The Politics of Portfolio Management: Why It’s Harder Than It Looks

January 21, 2008 from gannthead.com and written by Mark Mullaly, PMP – “Portfolio management is one of the concepts that, on the face of it, organizations should naturally want to embrace. Most executives and project managers alike will acknowledge with little prompting that many of their challenges go beyond just the project level. Competition for resources and funding, too much work underway and pressure to address both operational and project responsibilities all speak to the need to make more effective project choices. Once this need is recognized, the concept of portfolio management quickly emerges as a logical direction to explore.

The principles of portfolio management are extremely straightforward. At its core essence, portfolio management addresses three fundamental questions:

• Are we doing the right projects?
• For the projects that we have chosen to undertake, are we confident that the projects are being delivered well and meet their goals?
• For the projects that we have completed, are we consciously changing how the organization operates in order to realize the value we expected?

While these are entirely reasonable questions, and relatively simple ones to ask, the answers are more complex and involved. How do we know we are doing the right projects? What criteria do we apply? What judgments do we make? Right projects as compared to what?"

...Attempting to introduce portfolio management without acknowledging the politics of the organization is foolhardy” And he goes on to say “For the profit centers, however, any attempt to introduce a more objective level of scrutiny is going to be regarded as a significant threat to the status quo. For the profit centers of the world, they already have a positive level of influence in determining what projects proceed. More importantly, they are able to ensure that it is their projects that are the ones that do go ahead.”

180 View – People who belong to a profit centre will resist the imposition of change from head office or the project management office if it diminishes their control or could negatively impact their success. Even if the change is for the good of the company as a whole, the change will be resisted. You will need to change the organizational structure or the motivation/compensation if you want the profit centres to sign up.