portfolio governance structure

December 2, 2020

One way of dealing with the increase in complexity and the significant increase in the use of projects as a method to deal with challenges is to introduce the business practice of PPM[3]. illustrations may have changed. However, if the project is deviating from the schedule, budget or other significant metrics – the project management office must be notified or detect the deviation and report it to the governance board. In this article we will review what a governance structure means and what the Steering Committee is. In the example represented in Figure 2, the Executive Team consists of the VP's of four business and service organizational units that conduct or make use of projects within the enterprise portfolio. [2]. In case the organization does not have employees/managers who possess the required knowledge and expertise, an advisory board to the governance board can be a good and flexible solution. A best-practice framework and set of guidelines enables your organization to more effectively create, control, and deliver all types of work. Project Management Centre of Excellence (PMCoE) Let’s discuss the responsibilities, accountabilities & authorities of the Business level PMO’s:1. The purpose of this article is to address and stress the importance of organizational design - including organizational structures needed for a PPM organization to be effective in and co-exist with a classical line organization - for the enterprise to become successful. The work is kept to the individual functional division and isolated from the others. PPM has successfully been applied in IT and software development companies with a strong need for continued alignment and where product life time is often very short. It gives an introduction to how you can, on the basis of certain criterias and demands, lead and design organizations. The “tail” of the project tends to be underestimated, but this is where the project spend is transformed into business opportunities – the product enters the finalization and maintenance phase (project excellence). Advantages of the Matrix structure:[4][1][2], Disadvantages of the Matrix structure:[4][1][2]. What was done. Essentials of Contemporary Management(5th edit.). Division PMO 3. Business Unit PMO 4. resource conflicts, between projects, etc.) ... An overview of structure follows strategy. Project Office 6. In the ideation phase, it is all about managing uncertainty – potentially having limited knowledge about the market, the technology, the resources required, and the organization. The purpose of introducing Project Portfolio Management (PPM) is to establish and formalize an entity, that provides insight and transparency for the senior management to constantly align the activities (projects) with the strategy and thereby utilize the limited economic and human resources of the organization in the best possible way[3]. In addition, governance requirements and strategies have been discussed with business leadership through MN.IT Services’ strategic planning process and through input from the Technology Advisory A project is focused on creating a unique product, service, or result. If the market insight is insufficient or product features are deemed unknown, a panel of lead users could be established [8]. This content is no longer being updated or maintained. Before we launch into a more detailed discussion of program governance, let us define two basic terms we will use in this article. It is of significant importance that the PPM organization has the right information to be able to determine which projects that will enter the next stage and which ones that will be trashed. business function that operates at a strategic level in collaboration with an organization’s executives As mentioned above, there are several types of organizational structures. time and expenditures. The simplest definition of project governance is that it is the framework for effective project decision making. Project Portfolio Management: A Practical Guide to Selecting Projects, Managing Portfolios, and Maximizing Benefits. The organizational structure is primarily applicable for ongoing operations rather than projects. The framework comprises: The structure composed of the governance decision-making committees and roles; The people that populate the governance structure; Furthermore, they are also grouped in project or product teams in order to create a diverse group with different skill sets and functions that shall develop a specific product. The following structures have been selected as relevant for this article. Centralized resources – it ensures sustainability in the organization (the knowledge remains in the individual department). Portfolio Governance Teams. The structure can be selected and designed in order to fit your organization – there is no “one-size-fits-all” structure. Depending on the type of enterprise/organization, e.g. static.content.url=http://www.ibm.com/developerworks/js/artrating/, ArticleTitle=Establishing portfolio management governance: Key components. Tiered organizational structures, based on a hierarchy of programs and portfolios, are common for PPM implementations of larger scope. (2005). It is a defining move in maturity on a path that started with Michigan’s consolidation efforts in 2002, a … The evaluation is determined based on strategic fit, risks/uncertainties, and benefits for the corporation; it is essential for optimal utilization of the financial and human resources of the enterprise. Depending on the size of the organization, this can be a team of directors and managers. Easy access to “experts” - since they are in the same functional unit. Relatively small and simple teams and communication system. It provides the tools and accumulated experience to become a good and successful practitioner. Portfolio governance is a cornerstone of any effective PPM process. Project PMO 5. You can also apply project governance to your portfolio to govern your programs. The projectized organization rarely has a functional manager. Project Management Institute, Inc.. (2017). It can be a comprehensive task to select and design a proper structure for an organization, which cater for the desired increase in efficiency and effectiveness of the organization. It is a great addition (with a practical perspective) to any other organization design litterature. Repetition of facilities and job functions – the resources and tools only belong to one project in the organization at a time. The board needs to select the portfolio and ensure good governance is undertaken.The board directs, approves and monitors progress to delivery of the required (strategic) benefits. You need good governance to realize value and transform your vision with ServiceNow. The success criteria, and the ability, of the organization to execute the right projects are closely linked to their capability to design and structure the organization[1][2]. The same holds true for portfolio or program governance. Authority to both project managers and functional managers – building a strong culture within the teams across divisions. Application Portfolio Management is a framework to identify every IT software applications within the company and to manage these applications in a clear and efficient overview. IBM and Red Hat — the next chapter of open innovation. Michael F. Hanford. Establishing portfolio management governance: Key components. Project Request Management levels to achieve portfolio strategies and balance enterprise risk Governance Structure § Three-tiered structure consisting of a Group, a Board and a Council with varying thresholds of responsibilities § Governance structure evaluates and certifies Enterprise IT service proposals Requirements Management § Process for the user community to Active projects that progress within the boundaries determined by the governance board will report “progressing as planned”. The organizational structure will vary from enterprise to enterprise, but figure 4 indicates the typical elements of PPM organization structure. The composition of the project team will change as the project progresses towards hand over to the company’s delivery organization and the uncertainty is transformed into risk management, i.e. A governance operating model may assist the board and management in fulfilling their governance roles. The organizational structure should be perceived as a dynamic tool to optimize the business. Organizational structuring is in essence about placing your resources and getting the most out of them as possible. The full article is provided "as is" in a PDF file. The article addresses the important concepts and the application of how to obtain an optimal organizational design which is needed in order to execute on the strategy of the organization. More effective communication than in the functional structure – the project team usually works in the same location (or room) which increases the efficiency of communication significantly. This also eases the scheduling of work. ... Members of the Executive Committee need to review the organization and its investment portfolio to make sure strategies reach their intended goals. The successful implementation of PPM requires a transformation of the organization involving significant changes to the roles and responsibilities of not just the upper management level but to the entire organization - a new organizational design is needed. The IT Governance structure for contains three core levels: Portfolio Management Office (PfMO) Information Management Advisory Council (IMAC) Information … The scope of PPM begins with preparing the proposed projects (options) against a set of well-defined selection criteria and making sure that only relevant project are ranked and presented. A portfolio plan is a depiction in words and diagrams of what the portfolio comprises, its major dependencies, expected timescales and major deliverables, defining how the portfolio will be managed. The individual department usually works independently and isolated from the other departments. Less efficient use of resources – the resources are dedicated to one project only and they cannot be allocated to another task, which creates inefficiency. However, the standards provided as readings in class only very briefly address the PPM (Management of Portfolios [9]) and the “real” challenges associated with applying PPM could be elaborated more. As per the Project Business Management framework, there are various PMO roles listed below: 1. The importance of Organizational Structures in Portfolio Management, Creating the optimal Project Portfolio Management organizational structure. Chapter 7 describes the design of organizational structures from an organizational management point of view; including a more in-depth elaboration on each of the structures and the choices of why a certain structure is chosen by the managers. governance practices that were used by individual state agencies, by other states, and by MN.IT Services prior to consolidation. This is a book on project portfolio management (PPM). The portfolio management office hosts and provides infrastructure for the portfolio management teams, i.e. In this context, the function is a grouping of employees, who hold the same knowledge or field of work. It relies on the ability to set up projects and manage the project team composition as the projects move through the different stages. Given the rapid evolution of technology, some content, steps, or The PPM method relies heavily on the ability to compose a team of highly motivated employees from an internal resource pool. The content is provided “as is.” Given the rapid evolution of technology, some content, steps, or illustrations may have changed. Project management is usually underestimated and is reflected in the success of projects. Implementing good IT governance requires a framework based on three major elements: effective structure, effective process, and effective communication. Project governance differs from daily governance, also known as your organizational governance, since daily organizational rules and procedures cannot provide the structure necessary to successfully deliver a project. The portfolio’s governance structure and operating systems are based on strong leadership on the basis of government objectives and frequent monitoring of performance against these objectives. However, it is important to notice that changes will create uncertainty among the employees and will result in resistance – transparency and open communication is perceived as one of the most effective measures to minimize the resistance. One of the most important aspects of project portfolio governance is … First, the private equity fund’s partners are known as general partners. The book provides a good knowledge base on the subject of Organizational Management including advantages/disadvantages and examples. And, a portfolio is a collection of projects and programs that are managed as a group to achieve strategic goals and a business value. Jossey-Bass. [4][5]The projectized structure is a structure that groups people and resources by project or product teams. Application Portfolio Management Oversight of applications at the portfolio level. Having an organizational structure can help the organization improve efficiently by balancing the influencing factors such as external environment, strategy, technology, and human resources[4][5]. Change needed to be driven strongly across the portfolio, with leadership and an overarching framework provided by the portfolio department. The rapid changes in the competitive landscape require constant alignment with the strategic direction of the enterprise. Closing a project can mean losing your job. Conflicts between “business-as-usual” assignments and project work for the individual – functional managers are likely to have different priorities than project managers. The employees of a department report to a functional manager. No “home” when a project is finished – if there is not a new project after the project has reached its end, the resources are released. Enterprise IT Portfolio Governance and Management Model Executive Summary. Conversely, putting portfolio management in place can force companies with weak governance structures to improve them. Below is a short description of the different main types of structures including the advantages and disadvantages of these. The PPM organization must liaise and connect the project with the business. The success of any organization – being a commercial company, public or non-profit organization – is highly dependent on the level of alignment the organization is able to execute on. Advantages of a Functional organization:[4][1][2], Disadvantages of a Functional organization:[4][1][2]. pharmaceuticals, software, or public service, the steps and procedures are often governed by a stage gate control model adapted to the nature of the projects being executed. Developed by Anne Kiesbye Dittmann (s144038). This page was last modified on 4 March 2019, at 20:27. & Kesler, G. (2011). Project governance appears to be an elusive concept, which is further complicated by the fact that there is a lack of an agreed on, generally accepted definition for “project governance.” Consequently, this means that individuals are left to develop their own understanding of what project governance means or else try to find an implicit meaning from the context in which the term is used. Date archived: May 13, 2019 The mission and vision statements of an organization express the end goal – the North Star. Employees work on different things in parallel. Epic Owners, Enterprise Architects, and Business Owners support the portfolio Kanban system. In contrast to the functional organization structure applied in many companies, the portfolio management office, including the portfolio and project managers, has a fairly small number of permanent staff members. Different stages longer being updated or maintained applicable for ongoing operations rather than projects as needed subsequently. 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