STUDENT ID: 15950183

NAME: NICHOLAS AHADJIE

WEEK 2 DQ: IMPORTANCE OF LINKAGE BETWEEN PPM AND BUSINESS STRATEGY Introduction Week 2 discussion seeks to explore how the objectives of a business or strategy connect with Project Portfolio Management (PPM). There was a complete disconnect between an organizations projects / portfolio and its strategy in the past, however, PPM is now being recognized as a means of providing that linkage or bridging the disconnection between strategies, objectives, programs, and projects. (Week 2 lecture notes) PPM goes beyond selecting projects Archer and Ghasemzadeh (1999) defined Project portfolios as a collection of single projects that are implemented at the same time. This definition highlights one of the key roles of PPM which is project selection and prioritization. The selection process also takes into consideration a balance between possible risk, complexity as well as returns on investment (PMI Standards for PPM, 2008). Much as the project selection is a daunting task and must be done right, it does not completely define PPM, it only highlights its primary focus. The PMI Standard for PPMs (2008) definition of PPM is similar to that of Archer and Ghasemzadeh (1999) but included the alignment to strategic objectives. Stouffer and Rachlin (2002) indicated that the focus portfolio management is at the collective level and comprises the identification, selection, financing, monitoring and maintaining an appropriate balance to achieve organizations goals and objectives. Stouffer and Rachlin (2002) discussed in Kerzner (2010) summarized PPM as follows: 1. PPM looks at risk, cost and returns on investment at the organizational level 2. PPM ensures that all projects in the portfolio are managed well 3. PPM helps to determine the project composition of the portfolio and the level of each investment Meskendahl (2010) listed the main goals of PPM as: 4. Maximizing the financial value 5. Linking the portfolio to the organizations strategy 6. Balancing the projects within the portfolio in consideration of the organizations's capacities. Importance of PPM & Business strategy tie Most organizations are moving away from single project management to PPM where multiple projects are implemented at the same time. Organizations develop strategies that define actions and decisions that need to be made to ensure that its goals and objectives are achieved. Achieving organizational strategies has been a challenge according to Mankins and Steele (2005), who indicated that organizations realize only 63% of their strategies. Thus, the tie between Business Strategy and PPM lies in the fact that PPM serves as the building block for strategy implementation (Dietrich and

Lehtonen, 2005). In other words, PPM is the means to achieve organizational strategy. Linking the portfolio to the organization's strategy is one of the 3 key objectives of PPM (Meskhandahl, 2012, pp. 808)

Common Failure modes in PPM Ward et al. (2000 2010) identified some pitfalls PPM. Notable among these pitfalls are the following: 1. Resource Allocation Since resources are scarce and all projects in the portfolio are competing for the available scarce resources. The challenge is the allocation of inadequate funds to a project which results in uncompleted projects. 2. Selecting the right project The project selected to be part of a portfolio must be aligned to the organization strategy. Selecting the wrong project will impact negatively on the achievement of the organizations goal and objectives 3. Risk Identification Project risks increases with its value. Successful portfolio management requires that the risks are identified and mitigation strategies developed to address them. Failure to identify the risks will ultimately lead to project failure and non achievement the strategic intent. Conclusion Portfolio management provides a bridge between organizational strategy and implementation. It is important that portfolio management processes follows a criteria that will ensure that project selection and resource allocation are done correctly. Lack of information could result in pitfalls in the portfolio decision making process. References
Archer, N. & Ghasemzadeh, F. (1999) An integrated framework for project portfolio selection, International Journal of Project Management, 17, pp. 207216. Dietrich, P., Lehtonen, P., 2005. Successful management of strategic intentions through multiple projects reflections from empirical study. International Journal of Project Management 23 (5), 386 391. Mankins, M.C., Steele, R., 2005. Turning great strategy into great performance. Harvard Business Review 83 (7), 6472. Meskendahl, S. (2012) The influence of business strategy on project portfolio management and its success A conceptual framework International Journal of Project Management 28 (2010) 807817 [Online] Available at http://ac.els-cdn.com.ezproxy.liv.ac.uk/pdf Project Management Institute, (2008) The Standard for Portfolio Management, Second Edition. Project Management Institute, Newtown Square (PA).

Stouffer, I. D. and Rachlin, S (2002) A summary of first practices and lessons learned in Information Technology Portfolio Management cited in : Kerzner, H. (2010) Project Management Best Practices: Achieving Global Excellence. Wiley & Sons, Inc. Hoboken, N.J. Ward, J., Karshen, M,. & Eisenman, E. (2000-2010) The point and pitfall in portfolio management. Project Smart [Online] Available at http://www.projectsmart.co.uk/pdf/the-point-and-pitfalls-in-portfolio-management.pdf Week 2 Lecture Notes (2012) Strategic and operational fundamentals of project portfolio management, MSc. Project Management - Module 4, University of Liverpool Dr
Hi Tuba, you have very nicely introduced the notion of "space" through your argument on "Portfolio

management is setting, knowing your business boundaries and managing within these boundaries."
Allow me to juxtapose it with the "temporal" dimension. The temporal problems of strategies and projects surely necessitate a serious contemplation. The relationship between the performance of projects and time is resembled to a sequential game being affected not only be exogenous factors like business strategies but also endogenous elements pertinent to the cost overruns and stakeholders' behaviors (Lewis, 1986). Another interesting reading on this topic is by Bebchuk and Stole (1993). Class, how do you perceive "space" and "time" in PPM and what is their contribution in PPM performance? Konstantinos Lewis, R. T. (1986), Reputation and Contractual Performance in Long-Term Projects, The RAND Journal of Economics, Vol. 17, No. 2 (Summer, 1986), pp. 141-157 Bebchuk, Lucian A. and Stole, Lars (1993), Do Short-Term Managerial Objectives Lead to Under- or OverInvestment in Long-Term Projects? Journal of Finance, 48(2), 719-729