Tip of the week by Terry Rusk, PMP
"Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight. " - Henry R. Luce
Expect Change
One of the challenges with defining the project portfolio for next year is that there will be changes. When the budget and projects for next year are first set they are based on what is known at the time and what is expected. As time goes forward the organization will experience internal and external influences that will change what is known. Some examples of these influences are:
- Changes to government rules and new mandates
- Competition
- New management
- A large new customer
Rather than worry about the potential changes or worse assuming they won't happen, plan for them. Portfolio management gives you several tools that can be used to deal with the change when it occurs. Three of the most important tools are:
- Prioritization - By prioritizing the projects in the portfolio the company is establishing a mechanism for dealing with change. If a government mandate requires a new project the company can stop or postpone lesser priority projects to free up resources and budget.
- Establishing a contingency budget - I always suggest that the company only allocate 90% of the project budget at the start of the year. The other 10% can be used to cover new projects or changes to high priority projects.
- Regular portfolio reviews - Quarterly portfolio reviews are essential in keeping the portfolio on track. They are also great forum's for discussing and handling the changes that will occur.
Using the three tools above will help organizations deal with the changes that will occur.
Terry (November 12, 2011)
