. Small cost, big benefits! And it's just as well, because I haven't yet won the lottery!

So what we are suggesting to cure this portfolio, programme funnel flow issue is:

That organisation's running programmes build extra capacity (about twice) into your feasibility work;

Part of the problem is identifying good benefit cases, so designing benefit criteria, and associated performance measures, will really help the business case building;

And you install supporting team innovation processes such as: requirements engineering; value management workshops; or other similar processes, such as six sigma. Processes that use facilitators. You are not going to generate good ideas under pressure so easily as you are in facilitated workshops (and if they are facilitated you can bring both your supply contractors in and your stakeholders without fear of self interest dominating);

And that you build proposals, for the shelf!

Lateral thinking can be induced, says Edward deBono, and making your organisation and programme a place where innovation is the normal pursuit is going to seriously motivate the workforce and enrich jobs. 

It'll be a project type place too!

I'd be interested in your views, do you experience this problem?  Will our suggested solutions work do you think?


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  1. Damian Nicholls
    Damian Nicholls 04 March 2016, 02:18 PM

    Interesting, I recognise some of these problems from long ago in my public sector days and you always get an amount of pet projects and low value stuff coming through in private sector, but in general I don't see the problems described. I wonder how many of those who have responded are in public sector? My experience from private sector is that there is always stuff to be done, the challenge is picking which one and determining the value to the company (whether financial or otherwise). That said, the same principles for project selection should apply and by doing so it may flush out opportunities or changes that had not previously been identified. This generally takes the form of looking at either the market you're in and what you're trying to address or reviewing technical risk and seeing which parts of the business pose a threat to you if not dealt with.

  2. Matthew Henry
    Matthew Henry 07 December 2015, 01:09 PM

    Surely an effective solution to this problem is to be greedy and create an over-abundance of potential projects for the funnel. That way you are in a stronger position to reject the dubious projects and not always be worried that you have hampered your ability to meet your programme targets when you cut projects from a list which would otherwise have only just met your target.In a previous role, we employed this strategy and successfully met programme targets (incidentally, for the first time in a decade) and subsequently met these targets for the following 5 years.Through trial and error we worked out a rule-of-thumb over-committment factor - naturally this will vary by programme and organisation.

  3. John Heathcote
    John Heathcote 10 December 2015, 09:25 PM

    Hi Matthew.  That's really telling evidence, if your organisation analysed this and then set out to prepare proposals for the shelf.  I'm heartened some people have done this. Best regards John

  4. Matthew Henry
    Matthew Henry 17 December 2015, 11:21 PM

    Thanks John. It was a simple and fairly crude solution: but the obvious isn't always obvious when in the heat of it :-)

  5. Neil White
    Neil White 02 December 2015, 12:26 PM

    Hi John, I agree with the point that Merv makes. Many organisations have yet to change to a culture where the outcome and, therefore, the benefit is what the investment is all about. The BRM process enables engagement with all players within the P3 environment. The sponsors (linked to the business goals) has a vested interest in assuring that the ensuing work is benefits driven. The required projects and programmes are, by design, required to enable the agreed outcomes. There may be many solutions that enable the required outcome to be achieved and by involving users, designers, planners in the process the enabling projects are much more likely to succeed - bearing in mind we already have the business sponsors on board. From a portfolio perspective, the benefits management process enables business interests to come to the fore. High risk, costly or complex projects are identified and appropriately prioritised. This dynamic arrangement enables the constant monitoring and testing of portfolio (and programme) performance which is used to ensure that the business dictates the projects and programmes it invests in and in a way that is much lore likely to result in a successful outcome. Great article. Neil.

  6. John Heathcote
    John Heathcote 10 December 2015, 09:28 PM

    Thank you Neil, and as you and Matthew both demonstrate the solutions are out there, once the problem is recognised!  I'm hopeful the P3 future will seek to prevent slowing programme problems before they start by engaging one of the processes you describe.  Best regards John. 

  7. Merv Wyeth
    Merv Wyeth 01 December 2015, 03:06 PM

    Hi John,Having worked in the public sector for a little over a quarter century your article really does strike a chord with me.My recollection is that the very same business justification case that was rejected out of hand in May one year would prove to be compelling and winsome the following February. It was a case of ‘Spend it or lose it!’ How can this be a proper, value-driven use of public money – perhaps this is a vestige of a former systemic problem and no longer happens?I appreciate that, as a benefits person, I would say what I am about to say but ... the first principle of benefits management is to ‘start with the end in mind.’ Better still, and this accords with the OpenStrategies approach to programme and portfolio management, ‘Start with users and uses.’Proposals for projects within any programme or portfolio must answer the question “What is it that I [my million pounds] or you [your million pounds] actually want to do? This is the use that creates the benefit.Thanks again for a thought provoking article and let’s hope it does spark the conversation / activity that it deserves.

  8. John Heathcote
    John Heathcote 10 December 2015, 09:31 PM

    Hi Merv.  Ultimately it's all about benefit and value, I very much agree.  My belief is that this is why the central project challenge is, developing projects whose projects add benefits at a rate that represents value.  Not so easy to do as it first appears!   Best regards John