Portfolio Management – Review 1 (MoP)

The three reference books identified on the previous post have their own process models

• Management of Portfolios(MoP) – OGC (now Axelos)
• Portfolio Management Standard (PMI)
• The Wiley Guide to Project, Program and Portfolio Management

Over the next two posts I will review parts of the two main publications and include thoughts from the Wiley Guide.

We can explore the models for similarities and differences, not to chose one model as the only path to Portfolio Nirvana, but rather to look at the practices and processes that will fit within our own organizations and business environments.

I am not seeking to cause process chaos by proposing a cut and paste from different models, but simply to help people understand that they do not need to become a slave to one model.  

They can legitimately choose a core model to adopt as a guiding philosophy for their portfolio management approach and then utilize concepts / processes from other models to tuning to suit the business environment, creating their ideal for their organization.

This post will explore the Management of Portfolios (MoP) Manual from Axelos, originally developed with the Office of Government Commerce in the UK.

"MoP® is a (registered) Trade Mark of AXELOS Limited. All rights reserved"All figures and images in this post are copyright of AXELOS Limited

Management of Portfolios

The Management of Portfolios manual is a comprehensive guide covering Portfolio Management. With its principles, practices and guidance it is a philosophy for Portfolio Management that can be used to adopt and sustain Portfolio Management.

The Manual published in 2011 consists of seven chapters, six appendices and references.

Chapters 1 - 3 introduce Portfolio Management and the organizational context for it
Chapter 4 Introduces the five principles of Portfolio Management 
Chapter 5 Defines two Portfolio Cycles
Chapter 6 Defines the Portfolio Definition Practices
Chapter 7 Defines the Portfolio Delivery Practices


The six appendices provide a range of topics from roles and responsibilities,portfolio  documentation, guidance on assessing the health to the impact of Portfolio Management.

Organizational Context

Chapter 3 explores the relationship between Portfolio Management and the business. It exams the linkages between Business as usual (BAU).

Figure 1. "Run the Business, Change the Business"

The combining of operational work and Portfolio Management delivering Strategic Objectives. Portfolio Management organizing the delivery of major changes and BAU delivering the services and tactical continuous improvements. 

Portfolio Management doesn't seek to replace strategic and business planning but it supports it with optimal resource allocation and balance.


The diagram in Figure 2. outlines the two way interactions between Strategic Planning and the Portfolio Management function in the organization.

Figure 2 Strategic planning and portfolio management

The Portfolio Definition cycle with its practices is clearly linked to the strategic and business planning processes 

Process Model

The MoP process model consists of two process groups:

• Portfolio Definition  
• Portfolio Delivery

Each have their own set of processes and practices.

Figure 3 Portfolio Management Model - Management of Portfolios TSO, Ltd © 2011

For the MoP,  Portfolio Management doesn’t have a distinct start or end, it is a continuous cycle of Portfolio definition cycle combined with a Portfolio Delivery cycle that continues never ending. In the manual this is shown other diagrams by using a Mobius strip image to indicate there are no boundaries in the process.

Principles

Similar to all the Axelos Best Management Practices, MoP is based on a set of guiding principles that have been shown through research to increase the likelihood of success. 

These principles provide the foundation for the organizational environment for Portfolio Management. 

The five principles are:

1. Senior Management Commitment
2. Governance alignment
3. Strategy alignment
4.  Portfolio Office
5. Energized change culture

Each principle is defined in detail in Chapter 4, the definitions are clearly written from a business management perspective. For each principle there is a very useful small case study defining the target situation describing how the principle has been applied.

The MoP identifies and defines two portfolio cycles:

1. Portfolio Definition
2. Portfolio Delivery

Each portfolio cycle is supported by a set of identified practices within it (see Figure 1).

Because Portfolio Management doesn’t have a distinct start or end, but the two cycles of Portfolio definition cycle combined with a Portfolio Delivery cycle often the diagram within MoP is shown by using a Mobius strip image to indicate there are no boundaries in the process.

Organization Energy

The interconnection between Portfolio Definition and Portfolio Delivery is based on the UK's National Health Service Institute for Innovation and Improvement definition of Organizational energy as 'the extent to which an organization has mobilized the full available effort of its people in pursuit of its goals'.  The section defining organizational energy recognises the need for organizations to mobilise their workforce to deliver the defined portfolio. Strategy without delivery is just an exercise in delusional thinking.

Practices

"A best practice is a method or technique that has been generally accepted as superior to any alternatives because it produces results that are superior to those achieved by other means"

Chapters 6 and 7 provide sections with details on the practices in both the Portfolio Management cycles. These are comprehensive definitions and include identifying keys to success for each practice, documenting the key with an associated explanation of the key to success. Finally each section is very usefully rounded out with one or more short examples of how the practice can be put into use.

We saw on Figure 2 how the practices in the Portfolio Definition cycle interact with the Strategic Planning process. Some of the practices within the Portfolio Delivery cycle are based on well defined best practices that can be accessed in other frameworks, or perhaps your own organization has a set already defined. If not some of these can be found:

• Risk Management - See Management of Risk 
• Benefits Management- See Managing Successful Programmes or Benefits Management 
• Stakeholder Engagement - See Managing Successful Programmes
• Resource Management - 
• the only reference I have found for this is a book by Jerry Manas "The Resource Management and Capacity Planning Handbook"

Appendices

I find the appendices are where the authors have added extremely valuable sets of information they discovered along the way and couldn't include in the core of the book because of constraints in page count or time to write the information down to the same level of detail as required in the main body. 

This manual is the same, the appendices are a rich set of further tools, thoughts and defined processes to supplement the Portfolio Management function.

If you take these along with the Axelos best practices for P3M3® Maturity model then you have a significant set of information to support your Portfolio Management function.

Wiley Guide to Project, Program and Portfolio Management

The Wiley guide was published in 2007 and pre-dates Management of Portfolios it doesn't really compare to the more modern Portfolio Management frameworks. 

However chapter five on Portfolio Management is primarily focuses on Project Selection for the Portfolio. providing a process model developed by Archer and Ghasemzadeh in 1999 that helps in explaining the process of selection. The concept of a 'project hopper' where projects are pre-screened before entering into the more detailed task of detailed analysis (developing business cases)

Figure 4 : project portfolio selection process.
Source: adapted from Archer and Ghasemzadeh (1999)

It cannot compare to the Management of Portfolio in terms of details but there are excellent chapters on projects operating at a strategic level.

Conclusion

An excellent self-contained manual it provides a philosophy for Portfolio Management with readable definitions and explanations for the core principles, practices and processes. 

Many of the sections come with ready defined examples that can be easily explained to Executive Leadership Teams during the implementation of Portfolio Management using MoP. 

If your organization is moving forward on Portfolio Management I would recommend you get a copy and familiarise yourself with the core concepts, principles and practices to support the cultural change that is needed for successful adoption of Portfolio Management.