Changes in the Portfolio need to be communicated to create awareness of the portfolio. Other teams especially when working on dependent project or project requests are using this input for their planning.
The communication should cove
- Projects executing highlighting the new ones
- Updated project candidate pipeline (shortlist)
- New financial forecast for the budget year
- Forecasted financial impact on the organization (e.g. expected operational savings from projects could affect the budget of the following years)
The running projects also have an impact on the portfolio and any deviation of their execution plans needs to be highlighted in the portfolio reviews as well. There are the three obvious factors like
- Timelines as any deviation can impact depended projects. But even there are no one the planned benefit will be realized later (or sooner in rather rare cases). This can impact the next year budget for example. Especially if the end date of the projects moves to the next financial budget year creates an uncomfortable situation as the funding of the project might not be secured anymore or the additional un-budgeted spend will use funding for other planned projects.
- Costs are a very obvious and visible factor. As projects in a portfolio managed environment do not run autarkic any over- or under-spending are affecting the remaining project and project requests in the pipeline. If a project needs less funding because things can be made cheaper in the meantime it has to give back the not needed funding for other project than can make better usage of the money. In the other way round projects in the pipeline need to be re-planned because not enough funding is available. There is a link to the timelines as well as a project that is under-spending often is delayed as well.
- Value is basically on portfolio level the same as the scope on project level. Whereas the scope describes what will the project deliver, the value is what is expected to be achieved with the portfolio. Any deviation needs to be explained and communicated. The value is sometimes linked to the costs and timelines as well in cases where delayed projects – that are for this reason under-spending – are materializing the benefits later. In these cases launching another additional project could bring back the overall value of the portfolio, similar to the Crashing technique in the project management area.
Apart of these classic parameters there are more that are impacting the portfolio performance and setup. Like in project management risks need to be tracked carefully and on the other side changes of strategic goals that will influence the portfolio mix.
- Risks have two sides, negative (that is for what risks are commonly known) but also positive (rather called opportunities). Both having a likelihood and an impact, so a value can be calculated for each project. But only summing up risks/opportunities would not reflect the real risk on the portfolio level as they usually equalize each other because there are about the same negative risks and positive opportunities. What is necessary on portfolio level is the identification of common risks and opportunities the so called cluster risks. If one of these risks and opportunities is materializing it will have a real impact on the portfolio. An example of such a risk is the allocation of a single resource for multiple projects like certain Subject Matter Expert (SME). If he or she is not available it could delay several projects and reduce the overall portfolio value.
- Strategy deviations can occur when there are changes in the organization, economic or political environment. Most commonly these changes are linked together and trigger a couple of adaptions in the portfolio. For example a new law can raise the need to switch to a new but more expensive technology that is less polluting the environment
The communication of the portfolio status and changes should be performed regularly with a defined community of stakeholders. There are two possibilities. One- and bi-directional communication. The first is to only publish dashboards and reports on a website for example or to send out a newsletter. The latter is to schedule calls on maybe a monthly basis with the stakeholders to go through the portfolio its status and changes. Surely this will take more time but will increase the relationship to the portfolio management. It is recommended to establish a standing agenda containing the following topics as a start:
1. Current status of the portfolio
2. Focus on special projects
- New projects
- Closed projects
- Scope changes
- Spending Development
- Portfolio Risk Management
- Dependencies and impact
Of course there might be other topics as well to be included. This depends on the kind of project portfolio and of course the stakeholder's information needs.