Super easy way to learn everything about Project Performance Management – in 6 steps

Does this sound familiar? You have to oversee several projects / initiatives at the same time and make quick and well-founded decisions about project approvals, human resources and financing from the overall budget. AND you need to guarantee that each project is strategically optimally suited to the company goals / portfolio, AND make sure you run all your projects with minimal time expenditure and the lowest possible costs at the best possible quality.

But how do you achieve this optimum? This is certainly something between tough and impossible with Excel-based solutions, no matter how cleverly built: decisions based on such solutions are often questioned by management due to insufficient data quality. Alternatively, there are countless project management OR project cost OR resource optimization OR financial planning tools on the market. But if you want to cover all of these areas together (currently or at a later date) and not have a patchwork of numerous software products, then the selection is thin.

Project controllers thus demand an integrated, expandable system that brings together all data from relevant sources and to which everyone involved has access. SmartPM.solutions also follows this approach and has built a fully connected, modular project controlling and portfolio optimization model (= Project Performance Management) based on scientific research and many practical projects. This enables a comprehensive overview of all projects and portfolios and allows ongoing monitoring and control of project costs / turnover, time, and project management, The module also covers portfolio reporting and financial planning and reporting.

Figure 1 shows smartPM.solutions' integrated project control and portfolio optimization approach, which deals with the strategic fit of the projects to the defined corporate goals and defines necessary steps for operational success. Based on this framework conditions for efficient project management and portfolio optimization, resource allocation, operational management, reporting and, finally, the development of know-how are suggested in an ideal way.

If you follow this approach, you‘ll come to find the 6 success factors for multi-project management and portfolio optimization, which are dealt with in detail in the associated smartPM.solutions PPM white paper and in this article as an overview.

(1) Efficient Project Goverance

The first step to successful project controlling is the definition or selection of project-related framework conditions. This includes the interactions between project participants - their roles, relationships, and positions. The criteria for project submission and approval must also be defined. Standards are recommended here, such as lists of criteria for project submission and structuring (Relevant standards include PMI, PMBOK, PRINCE2). It must be ensured that the project plans are aligned with the strategic goals of the company and core information such as scope, budget, required resources and schedule are given when submitting.

(2) Portfolio Balancing

In project-driven companies, many projects are initiated, carried out and completed at the same time. It is particularly important that resources are allocated strategically and with regard to the entire project portfolio. The aim is to objectively prioritize those projects that ensure a balance within the portfolio in order to achieve the strategic and operational goals of the enterprise in the best possible way. An ongoing evaluation of projects and the adaptation of project portfolios are essential factors for successful project portfolio management.

Figure 2 shows how project ideas / inquiries can be evaluated based on various criteria - strategic relevance, opportunity costs, project costs or influence on the contribution margin, resource allocation, etc. “Must-have projects” (e.g. repairing a defective runway from the perspective of an airport) are rated higher, wildcards and manual re-prioritization (e.g. using the “CEO button”) allow flexible, yet comprehensible (auditor-compatible) adjustments. This approach gives project participants a clear picture of all newly initiated projects and the reasons for starting them.

The system indicates available total budget and highlights the number of (already prioritized) projects which can be started with the availabe time and money resources.

(3 & 4) Project Performance Management & Resource Allocation

The automatic connection to data sources or full data integration (e.g. time log, order entry (backlog) information, procurement times, etc.) provides an overview of all projects and portfolios and facilitates forecasting and resolution of bottlenecks. Automatically generated approaches to solutions for key participants are particularly helpful. The ongoing monitoring and evaluation of the project status, the project pipeline, the project risk, the project resources and costs as well as changes in projects can be easily accessed at any time. Project monitoring allows tracking, drill-down, ad hoc analysis, what-if scenarios and thus reliable decisions. Weak projects that do not develop as desired can be easily identified and rescheduled or canceled (Figure 3), which is crucial in regards to cost cutting in times like these.

Milestone progress and earned value analysis are tried and tested approaches to monitor and optimize project plans and entire portfolios. Meaningful graphics with relevant information on specific projects and portfolios, which allow an overview of milestones, costs / turnover, risk and strategic influence, simplyfy the decision making process. In any case, portfolios must be regularly monitored, evaluated, compared and optimized, taking advantage of comparable metrics.

To be able to link project implementation and top-down objectives of the projects, bottom-up estimates of those directly involved in the project are required. Ideally, project managers use their project controlling tool to make statements about the resources, cost and the timeline. This enables seamless tracking of costs and time, e.g. by means of project budget ceilings and commitment monitoring.

 Scenario-based portfolio simulations make it possible to predict the effects of changes in one or more projects on specific portfolios and corporate success. This is helpful when “make or buy or cancel” decisions are pending and require an immediate response to keep up with rapidly changing markets. Project budget ceilings ensure significant cost savings and comprehensive control.

Inclusive personnel planning (concerning resources, skills and cost rates) is essential to ensure the right qualifications for important projects. Personnel costs typically represent the largest share of project costs and can either be kept separately (for data protection reasons) or included (e.g. with hourly rates) in the project cost calculation. External personnel costs (e.g. freelancers) can be considered in the project calculation in a similar way, and internal and external competencies can be used for adequate resource planning.

(5&6) Portfolio Reporting, Communication & Learnings

Typically, projects require resources from different departments. Interdependencies and resource constraints need to be identified and cleaned up early on. The use of a common communication and reporting platform, e.g. by means of MS - teams and planner integration, for all projects in the portfolio. In addition, lessons learned must be assignable to projects and existing projects must be used as templates for new ones. A project recalculation rounds off the project life cycle from a commercial point of view.

Linking project portfolio data with integrated planning data brings the greatest benefit from an overall entrepreneurial perspective. The "tip on the scales" is always the acceptance of a project controlling tool, which must be promoted internally. This will allow for cost savings of several million euros per year.

The Project Performance Management Tool of smartPM.solutions follows the 6-step approach and includes the following key features to get full control of projects and portfolios:

Hamburg Airport actually uses the Project PM Tool of smartPM – here’s what Julian Jirsak, a PPM luminary - says about the benefits of professional Project Controlling: 

Since the tried-and-tested project controlling and project portfolio optimization solution from smartPM.solutions represents a sub-module of a linked product family, it can either be used individually ("stand-alone") or in conjunction with the other modules, e.g. financial planning. This enables real integrated corporate planning that combines data and expert opinions from all relevant parts of the company as well as external sources.

Full integration can also be achieved at a later point in time and represents the great advantage of the solution presented compared to stand-alone solutions. Decisions based on this 100% reliable data source and methodology are a solid basis for sustainable corporate success

>> Read the full story here ?6 steps to successful project controlling and efficient portfolio optimization “.

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