Microsoft Office Project Portfolio Server 2007 (PPS 2007) does an excellent job of aligning projects, programs and applications with an organization’s strategic priorities. PPS 2007 provides three key capabilities to accomplish the alignment:

  • It lets you control and manage data and track project investments.
  • It helps you prioritize and evaluate competing investments.
  • It measures and tracks portfolio performance.

In this article, I show how to accomplish each.

While you can change the PPS 2007 governance phases and workflows, the default governance phases are Create, Select, Plan and Manage. Associated with each phase are workflows that are necessary to progress to the next phase. In Figure 1 Propose Idea is the first workflow step of the four default governance phases; the last workflow step is Post Implementation under Manage.

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

How to Control and Manage Data and Track Project Investments

To get to the Propose Idea workflow step, you need to move projects, proposals, and activities existing in Project Server 2007 into PPS 2007. You can also create a proposal or project in PPS 2007. Typically, organizations create rules about whether proposals and activities can be imported into PPS 2007 or whether they have to be converted to projects in Project Server 2007 before being imported. PPS 2007 is tightly integrated with Project Server 2007. It allows you to:

  • Export projects, proposals, and activities.
  • Import and export project schedules.
  • Import and export resource information.
  • Import data from Excel spreadsheets into the PPS 2007 database.

Once projects are in PPS 2007, you can use the Builder Module to control and mange data and track project investments. The Builder Scorecard shown in Figure 2 is used to review and manage proposed ideas as they progress through the workflow.

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

Information used to manage and track information about a project are contained under the following project tabs:

  • Project Information
  • Additional Information
  • Budget Cost
  • Budget Resource
  • Benefit Estimates
  • Strategic Impact
  • Risk Assessment
  • Schedule
  • Issues & Risk Management
  • Status
  • Cost Tracking
  • Resource Tracking

The project tabs that must be completed depend on the workflow and governance phase. For example, for the Propose Idea workflow in Create, information must be provided in Project Information, Additional Information, Budget Cost, Benefit Estimate, and Strategic Impact tabs.

Figures 3 and 4 show the Project Information tab for a sample project in the Propose Idea state.

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

How to Prioritize and Evaluate Competing Investments

Since no organization has unlimited resources and funds, the Select governance phase is used to prioritize and evaluate the competing projects and to make sure the selected investments align with the organization’s strategic goals. The PPS 2007 Optimizer Module is the means to create a portfolio that identifies and “optimizes” the investments that should proceed to the Plan and Manage governance phases. Portfolio optimization is a function of the strategic value of each project and requires three steps:

Step 1. Define strategic business goals.

In order to align projects with the organization’s goals, of course, the first step is for management to define the goals. Once that happens, the goals appear in the Optimizer Relative Importance matrix. Figure 5 shows seven strategic business goals known as business drivers.

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

Step 2. Prioritize business goals.

Once management has reached consensus on the goals, the latter have to be prioritized by comparing the importance of each business driver. As shown in Figure 6, when comparing business drivers the Optimizer Module provides the following choices:

  • Extr More Imp — Extremely More Important
  • Str More Imp — Strongly More Important
  • Mod More Imp — Moderately More Important
  • Equal
  • Mod Less Imp — Moderately Less Important
  • Str Less Imp — Strongly Less Important
  • Extr Less Imp — Extremely Less Important

For example, management has determined that business driver 001, “Expand into new markets and segments” is Strongly Less Important than 002, “Reduce Expense Base” but of Equal importance to 003, “Improve customer satisfaction score.”

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

Once management has completed the evaluation of the business drivers, the business driver priorities are calculated as shown in Figure 7. For example, business driver 001, “Expand into new markets and segments,” has the highest priority of 31% while 005, “Improve employee satisfaction,” has the lowest of 3%.

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

Step 3. Define the Strategic Value of Each Project.

The third step is to determine the relevance of each project in the portfolio against each of the seven business drivers. As shown in the Optimizer Module Impact Assessment matrix in Figure 8, each project is Extreme, Strong, Moderate, Low, or None with respect to each business driver. For example, project 0001, “Feature Request Database Evaluation” is Strong in support of business driver 001, “Expand into new markets and segments.”

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

As shown in Figure 9 the results from steps 1 through 3 produce the strategic value of each project indicated by calculated project priorities.

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

All of the project priorities listed on the left side of Figure 9 sum up to 100%. If an organization has unlimited resources and an unlimited project budget, completing all of the projects would maximize the strategic business goals of the organization. Since this isn’t usually practical, the Optimizer Module provides for other variables that will affect the strategic value and priority of each project, including:

  • Project constraints such as project cost, project net present value (NPV), resource availability, resource costs, risks, etc.
  • Mandated compliance or regulatory projects that must be completed.
  • Whether the organization is aggressive or conservative in funding projects with strategic value.

Figure 10 shows an example of how other variables can affect the overall strategic value and priority of projects:

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

How to Measure and Track Project Performance

The Portfolio Dashboard, shown in Figure 11, is used for the Plan and Manage governance phases. The Portfolio Dashboard gives management the opportunity to drill down to see the status of a project. The red, yellow and green indicators are determined by project managers and management.

Managing Portfolios with Microsoft Office Project Portfolio Server 2007

Effectively identifying and prioritizing business drivers requires a considerable amount of effort in any organization. But Project Portfolio Server 2007 does an excellent job of aligning projects with strategic business goals to help move your business in the direction it wants