The aim of program management is to manage a coherent group of projects in such a way that the Return on Investment of these projects is maximized. This objective is achieved in the following way:
- In the planning phase of program management the priority and sequence of all projects is based on the expected value (financial and other benefits) and risks.
- In the delivery phase of program management the progress and risks of the program and related projects are monitored in a structured way, and the realization of benefits is monitored.
|Strategic Portfolio management
||Programme Delivery Management
The approach for both phases is explained below.
During this phase the data about the value and risks of each project. The value is calculated based on scores for financial benefits, non-financial benefits and the support for the business strategy. The Risk scores are calculated based on an analysis of organizational and technical risks. A practical way to calculate is to make a ranking of all projects, and to standardize the ranking on a scale from 0.0 to 1.0, for example in the following table:
project A: value 0.8, risk 0.3
project B: value 0.4, risk 0.8
A bubble chart is a nice graphical representation of this:.
This bubble chart is an efficient tool to discuss with top management in a brief session whether projects deserve approval and if so, what the priority will be. Projects in the down-left corner of the bubble chart (low value, high risks) are likely candidates for non-approval or low priority, because they combine a low return on investment with a high risk. Projects in the top-right corner of the bubble chart (high value, low risks) combine a high ROI with low risks and therefore they are a likely candidate for approval and a high priority.
The progress of all projects will be monitored with some frequency (e.g. monthly). An efficient tool to discuss the progress of projects with top-management is a traffic-light report, as shown below.
The traffic light report displays the status of the three most important KPIs for all projects: time, quality and budget. The traffic lights show the status in a quick overview:
- Red = the target will not be achieved
- Amber = the target is still feasible, but there are serious issues and risks that might jeopordize the targets. The type of issues and risks are explained in the text column.
- Green = the target will be achieved.
A plus-sign or minus-sign in the traffic light shows that the status is better respectively worse than in the previous status report. If there is no plus-sign or minus-sign in the traffic light then the status is unchanged compared to the previous status report.
Projects that have been completed will be taken off the traffic light report and will be moved to a separate report with a lower frequency (e.g. every 6 monts). This separate report will show which percentage of the expected benefits have been realized. Often this report will trigger additional actions for optimizing the use of IT. All completed projects will stay on this report, unless all benefits have been achieved of if it is decided that it does not add any value to keep the project on the list.
Costs & Benefits
The costs of program management depend very much on the number of projects in the program, and on the time that is needed to collect all the raw data. Usually program management will need 0.4 up to 2 FTE for large programs.
The benefits of program management are:
- Maximize Return on Investment on projects
- Adequate management of risks in projects
- Monitoring of the realization of expected benefits, and optimization of the use of IT.