Sustainability in Project Portfolio and Program Management

This report evaluates the functionality of project portfolio management and its impact on different aspects of business in Richard Crookes Constructions. It suggests using return on investment method for project evaluation and Kotter's change management plan for change management strategy. It also discusses methods and techniques used in business and threats and issues in stakeholder management.

Sustainability in Project Portfolio and Program
Management
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Executive summary
The main focus of this report would be to evaluate the functionality of the suggested portfolio
management function in order to convince the members of the organization that are resisting.
This report has disclosed the impact of project portfolio management on different aspects of
business in Richard Crookes Constructions. This report has suggested that management
should use return on investment method for the purpose of project evaluation. In addition to
that Change management strategy suggested in this report is Kotter's change management
plan. In addition to that this report has also explained methods and techniques that are
currently used in business. Threats and issues in stakeholder management is also discussed in
the report for facilitating implementation process.
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Contents
Executive summary....................................................................................................................2
Introduction................................................................................................................................4
Situational context......................................................................................................................5
Portfolio evaluation....................................................................................................................8
Portfolio management..............................................................................................................10
Maturity levels.........................................................................................................................12
Corporate culture......................................................................................................................15
Conclusion................................................................................................................................18
References................................................................................................................................19
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Introduction
Project Portfolio Management (PPM) can be defined as the art and science of managing
different project undertaken by a particular organization. This business management
technique is critical for an organization as its success is dependent on the success of different
projects undertaken by them. PPM helps the business organization to understand and evaluate
the operational and financial viability of such projects. Main focus of this report would be on
project management in family-owned business organization i.e. Richard Crookes
Constructions. This is a family-owned company that has been operating in Australia since
1976and it has been providing construction services to private as well as government
organizations over the period of time (Bodie, Kane & Marcus, 2013). In the given situation,
management of the organization has proposed to implement PPM. Management of the
organization has appointed us for the purpose of implementing the PPM and this report will
describe various aspects of implementation process. In the provided case study, there are
certain members of the organization that are not satisfied with the approach suggested by us
for the purpose of implementing portfolio management. This report will help in convincing
such members of the company.
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Situational context
Need and requirement of implementing portfolio project management in any business
organisation has increased including Richard Crookes Construction. One of the primary need
of implementing this project portfolio management is to director business operations towards
growth and development (Bodie, Kane & Marcus, 2013). This is due to the fact that resource
allocation and cost of agency can be maintained by the organisation with the help of selecting
effective and efficient projects for operation in the business. After conducting analysing past
performance of different project undertaken by this organization it can be said that there are
no failed projects in past. Success rate is expected to increase with the implementation of
PPM (Nikkhou, Taghizadeh & Hajiyakhchali, 2016).
Investing in the right projects
After evaluating different projects completed by the organisation, it can be said that currently
over on success rate of this is high. In addition to that there is a scope of improvement over
the period of time with the help of effective and efficient project management structure.
Project management principles- management of the organisation has been using principles of
PMBOK providing standardization to the project management process (Longenecker, Petty,
Palich & Hoy, 2013).
Project management methodology- Currently management has been using prototyping
methodology for developing projects.
The main purpose of portfolio management is to evaluate the financial and operational
viability of a particular project undertaken by the organization. There are certain projects
undertaken by the organization that might not be very operationally viable and financially
profitable for the organization (Burns & Dewhurst, 2016). This is one of the primary reason
that management of the organization is a considering to implement portfolio management
function in the business. Therefore it can be said that current management is not taking 100%
accurate decisions in relation to investing in the right projects.
Capacity Optimisation
After evaluating the working of the organization it can be said that management is operating
at 100% capacity. This is due to the fact that Richard Crookes Constructions has been in
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operation for a long period of time and it has experience in relation to capacity optimization
and resource utilization. The capacity of this organization changes regularly in accordance
with the business environment (Longenecker, Petty, Palich & Hoy, 2013). If the demand for
construction services in the industry is lower than the capacity of this organization
automatically decreases as it is more profitable in this situation.
Execution
There are various key performance indicators that can identify whether a particular
organization is executing effectively or not. One of such key performance indicator is overall
revenue and profitability. After evaluating these key performance indicators it can be said
that this organization is executing in an effective and efficient manner (Hatten, 2015). Overall
profitability of the organization has been increasing over the period of time which is a
positive indicator.
Absorption of changes
Management of the organization is using different Change management Strategies for the
purpose of executive different projects and incorporating the changes in day-to-day
operations. Therefore it can be said that Richard Crookes Constructions has been successful
to absorb the changes that are created out of the internal and external business environment
(Hatten, 2015). Change management strategies that are currently used by the organization is
Kotter's change management plan.
Realization of promised benefits
According to the annual review of project selection and performance, it can be said that
management is not able to achieve targeted profits. There are some deficiencies in current
project selection performance strategies that can be mitigated with the help of implementing
new portfolio management technique (Maylor, Blackmon & Huemann, 2016).
Decision making process-
Following is the basic decision making process that is generally used by management of
Richard Crookes Construction for incorporating the changes with respect to project portfolio
management-
 Identifying decisions to be taken
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 Gathering information for supporting the decision
 Evaluating different alternatives
 Pros and con analysis of the alternatives
 Selecting change management strategy
 Implementing change management strategy
 Review decision and its consequences (Hatten, 2015)
Following are some of the foreseeable resistance factors that will affect Richard Crookes
Construction-
 Resistance from employees
 Lack of experience in project portfolio management
 Assessing the impact of internal and external environment
 Satisfying and managing requirements of stakeholders.
Acceptance factors-
 Increase in efficiency of business.
 Increase in profitability margins
 Better resource management (Danesh, Ryan & Abbasi, 2015)
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Portfolio evaluation
Project evaluation method
There are various methods that can be used for the purpose of evaluating a particular project
such as return on asset method, return on investment method, return on capital employed
method, return on equity investment method, etc. currently management of the organization
is using return on investment method for the purpose of selecting a particular project for
execution in the business. This method management is selecting a particular project to only if
the targeted profit from such project is higher as compared to targeted cost (Martinsuo, 2013).
Therefore overall investment should be lower as compared to profit on the project. Targeted
cost estimated by the management is also used for the purpose of quoting the price of the
project from a customer.
Comparison with other methods
As it is already discussed that there are various methods of evaluating a particular project and
management has chosen return on investment method as compared to other methods. This is
due to the fact that it has superiority over other methods. Return on investment helps in
maintaining effective and efficient profitability margins which are very important for a
family-owned business organization. Choosing other methods such as return on share capital
will not be appropriate in the given scenario as an equity investment in the organization is
very limited as it is a family-owned business (Chandra, 2017). In addition to that Richard
Crookes Constructions has been operating in this business for a long period of time and
estimation of targeted profit and cost is easy for the organization.
Challenges in the global environment
One of the primary challenges that you will arise out of the return on investment method is
that estimation of targeted profits and cost will be very difficult in the global environment.
There are various assumptions that are required to be made by the business organization by
estimating cost and profit promo particular project such as inflation rate. For example, the
inflation rate might change over the course of the construction as some construction projects
are very time-consuming (Klingebiel & Rammer, 2014). Management of the company has
been operating only in Australia since its Incorporation and is not aware of different factors
that can affect business in the global environment.
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Benefit management life cycle
Benefit management lifecycle can be defined as the process that involves identifying,
planning, measuring and tracking of the benefits that arise out of a particular project.
currently, management of the organization is using the benefit to management lifecycle in
order to identify whether the targeted profits estimated at the starting of the project are
actually realized in the course of project or not (Stark, 2015).
Impact on deliverables goals of organizations project
Benefit management lifecycle always has a positive impact on giving the desired goals in a
particular project. One of the primary function of a benefits management lifecycle is to
evaluate the progress of the project at regular interval of time along with identifying the cost
associated at the time of such assessment. Therefore it can be said that management will be
able to complete the project within the estimated budget and timeline with the help of
benefits management life cycle (Bradley, 2016).
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Portfolio management
Alignment of organizations collective projects with strategic objectives
Each and every business activity undertaken by an organization should be directed towards
overall goals and objectives of the company. Therefore it is important that final objective of a
particular project undertaken in business is in line with organization’s strategic goal (Garcia,
Vasconcelos & Fragoso, 2018). Following are the methods that are used by Richard Crookes
Construction for the purpose of such alignment-
Balance scorecard method-
Balance scorecard is a very efficient method of converting strategic goals into operational
action strategies business. Apart from that it also helps in measurement of overall as well as
selective performance of a business organization (Garcia, Vasconcelos & Fragoso, 2018).
This strategy will help in ensuring that performance of individual projects are in line with
organizational goals.
Mission and vision statement-
Development and revising of mission and vision statement has become very common in
current business environment. This strategy helps management to provide direction to the
different projects undertaken by them in day to day operations (Garcia, Vasconcelos &
Fragoso, 2018).
Project Management Office
During the planning stages of portfolio project management, it was decided that a project
management office will be incorporated by the organization and it has been incorporated
during the initial stages of execution. Project management office can be defined as a group of
departments within an organization that helps in the standardization of project management
functions and policies. It can be said that this project management office has played a very
prominent rule in standardizing practices and increasing project success rates over a period of
time. This is due to the fact that this office was established specifically for the purpose of
standardizing project management practices. This has brought clarity in the manner in which
different projects are being undertaken by the organization (Pemsel & Wiewiora, 2013).
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Standard policies and practices have been developed by the office for different projects to be
undertaken such as government projects or private projects. This has also helped in defining
overall roles and responsibilities in such projects which have increased the overall success
rate (Pemsel & Wiewiora, 2013).
Functions of this office can be established by the organization without establishing a separate
office for this function. Alternative of this project management office can the rules and
regulation prepared by top management of the organization. This alternative action will
require participation on part of top management and departmental heads. Top management of
the organization will prepared strict rules and regulation for each and every department
regarding project portfolio management (Turner, 2016). These rules and regulations will be
communicated to every department in the organization and responsibility of overseeing
whether department is following every rule will fall to departmental head. During the initial
stages this option might be more productive as it would be cost efficient and less time
consuming.
Managing project portfolio
Currently, management of the organization is using the following tools and techniques for
managing project portfolio-
Quantitative- For the purpose of evaluating benefits to be arising from a particular project in
quantitative terms, management of the organization is using the net present value method.
This method helps in identifying overall benefits that are expected to be achieved from a
particular project by using the concept of "time value of money". Return on investment
method is also being used along with this method in order to satisfy the conclusions made
with net present value method (Too & Weaver, 2014).
Qualitative- System testing technique has been used by management in order to evaluate the
quality of the project portfolio. System testing helps in identifying whether a particular
module of the project is working effectively with the whole system. This type of testing
methodology is very effective qualitative tool of project portfolio assessment.
Both of the above mentioned tools and techniques for managing project portfolio are
effective and producing positive returns for the company. This can be concluded form the
fact that in recent years none of the projects undertaken by Richard Crooks Construction has
failed to produce expected outcome (Carstens, Richardson & Smith, 2016).
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Maturity levels
The following can be defined as the five stages of project portfolio management maturity-
Current maturity level
The concept of project portfolio management in Richard Crookes Constructions is very new
as management has a note to effectively achieve the implementation process. In addition to
that, there is the various executive in the organization that is opposing the validity of this
methodology and creating resistance for implementation. Therefore it can be said that project
portfolio management is at level 1 i.e. foundation in Richard Crookes Constructions
(Crawford, 2014). It is expected that business organization will understand the advantages of
project portfolio management and its maturity level will increase over the period of time.
Key practices and model
Following are the key practices that should be adopted by the management of Richard
Crookes Constructions in order to improve the maturity level-
 First of all, it is suggested that each and every executive should understand the
importance of project portfolio for the overall success of the organization.
 All the changes brought in due to the introduction of project portfolio management should
be incorporated effectively with the help of Kotter's 8 step model.
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 The functionality of project management office should be reviewed at regular interval of
time to identify its advantages on the performance of the organization (Kerzner, 2019).
 Roles and responsibilities in project portfolio management should be clearly defined.
The organization should do using Prince2 methodology for the purpose of implementing
project portfolio management. Principles of this methodology will definitely have a positive
impact on the overall implementation process and it will help in improving the maturity level.
Implementing the changes
As it is already discussed that Kotter's 8 step model should be used by management in order
to incorporate the changes. 8 steps described in the method will definitely help management
to incorporate the changes in each and every aspect of the business. Negative impacts of the
changes will be reduced to a minimum with the help of this methodology (Hopkinson, 2017).
Primary cooperation will be required from top management of the organization as negligence
of participation from executive members is always a negative sign. In addition to that
executive members should also instruct all the departmental head to understand the changes
effectively and incorporated them accordingly.
Source- https://www.managementstudyguide.com/kotters-8-step-model-of-change.htm
Implementation process in accordance with Kotter’s Change Management model is as
follows-
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Increasing urgency- In this situation management of the organization is identifying the need
of project portfolio management in business. Communication to stakeholders will be an
important step in this process.
Build guiding team- In this step management of the organization will be developing a team
that will be responsible for actual execution of the PPM in business. This team will be
developed from different internal departments of Richard Crookes Constructions (Small et.al,
2016).
Develop the vision- Vision of the project will be created and in this scenario vision should be
to improve construction project selection process.
Communication of vision- Vision will be communication to employees and management
specifically to the PPM development team members.
Removing obstacle- All the factors that might have negative impact on the PPM development
process should be identified and managed (Small et.al, 2016).
Creating short-term wins-Project deliverable will be prepared to ensure undertaken project is
in line with project timeline and budget.
Consolidating gains- Comparison is required to be conducted to between new PPM method
and older method to identify benefits of the project.
Anchoring corporate culture- Changes are required to be incorporated in organizational
culture (Pollack & Pollack, 2015).
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Corporate culture
Concerns of stakeholders
Internal stakeholders-Internal stakeholders will be concerned about the changes in operations
of the company due to implementation of new project portfolio management policies and
procedures. This will definitely impact their day-to-day operations that can create resistance
from internal stakeholders surcharge management and employees.
External stakeholders- External stakeholders will be concerned about the manner in which
management is representing profits and success rate of the project. Detailed report is required
to be provided to the stakeholders including a comparison of new PPM with older methods
for providing clarity (Hogan & Coote, 2014).
The corporate culture of the organization
There are various categories of organizational culture that are adopted by Business
organizations for effectively executing their functions such as adhocracy culture, market
culture, hierarchy culture, etc. as it is already discussed that Richard Crookes Constructions is
a family-owned business, therefore it is using clan culture as their corporate organizational
culture. Clan culture can be defined as an organizational culture which is an environmentally
friendly 1 and functionality of such organization is similar to a large family. Being a family-
owned business impact of key internal stakeholders and their influence is very high as
compared to other stakeholders (Alvesson & Sveningsson, 2015). This is very common in the
family on business as the influence of certain members of a family is higher due to their
superiority in terms of age and experience. Therefore it can be said that the influence and
input of different internal stakeholders are different.
Impact of changes on stakeholders
Stakeholders in any business organization can be categorized into two categories i.e. internal
stakeholders and external stakeholders. There will be a significant impact of changes in
Richard Crookes Constructions due to implementation of project portfolio techniques on each
and every stakeholder of the organization. For example, the working of internal stakeholders
will become significantly different as compared to normal day to day operations. This is due
to the fact that business processes will be standardized by the Project Management Office
established as a result of project portfolio management (Bourne, 2016). Similarly, the
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functionality of different internal and external stakeholders will change. Therefore it is very
important for management to consider the impact that these changes will have on different
stakeholders and prepare strategies to satisfy them.
As it is already discussed that organizational culture in Richard Crookes Constructions can be
categorized as clan culture which creates a friendly environment in the workplace. This
friendly work environment will be a positive factor towards the implementation of changes
the proposed due to the execution of project portfolio management (Verbeke & Tung, 2013).
Assigning of roles and responsibilities in the change management plan will be very easy due
to the friendly nature of the work force.
Challenges/ threats in implementation of PPM
Some of the primary challenges that will be faced by management in the execution of
executing the project portfolio management are as follows-
 Resistance from employees- This will be one of the primary challenges that will be faced
by the organization as resistance will be created by employees as their day-to-day
operations will change after execution of PPM.
 Lack of experience- lack of experience in the field of project portfolio management will
also be a challenge for an organization that will be mitigated over a period of time
(Eskerod & Jepsen, 2016).
 Assessing the impact of internal and external environment you will also be a challenge.
Positive and negative impact of implementing project portfolio management-
Positive impact-
 Better risk management of different project to be accepted.
 Improvement in management decision making process regarding selection of projects
(Kaiser, El Arbi & Ahlemann, 2015).
 Project success rate is expected to improve.
 Better resource management.
Negative impact-
 Large number of changes will be required in business.
 Ineffective change management can have significant negative impact on business.
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 Efficiency of employees might decrease due to changes in day to day operation
(Kaiser, El Arbi & Ahlemann, 2015).
 Overall training and development cost will increase.
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Conclusion
On an overall conclusion, it can be said that there is a requirement of effective innovation
project portfolio model in the organization for identifying operational and financial viability
of the project. Every executive member in Richard Crookes Constructions should understand
the importance of implementing project portfolio management and the primary focus of this
report is to communicate the positive impact of such a strategy. It is expected that this report
will be helpful in communicating the advantages of PPM and improve the maturity level from
level 1 to level 5 over the period of time.
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