Who Owns the Portfolio?

Who Owns the Portfolio?

1. Who should manage project portfolio? Marketing? Engineering? Both? Some other group?

The project portfolio of Interconnecting Cable Inc (ICC) is not being managed effectively. The Marketing Department, through a bidding process, selects projects with the highest net present value (NPV), without the involvement of the Engineering Department. Both Departments contribute to delivering the projects but neither should be responsible for driving them.

In order for ICC to continue its growth strategy and maintain a competitive advantage in the marketplace, it must implement an integrated Project Portfolio Management (PPM) framework and select projects that align to strategy, leverage human capability and benefit the company and customers. The portfolio should address the company's strategic aims, which requires a perspective separate to the operational divisions alone. Effective portfolio management must be achieved through the support of the executive, the involvement of relevant departments, the alignment of tactical and strategic goals, the appointment of an experienced project manager and the adoption of a formal framework and methodology.

This can be achieved through the hiring of an external project management consultant to facilitate the process between stakeholders and the establishment of a cross-functional Project Management Office or Committee. The Committee should be chaired by a senior manager and have representation from both the Engineering and Marketing Departments. Such a Committee would balance competing goals and manage the tradeoffs between time, cost, scope and quality constraints from a strategic perspective. It would also build the project management capabilities of company staff and increase organisational success.

In effect, by implementing an integrated PPM framework and establishing a cross-functional project management committee, the company can leverage organisational capability to achieve strategic aims and maintain its competitive advantage

2.How does project portfolio management influence engineers' skill sets, a companies competencies, and market position?

PPM can influence engineers' skill sets, a company's competencies, and market position through the planning and selection of projects that a company undertakes. PPM can monitor current skills usage of the engineers, identify current skills gap and commit to projects with strategic fit of skills required in order to maintain and enhance the company's engineers' skill set. As explained in the case study, "...result of some types of projects being overemphasized...leading to the unbalanced...project portfolio...if this problem persists, the skills of his company's best engineering talent will go rusty."

A balanced selection of projects with a strategic fit of skills can also influence a company's competencies by building on the strength of the company to develop a market niche, or identify and develop a company's weakness to provide better growth prospects. Again from the case study, ICC's original business model was to develop platform cables (big project) but due to the resources, financial certainty and ease of completion, the marketing department have steered the company towards the "bread and butter" (small/medium) projects. As a result, ICC never developed the competencies to undertake and mitigate the risks of the big platform projects that could have provided more growth to the company.

It follows that without any exposure to the bigger projects, ICC's market position has remained at the small to medium project level. This creates a downward spiral for ICC, customers with big projects do not view ICC as competent to take on their projects and therefore ICC does not get the exposure. PMM should identify how the active projects fit the organisations strategic goals, link the projects to their market position as per their organisational goals and plan ahead to allow skills, resource and competence to grow in line with their strategic plan.

3.Does the use of only NPV as a project selection method carry certain risks? What are they?

At ICC, project selection is done solely using the net present value method (NPV) model in which the project with the highest NPV will be chosen. This approach offers a meaningful way to determine the worth of a project to the business by calculating the present value of the expected future project cash flows. However, it does possess