For any size business that undertakes multiple simultaneous projects, the ability to manage the project portfolio is a constant struggle (1). In particular, the portfolio over time tends to move to a higher state of disorder akin to the concept of entropy (2). Think about what happens at most companies, large and small: over time, more projects get started before existing projects are complete. Engineers are expected to work on not just one or two projects, which is ideal, but now must multi-task across multiple projects. On top of that, important customers demand new software features or enhancements to existing products, further diluting the focus on current projects. Statements like “every project seems to be late, never early”, “we always underestimate project cycle time” and “we constantly pull team members from a project to fix high priority customer requests” are common, especially in small to mid-sized firms. There are simply too many projects for too few resources, and the system grinds to halt.
In Part I of this article (3) I reviewed five tools that management can use to help bring order to a chaotic portfolio. They are particularly well suited for small to mid-sized organizations that are just beginning to realize that the informal processes they have used in the past will not suffice as the company, and the project portfolio, grows.
One of the five tools described in the original article is PortView from the Adept Group (4). The tool allows the user to input data via Excel and plot a wide variety of bubble charts, using any x and y axis definition that makes sense. To illustrate, Figure 1 shows an example of a “cumulative frontier” for a company managing multiple projects. In this example, and very typical of most existing project portfolios, about 90% of the value generated by projects could be done with 50% of the resources. Some of the projects in the flatter portion of the curve in the upper right quadrant of the graph might warrant a “kill” decision. Of course, there may be good reasons to continue them, but tool can be used by management to help bring order to a chaotic project portfolio, and reallocate scarce resources to higher-value projects.
Another example of PortView is shown in Figure 2. In this example, months until launch is on the y axis, and the project phase on the x axis. All projects are represented by bubbles, the size being NPV relative to other projects, the color associated with market segment, and the segment the probability of success. You will also notice that each bubble has a line with an arrowhead. This indicates where the project was the last time it was evaluated. In a perfect world, all projects would start in the upper left quadrant, and progress to the lower right quadrant. Reality is much different. For instance, in this example, the “Venus J” project has moved almost vertically since the last evaluation. For whatever reason, the time to launch has increased, not decreased. If a majority of projects in this diagram exhibit similar patterns, then the portfolio is in a high state of disorder and management must determine the reasons and take corrective action.
I want to expand on that discussion in this article, and describe another very useful tool well suited for small to mid-sized companies. This online, cloud-based tool is provided by Nupe (www.nupe.com). The basic tool is free, and there is additional functionality that will be added for a very nominal monthly fee. The basic tool, however, is very full-featured and provides an excellent way to visualize a portfolio and aid in decision-making. Let’s illustrate how it can be used.
First, the tool allows you to create an online portfolio that consists of multiple projects. Figure 3 illustrates one of several projects that reside within a demonstration portfolio currently on the Nupe website.
The graphics and text can be fully customized for the project. For each project in the portfolio, you can choose from broad range of standard metrics (e.g. investment, revenue, resource requirements, etc.) or scorecards that relate to a bubble chart. For instance, you can choose a set of scorecard metrics that includes “importance to market” (x-axis), “technological advantage” (y-axis) and “market size” (bubble size). You input a relative ranking from 1-5 and the program generates a bubble chart with all the projects plotted. Figure 4 shows the set of metrics chosen for the project in Figure 1.
Now, once all projects and metrics have been input, you can then go to the report tab and see a consolidation of all the projects. In this example you would have access to reports, both in bar chart and tabular form, for NPV, total investment, total number of FTE Electronic engineers, and mechanical engineers. You would also have access to two bubble charts based on the scorecard metrics chosen. Figure 5 shows an example of the reports page, with the NPV metric highlighted. As you select each of the metric boxes at the top, the appropriate chart is displayed.
Figure 6 shows an example of one of the bubble charts. In this case, the bubble size relates to relative market size.
Once all the data is input, another useful feature is the portfolio planning mode. In that mode, while viewing the bubble chart above, you can select individual projects, and remove them or add them back into the portfolio and watch what that does to the overall set of metrics. Figure 7 illustrates this functionality. You see that a project is highlighted and if you select “-“, it will be removed from the portfolio and all the consolidated metrics on the top of the figure below will change in real time. You can add back by selecting “+” or choose “i” to see the information on that project.
In summary, Nupe is an effective portfolio planning tool that has many powerful features available at no charge and an appropriate choice for many small to mid-sized companies who are just starting to develop more sophisticated processes for managing a portfolio of projects. Not only can the tool help make decisions about the relative value of a set of projects in a portfolio, but also help highlight the need to find projects that will lead to “bigger, better bubbles” as my colleague Paul O’Connor at the Adept Group contends, rightfully so, is an important aspect of portfolio management. As additional functionality is added to the tool, it will only improve. PortView is also a valuable tool that provides maximum flexibility in generating useful bubble charts for portfolio management.
Are you interested in using either tool? New Product Visions is happy to help you utilize both tools, as well as set up an initial portfolio in Nupe. We can of course also assist in evaluating your overall new product development (NPD) process, offer suggestions, and guide implementation. Contact firstname.lastname@example.org for additional information on the services provided by New Product Visions, or visit our website at www.newproductvisions.com. Nupe and New Product Visions are soliciting feedback and input as the tool is further developed.
What tools do you commonly employ to help manage the project portfolio? Which ones have you found to be effective, and which ones are least effective? Are there other useful tools not described here you would add?
- For additional information on portfolio management, see these articles: Assessing Disorder in a New Product Development (NPD) Process, The Importance of a Balanced Project Portfolio, Critical Aspects of Project Portfolio Management in NPD Success.
- Paul O’Connor of the Adept Group (adept-plm.com) is credited with the concept of entropy as it relates to higher states of disorder in project portfolios. The second law of thermodynamics states that all systems move to a higher state of disorder. To bring more order, energy must be expended.
- See Practical Tools for Project Portfolio Management.
- PortView is a product of the Adept Group (adept-plm.com). If you are interested in assessing its capabilities for your application, please contact Jeff Groh at New Product Visions (email@example.com).
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