Lean Portfolio Management in the picture

You have probably encountered it too. "Our teams are agile, doing Scrum. And we have kept the old governance in place, based on Prince2". With budget meetings and the traditional PMO chugging on. 

We really need to change the way we manage the governance of product development and budget allocation...

Odoo • Image and Text

Project management and time-sheets

I often tell a story about a - fictitious - project manager who comes by when you are filling out your time-sheet and suggests that you spent some time on a different part of the project, or even different project, than the one you were actually working on.

Everybody seems to know this project manage', they have all worked for him, too. 

Why do project managers - honest, fair people, most of them - ask their team members to cheat? Because they want to avoid escalation, pending a lot of time to explain why the estimates were wrong or the technical difficulties they encountered or a problem of team dynamics. Better to sweep it under the carpet for now.

This means that the elaborate PMO some companies set up, with close follow-up and early warning if projects go off track, does not seem to work.

And the real reason it does not work is twofold: we manage people as resources, as man-hours filling cells in a spreadsheet, and want to optimize their 'utilization' on the one hand, and we have too many projects going on all the time on the other hand.

The bean counters

The core problem with traditional governance is that we focus on the expenditure side. A good project manager, by the old rules, delivers on time, on budget, on scope.

But that is not the entire point, is it? We invest to create value for the customer. Our project plan contains a business case, but a telltale point: in most companies the business case is not compared to the results afterwards. The whole 'value for the customer' aspect often goes missing.

Financial governance remains crucial for success. But the traditional governance driven by project budgets and the yearly budget cycle is poorly suited for an unpredictable environment where the customer has a lot of choice.

Odoo • Text and Image
Odoo • Image and Text

Budget cycle

What happens to a good business idea in such an environment? Say the idea comes up in January. It is picked up and elaborated, as it needs to be ready for the budget preparation cycle. This starts in September, and goes on till the end of December. And in January we start looking for a project manager and a project team.

Then what happens at the kick-off meeting? More often than not, business stakeholders are disappointed. The approved idea may look less exciting compared to new ideas. Or, worse, it is still exciting, but the competition has launched a similar product, and your development has not yet started.

In short, the widespread yearly budgeting process results in a tremendous waste of time: it is easy to lose a year before real work can start.

In the total picture, it makes no sense to invest in the move to agile to be faster on the market, and still maintain a 20th century budget control mechanism in place that wastes time and is no longer fit for purpose.

And finally ... overload

In my classes, I make the statement that I know one thing about the number of projects they have at their company. I am always right. All participants at all training sessions agree: they have too many projects.

Project overload causes two problems. One is that using a fixed number of resources for more work will automatically result in slowing down the delivery. The second is that the large number of projects causes an enormous overhead to coordinate the projects. That is why managers run from one meeting to the next.

Budget thinking, maximizing resource utilization as the single measure of productivity, silo's, caused by hierarchical management, top-down command and control all contribute to the general overload and slow delivery. And, worst of all, discouragement and burn-out among staff caught in the overload with no end in sight.

Odoo • Text and Image

Lean portfolio management offers solutions for these problems
The traditional approach clearly does not work. Slow and unpredictable delivery, too many meetings, exhausted staff: all the result of 20th century approaches to portfolio and project management.

More on lean Portfolio Management

ADJUGO launches Lean Portfolio Management Month in January 2021. Come and get to know Lean Portfolio Management during our free seminar on January 6th. Or you can register for our SAFe Lean Portfolio Management training on January 13 and 14. Certain to run, as there are already registrations!
We hope to meet you at one of these events. Or at both, even better...
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