Project Management World Today Latest Publications and Newsletters September/October 2005
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- Project Portfolio Management: A Practical Guide to Selecting Projects, Managing Portfolios and Maximizing Benefits
- EARNED VALUE PROJECT MANAGEMENT Third Edition
Project Portfolio Management: A Practical Guide to Selecting Projects, Managing Portfolios and Maximizing Benefits by Harvey A. Levine
Foreword by R. Max Wideman
The field of project management has experienced explosive growth during the past two decades and has emerged as a distinct discipline of its own. Membership in project management-focused organizations is doubling every few years. A project management body of knowledge has been developed and advanced, project management certification programs have garnered major support, and new organizational structures and job titles have emerged to recognize the positive contribution of project management to success of the enterprise. As a further validation of the popularity of project management, there are now several hundred books available on this topic, most of which have been published in the past half-dozen years.
Despite the popularity of project management and the growth of the central Project Management Office (PMO) as a structured organizational model for implementing and managing projects, project success has not always been translated to business success. Project management has primarily centered on methods and expertise in “doing projects right.” Project management, and even enterprise project management, as we’ve come to call it, has had a focus on the four pillars of success: scope, time, cost, and quality. This is not broad enough.
More recently, we came to find that enterprise project management entails consideration of potential projects as well as approved projects. We also found that the emphasis has shifted from traditional project-centric objectives to higher-level operational objectives.
Projects, executives have come to realize, are the basis for future profitability or viability of the firm. Hence, there is a growing interest on the part of executives in how projects are selected and managed. What they are calling this emerging project management protocol has also changed. It is no longer just project management, or even enterprise project management. It is now called Project Portfolio Management.
In a new book by prolific project management writer and consultant, Harvey A. Levine (Project Portfolio Management: A Practical Guide to Selecting Projects, Managing Portfolios, and Maximizing Benefits, Harvey A. Levine, Jossey-Bass Business and Management Series, 2005), demonstrates how Project Portfolio Management (PPM) has served to bridge the gap between the projects and operations functions of the enterprise. He notes that PPM has emerged as a hub for the many processes involved in making sure that the selected projects are aligned with business strategies and lead to the realization of the maximum benefits that can be derived from the organization’s limited resources.
In Project Portfolio Management, it is assumed that the enterprise, via the selection and execution of projects, positions itself for increased strength and profitability as well as assuring that the firm continues to thrive in a world of constant change and the threat of competition.
Levine does not claim that the basic elements of Project Portfolio Management
are entirely new. However, before the emergence of Project Portfolio Management,
as a defined discipline, these elements were the responsibility of two
distinct groups: Operations Management and Projects Management. Each group
had its specific role.
| Operations Management | Projects Management |
| Strategies | Schedule/Time |
| Objectives/Goals | Project Cost |
| Business Performance | Project Performance |
| Stockholder Satisfaction | Stakeholder Satisfaction |
| Project Selection and Mix | Scope/Change Control |
| Resource Availability | Resource Utilization |
| Cash Flow/Income | Cash Usage |
Project Portfolio Management, according to Levine, brings these roles and processes together, integrating methods that shift the primary focus to “doing the right projects.” Most of the key processes in PPM support the ranking of potential projects, based on value, benefits, risk, and alignment with enterprise strategies. These processes, and the people involved in them, are considerably different than in traditional EPM. And the focus has changed to “maximizing the realization of benefits.”
As Levine states simply in the Introduction: “Project Portfolio Management is a set of business practices that brings the world of projects into tight integration with other business operations. PPM brings projects into harmony with the strategies, resources, and executive oversight of the enterprise. PPM provides the structure and processes for project portfolio governance.”
Levine subdivides PPM into two primary phases. The first part focuses on the prioritization and selection of projects for the portfolio. The second part deals with managing the projects within the portfolio.
In phase one, Levine discusses the need to align projects with strategies, evaluate value and benefits, appraise risks that might modify these benefits, determine the best use of limited resources, and rank projects for selection. In phase two, he discusses the need to monitor and evaluate approved projects for continuation, delay, or termination.
The book, itself, is divided into two parts. In part one, consisting of thirteen chapters, Levine provides his personal view of PPM, based on over four decades of practice in the field of project management. In part two, Levine invited two-dozen recognized experts in the field to contribute their expertise and experience. This includes several case studies, studies of best practices, and discussion of special methods applicable to PPM, such as Stage-Gate®, Analytic Hierarchy Process, Theory of Constraints, and Earned Value.
Levine has an easy-going style of writing that invites the reader to move through the material with little effort. In most cases, he promotes the common sense aspects of PPM over the technology. The reader will learn why PPM is needed, what it is about, and how to implement its methods and processes. A special section is devoted to some of the fine points that help to cement the promise of PPM.
Part two contains contributions from some of the most recognized gurus
in project management, as well as the lessons learned in several types of
applications. This is a great wealth of knowledge and experiences, presented
in a single (560 page) volume.
This is the author’s third book on project management. He has also
published over 200 papers and conducted hundreds of seminars and paper presentations.
He has spent over 40 years in the field, sharing his experiences and lessons
learned as in this new book.
Levine, and foreword author Wideman, are both past Chairs of the Project Management Institute and are PMI Fellows. They were instrumental in promoting standards and the body of knowledge that form the basis for certification of project management practitioners.
Review by :
Max Wideman is an engineer and professional project manager with experience in systems, social and environmental projects, as well as design and engineering projects. He is a Fellow of the Project Management Institute, of which he is past president and chairman, and for whom he developed the 1987 version of the Project Management Body of Knowledge. He is also a Fellow of the Institution of Civil Engineers (UK), the Engineering Institute of Canada, and the Canadian Society of Civil Engineering. His web site is at http://www.maxwideman.com
EARNED VALUE PROJECT MANAGEMENT
Third Edition by
Quentin W. Fleming and Joel M. Koppelman
Review by Ed Fern
Several features distinguish this new edition from the earlier book.
- There is a new chapter about using Earned Value in procurements.
- There is a new chapter detailing the use of Earned Value in portfolio management.
- There is new information about Price and Usage Variance Analysis.
- There is a concrete proposal for a simplified approach to using Earned Value for every project.
- There is a new chapter dealing with the possible implications of the Sarbanes Oxley Act of 2002 on the employment of Earned Value in publicly held corporations.
The chapter on Earned Value in procurement specifies a six-step process.
- Continue scope definition to include make or buy analysis, then compile a “Listing of Procurements”
- Place all procurements into three generic categories
- Define an earned value metric for each procurement
- Time phase a project procurement baseline
- Measure actual earned value performance (estimate actual costs?)
- Forecast final costs (EAC) based on earned value performance
Fleming and Koppelman suggest using a “three-point” range for estimating costs of the remaining work, introducing a probabilistic element to Earned Value that has previously relied entirely on deterministic estimates. Their estimate to complete, however, still deals only with project costs and does not deal with the task of generating a new estimate for the project completion date.
The new chapter on Portfolio Management details how Earned Value can be used as a source of information about the comparative merits of projects within a portfolio in order to employ resources most effectively. Their analysis focuses on project costs and fails to detail how Earned Value might be used to aid in schedule-critical decision making.
The price and usage analysis chapter points out that cost is often the product of these two variables. Cost analysis may fail to pinpoint the cause of variances and, consequently, fail to provide an accurate picture of what is really happening within a project. Without that accurate picture, corrective actions may fail or may exacerbate a problem.
The ten criteria proposed for a simplified application of Earned Value to all projects are the result of inputs collected by Fleming from more that one thousand of his students, representing every imaginable industry and discipline, over a period of many years. The classroom exercise divided us into groups with the assignment to identify, from the full set of Earned Value criteria, the ten to twelve that were essential to a meaningful information system.
In the final chapter, Fleming and Koppelman assert that Earned Value is the only feasible means of complying with the Sarbanes Oxley Act of 2002 when projects may have a significant impact on a company’s financial position.
This new edition is a good deal more than a simple revision with
a few extra bells and whistles. The authors have identified fresh insight
and documented it well.
Review by:
Edward J. Fern is President of Time-to-Profit, Inc, a Project
Management training firm offering services in the United States and Eastern
Europe. He has held director level positions with Sprint, Control Data Corporation,
TRW, and Infonet Services Corporation. He earned an MS in Technology Management
from Pepperdine University in 1992 and his Project Management Professional
designation in 1998. Ed has served as Vice President of Professional Development
of the Project Management Institute chapter in Orange County and is Sponsor
of the California Inland Empire chapter of PMI. Ed serves as Director of
Education of the American Society for the Advancement of Project Management.
He is the author of Time-to-Profit Project Management: A Primer for Project
Managers in Commercial Product Development and co-author of Six Steps to
the Future: How Mass Customization Is Changing Our World, both published
in English and Russian.
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