Friday, July 05, 2024

Building and Using A Practical Portfolio Benefits-Realization Plan with MS Project (Part - 1)

Bugs smell, features tell, benefits sell.

-    From the book, I Want To Be A PfMP, the Plain and Simple Way

Portfolios fundamentally exist in an organization to achieve organizational strategies and objectives. One or more strategic objectives of an organization flow into the portfolio strategic plan. After the identification, categorization, evaluation, prioritization, and authorization of portfolio components, their execution begins and benefits are delivered. This, which in turn, helps in achieving the organization’s strategic objectives.

But then following questions come -up:

  • How do you ensure strategies are fulfilled in order to meet the strategic goals?
  • How do you find out that the portfolio components authorized earlier are actually delivering the benefits?
  • How to plan for, measure, and monitor the organization’s (business) value achievement?

The answers to above questions lie with portfolio benefits management. The Standard for Portfolio Management (SPfM®), clubs benefit management under Portfolio Performance Management. Benefits and their subsequent realization are extremely important in portfolio management. And as the opening quote tells, it's only benefit that sells! 

In this article, we will understand portfolio benefits, the benefits dependency map, and above all, how to build a benefits-realization plan with the MS Project software tool. The portfolio benefits-realization plan will be based on the template provided by SPfM from Project Management Institute (PMI®).

This series: Part – 2

Portfolio Benefits

Portfolio benefits are first identified during the definition stage of the portfolio and documented in the portfolio strategic plan (PfSP). These benefits will flow into the Portfolio Performance Management Plan (PfPMP) and are documented in the Benefits Realization section of the PfPMP. 

Benefits can be qualitative or quantitative, tangible or intangible, financial or non-financial, short- or long-term. Irrespective of the type of portfolio benefits, they need to be clearly defined and documented in the PfPMP.

The portfolio benefits actually come from the portfolio components. These benefits are aggregated at the portfolio level. The benefits in turn help achieve the strategic objectives of the organization. To understand it graphically, you need to be aware of another fundamental concept, the benefits dependency map (BDM).

Benefits Dependency Map

A simplified benefits dependency map is shown below.  

As shown in the above BDM, moving from left to right of the map, we have organizational vision (and mission) translated to strategic objectives. These objectives, in turn, translate to benefits, and then to outcome to outputs (or results). In other words, moving from left to right we are asking – “How the strategic objectives are finally executed to give results/outcomes/output”? On the other hand, moving from right to left we are asking – “Why this portfolio component (e.g., project), which is giving this result (or service or product) is undertaken in the first place?” 

As you can see, we are moving from strategic objectives at the level of portfolio to benefits at the level of portfolio components. With these fundamentals, let’s see how to build the benefits-realization plan. 

A Practical Benefits-realization plan

We will take a step-by-step approach to build the Portfolio Benefits-realization plan with MS Project software. Along the way, we will do a few customizations and apply them to the software tool. 

Step – 1: Add A ‘Portfolio’ Custom Field 

To add a custom fieldle, go to Gantt Chart Tools > Format tab > Columns group > Custom Fields command and add a Text custom field “Portfolio”. Under this custom field we will have various portfolios undertaken by the portfolio manager. 

Next, add three portfolios under this custom field – Portfolio I, Portfolio II and Portfolio III. For each portfolio we will have a number of components and we will add them shortly.  

Step – 2: Rename ‘Task Name’ Column to ‘Portfolio Component’ *** UPIDATED ***

Before adding the components, rename the Task Name the column to Portfolio Components. This can be done by right clicking on the Task Name column and choosing Field Settings option.

When you have both the Portfolio custom field showing having the above three portfolios and the renamed column of Portfolio Component, you will have the following figure. 

For the time being, do not worry about the start and finish dates for the portfolios. Abecause after we add the portfolio components and strategic objectives, we will get those dates. 

Step – 3: Add the Portfolio Components and Strategic Objectives

In our next step, we will add the portfolio components and the strategic business objectives, which will be met when the benefits delivered by portfolio components are realized. 

To add the portfolio components, fyou just have to fill -up the line entries under the Portfolio Components column with respective component projects, programs, operations, and strategic objectives. This is very much like adding the task names in a normal MS Project plan. After you add the entries, you will have the following plan.    

This is the first -cut of our Portfolio Benefits-Rrealization Pplan, which we are going to refine as we proceed. As shown above, for Portfolio I:

  • There are three component projects - Project 1, Project 2, and Project 3 - and also Component Program 1.
  • Organizational Strategy and Objective I will succeed the completion of the project and program components. 

Similarly, we have components, including operations, for other portfolios such as Portfolio II and Portfolio III in the evolving plan. 

Step – 4 (mini one): Ensure Proper Timescale

Did you notice on the right side of the above figure that the timescale has changed?! This is important because, without proper timescale adjustment, you won’t be able to visualize the long running portfolio components such as a program or a long-term project. 

In our case, I’ve used the below timescale customization.  

As shown above, we have:

  • Two tiers – Middle Tier and Bottom Tier.
  • For the middle tier, Units used is Years, whereas for the Bottom Tier, Units used is Quarter.
  • The Preview is shown belowbelow, and the exact same view is available in the previous figure.

Step – 5: Build the Dependencies

Now that we have the right time-scaling, we must ensure the dependencies between the portfolio components and the strategic objectives which will be met when they are complete. 

After you add the dependencies, the view will come as shown below. For an in-depthTo understanding of know in-details about dependencies, lead, and lag, , you can use this course.

Interpreting the above figure and dependencies, one can say:
  • Component Program 1 has finish-to-finish (FF) dependency with Component Project 1 and Component Project 2. 
  • Organizational Strategy and Objective I has FF dependency with Component Project 3 and Component Program 1. 
  • Organizational Strategy and Objective I also has FF dependency with Component Project 3 and Component Program 1.
In other words, you can say that Organizational Strategy and Objective I will be achieved when component Project 1, Project 2, Project 3, and Program 1 are completed and associated benefits are realized. This is important to understand.

Similarly, as you can see in the above plan, other organizational strategic objectives are associated with other portfolio component projects, programs,  and operations.

In the next part, we will follow few more steps such as seggregating the components based on their classes or categories. We will conclude with a video demonstration.

This series: Part – 2

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