Project Portfolio Success and Failure

Meridith Lavinson (2010) had mentioned in his paper that there are a number of factors which determine either the success or failure of a project portfolio success and failure. Among these factors are schedules, assets and sources of funds. However, new-age project management analysis from training institution insights learning and a strategic execution consultant suggest that the primary factor determining a project success is the task’s relation to the institution’s business approach and the project manager’s appreciation of how the task influences the development of the business strategy.

This basically means that, the closely linked a project is to the business approach, the easier and more appreciable the progress. On the other hand, the more tenuous the relationship between the project and chosen strategy, the more difficulties the project will have to go through.

Payne H. (1995) offers an even better viewpoint of these problems and in order to offer some guiding principles, an analysis of the popular and accessible literature was conducted. The information collected fell under a five-tier categorization framework. These five categories are: Capacity. Conflict, Context, Complexity and Commitment

Capacity refers to the ability of an enterprise to initiate and oversee the success of the multi-projects in order to come up with enough and more relevant resources. The author in this instance has come to the conclusion that a balance between the needed resources and resources supplied is only achieved in very few circumstances. It does not make economic sense for a company to have excess resources in terms of labor force idling around while still on the establishment’s payroll. As a result of this, dedicated efforts should be made to cut down the number of staffs and manage those persons retained in a more effective and less costly manner.

Unfortunately, this form of discriminate retrenchment is associated with sessions of under capacity occasioned by increased work loads. This scenario is occasioned by management insisting on taking up all available opportunities without factoring in the company’s capabilities. Spuher and Biaggini (1990) supports this latter fact by stating that it is almost impossible to find a company which shies away from taking up more projects just because it cannot complete them using the available resources.

Payne, J (1993) established a categorical distinguishing of elements of the conflict by placing them under three subdivisions. These are staffing, infrastructural and organizational issues. Conflicts tend to come up in the unstable relationships emanating around a multi-project set up. If the individual in particular specialist role is constantly being replaced because of fluctuations in the levels of the needed resources, there is a possibility that the new staffs will be required to constantly assess and modify the work done by his/her predecessors. This mainly happens because of certain inadequacies in the proper institutional management.

The author has attested to witnessing this on more than a few occasions. In one instance the individual in a certain engineering specialist role was replaced thrice, and each of the new staffs ended up editing the work done by the individuals who occupied the same position before. This in turn had the negative effect of causing delays and substantial non-cooperation from the other members of staff whose jobs are affected by the modification of the design or the delays caused, or both. This ineffectiveness was to a great extent linked to a lack of proper exercise of authority on the part functional manager regarding the performance of the task.

In this particular instance, the functional manager and the project manager did not gel effectively, resulting in a personal tension which ended up toughening the flow and execution of instructions, with the functional manager not making any response to the project manager’s complaints. The project manager had to share some of the blame because he did not ask for assistance. Peer rivalry amongst a group of functional specialists almost always ends up causing definite conflicts. The most distinguishable causes of systems conflicts are the protocol structure and the job scheduling procedure. These elements are also influenced by the appreciation of the necessity of the project.

Commitment is basically the dedication to individual projects of the individuals or groups of individuals working on, or controlling the flow of resources to, the various tasks. The topic has some definite importance on its own but it mainly makes sense in the light of the multi-project context. The extent of a project usually plays a role in the determinations of its perceived relevance. Commitment is relative to perceived importance.

It is appropriate to direct the emphasis further from size of the project and focus it on the objectives of the organization. The size of the establishment actually has some influence on the commitment. A member of a small organization is likely to be subject to the moral pressures not to disappoint his/her colleagues as compared to his/her counterpart from a large institution.

The resource providers, also known as functional managers, need to clearly establish both the level and type of commitment required for the project. This could be defined by the provision of resources for the tasks or by shouldering responsibility for the project. As far as the individual is concerned, the type of commitment is also having some critical relevance

Context is basically the elements surrounding the development of a project, such as cultures, traditions and practices of groups or societal set ups. Context can also be described from the direction of staffing issues, infrastructural issues, and institutional issues. The culture of an expansive task or process is categorically distinguishable from the culture of comparatively smaller projects. This is something that can be attested to by any individual who has worked in a variety of different-sized enterprises.

The committed hierarchical organizational structure which is in most instance linked to large tasks, or institutions, tends to come with a stable culture, while the multi project culture, on the other hand, is constantly undergoing changes. Senior administrative influence has an appreciable impact on the context. A specialist resource provider, linked to a small task, tends to lack the necessary direct contact with peers which makes the setting interesting to work on. The multi-project project on its part has a number of managers working concurrently, alongside functional managers which makes the task comfortable. The career structuring and development that are required in different situations also exhibit some differences.

Complexity mainly refers to those elements that are linked to multiple interfaces between the tasks, the institution, the relevant authorities etc. It is also directly linked to the directive approaches utilized by management, and options pertaining to the extent to which the amalgamation of the multiple tasks is either desirable or applicable.

Many recently recruited project managers discover that their working relationships with resource allocation heads have not been clearly defined by management. Who is responsible for assigning work to the financial analyst? Who decides when to order critical material before the product design is firm? Who decides to delay design release to reduce unit cost? Who determines the quantity and priority of spares? All these decisions vitally concern the project manager, and he must often forge his own guidelines for dealing with them.

Because of the number of decisions or approvals that may arise in the course of a large project, and the number of departments that have an interest in each, innumerable possibilities always exist for interdepartmental conflicts. Besides coping with these conflicts, the project manager must juggle the internal schedules, avoid political problems that could create bottlenecks, expedite one department to compensate for another’s failure to meet its schedule, and hold the project within a predetermined cost. Moreover, he must do all this single handed, with little or none of the experienced top management guidance that the line manager enjoys. Stewart John (1965).

The problem is in most instances not related to the project management, but instead the management of the entire portfolio. The bottom line is that some organizations can’t do portfolio management by themselves. It must be accomplished with the participation of both executive (who must understand and accept that resources are constrained) and the portfolio managers (who must appreciate that there are other projects competing for resources and which help distinguish the priorities).

Even if a team is able to achieve cooperation from senior administration and business partners, and there are systems in place for displaying the project portfolio, they (senior management) should not be expected to accept long project delays any more than an individual would appreciate a nine hour airport delay (Wittmann 2010).

However, in some tasks the objectives and/or the strategies for their attainment are not well defined at the beginning of the implementation phases. Projects can be defined by analyzing them against two definers: How properly defined are the targets, and how well defined are the strategies. The ensuing two b-two matrix relates to four kinds of tasks/projects:

Goals and achievement strategies matrix

  • Type-1 projects: tasks for which goals and strategies for achieving the tasks are clearly laid down.
  • Type-2 projects: tasks for which goals are clearly laid down but the strategies for achieving them are not.
  • Type-3 projects: tasks for which goals are not clearly laid down but the strategies for achieving them are.
  • Type-4 projects: tasks for which neither the goals nor the strategies for achieving them are clearly defined (J R Turner and R A Cochrane 1993).

To improve the organization and efficacy, many institutions tend to adopt multiple project management (MPM) strategies. A popular way for doing this is to have one project manager head multiple concurrent projects, which are described as the management of an integration of multiple projects (MGMP):

An example of a multiple-project management setup in one institution

Ideally, the issues look at interactions between the groups of multiple projects and their organizational environment as being important for effectively managing multiple projects. Such issues are related with the need for achievable portfolio management, sometimes in relation with appropriate project selection, establishment of priorities, and allocation of resources. For effectiveness in extremely competitive businesses, it is imperative that an institution undertaking multiple projects have the potential to provide both sufficient and relevant resources. In doing so, the enterprise should utilize a rigorous, well defined and formal projects selection framework (Fricke SE and Shenhar AJ 2000)

Tasks should be differentiated depending on their importance to the institution’s business criteria, the relevance of the size of the project, the timing and the technical workability, the financial viability and so on and so forth. Along the same line, Payne (1995) and Adler (1996) insisted that it is very inappropriate for an organization to implement more projects that can be handled by the available resources.

According to Patandakul and Milosevic (2009), after the selection process, another challenging task of managers in Multiple project management (MPM) environments lies on the assignment of projects to multi-project managers.

Kuprenas (2000) suggested that effectiveness in the management of a number of concurrent projects (MGMP) is dependent upon the number of projects that a multiple-project manager operates at any given time. In the development of support structures, a study revealed that assigning two to three major tasks to an engineering project manager will effectively maximize his/her productivity.

Pertaining to the assignment process, Patanakul (2006, 2007) concluded that a proper assignment process should comprise steps aimed at the understanding of project priority, development of linkages between the strengths of multiple project managers and project demands, and the categorization of the institutional/personal weaknesses.

Aside from project manager assignment, the distribution of resources also comes along as a challenge to management. A number of studies came up with tools and approaches for guiding the process of scarce resource allocation, which comprised of integer programming, heuristic methods, queuing theory, etc. (Lenvy 1997, Dean 1992, and Hendriks 1999). However, such approaches were fronted for utilization at a functional level. In this instance these referred to the distribution of functional resources over a number of projects. Because they were not meant for MGMP settings, these strategies may not apply to an operational level for a multiple project manager to use in the distribution of resource over a number of projects in his/her team.

According to Abdul-rahman, Takim and Min (2009) delay refers to a time overrun to either go past the original date of the contract or beyond the time that the parties had settled on for the conclusion of a project (Lo et al, 2006). Delay can be seen in most construction projects and its duration varies to a large extent depending on the needs of the project. Some tasks can be a few days behind schedule while others can delay by over a whole year (Ahmed et al, 2003).

In construction, delay is outlined in contract or past the agreed date for completion of a task amongst the concerned parties (Assaf and Al-Hajji, 2006). Sambasivan and Soon (2007) established 28 recognizable and well appreciated delay causatives in construction and classified them under eight major distinctions.

These classifications are: customer-related elements, developer-related elements, consultant-related elements, supplies-related factors, workforce and machinery-related elements, finances-related elements, agreement-related elements and external factors. From these categories the finances-related element is one of the most common factors that bring about delays in construction tasks (Alaghbari et al, 2007). Financial challenges experienced by many contractors result in delays in construction tasks.

This is because of the numerous modifications that are made by project customers in the construction process. Consequently, it results in an increase in construction costs because the contractors are forced to use means beyond their abilities to acquire the material and equipment needed. In addition to this, delays in offering payments to contractors tend to interfere with contractor’s flow of resources. A delay in payment is effectively linked to slow progress on site, because most sub-contractors and suppliers go through financial strains hence, the required materials are not delivered to the site on time.

Table 1: Potential causes of financial-related challenges.

Category Sub-categories
Delayed Payment
  • Customer’s inefficiency in financial and business management
  • Withholding of remittances by client
  • Contractor’s illegal claim
  • Lateness in valuation and accreditation of interim payment by consultant
  • Inaccuracy in the valuation of tasks completed
  • Improper documentation and supply of data for valuation
  • Participation of many individuals in the process of offering credibility to certificates
  • Too much consultant work in the evaluation and valuation process
Poor finances management
  • Developer takes too many concurrent projects
  • Contractor’s financial background instability
  • Contractor mis-approximating the cost of the project
  • Improper prediction of cash flow regularity
  • Poor credit management
  • Capital mis-appropriation
Insufficient finances
  • Challenges in obtaining loans from financiers
  • Lack of government budget allotment
Financial market instability
  • Increase in interest rate in for loans
  • Inflation (material costs, labour costs, transportation charges)
  • Increase in currency exchange rate for imported materials and equipment

Figure 8: How dependent and independent variables relate with each other.

The figure above is a description of how dependent and independent variables are linked to each other. It suggests that the finance-related challenges causing delays in construction tasks are mainly as a result of four primary reasons. These reasons are: Delayed payment, uncontrolled cash-flow, insufficient financial requirements and instability the financial market.

How the main problem is linked to the sub-problems

The illustration above presents the suggestions with the direct relationship between the principle problem and sub-problems. The propositions for the sub-problems can be assessed in the summary below:

  • The more the delay in payment owed to a contractor, the more the cash-flow challenges and therefore the greater the length of the delays.
  • The poorer the management of the flow of cash, the more the cash flow challenges and therefore the greater the length of the delays.
  • The more the unavailability of finances, the more the cash-flow issues, and therefore the greater the length of the delays.
  • The more the instability in financial markets, the more the cash-flow challenges, and therefore the greater the length of the delays.

Inter-relationship between independent variables

The above figure shows the suggestions establishing the direct relationship between general problem and sub-issues. For example, poor cash-flow managerial tactics by the customer of a construction task may end up resulting in delayed payments to the contractor. Lateness in payment for work completed will in turn cause problems in the cash-flow framework of the contractor.

According to Angling (1985) resources can be defined as those components that utilized by a task during its implementation. Examples of these resources are manpower, finance, time, plant and machinery, materials and computer. A project can be defined as a set of actions that utilize resources with visibly defined start and finish point and produce the end product. All types of organisations are involved in projects of one type or different types at one time.

The number of projects could be large or small as well as the size of each project. Most projects will need to be analysed to determine whether they should proceed or stop and how they should be prioritized among other projects in terms of limited resources.

A study was conducted on two organisations and the findings indicated that there is common issue in both organisations which is resource allocation pattern. The portfolio management was full of issues pertaining to the establishment of a protocol between tasks and, allocation of duties to staffs from one task to another and the search for material requirements. In addition to this, when resources were re-channelled to other sections it the result was harmful effects on other tasks within the portfolio. This ended up causing the administrative authorities to go through wrangles and unending conflicts during the implementation of various tasks.

However, the main influence for portfolio management which also affects the development of an already established project was the re-distribution of resources. The study’s findings verified the full image in literature of the complexity of planning, scheduling, and allocating resources between different, concurrently ongoing projects (Engwall and Jerbrant 2003).

Blichfeldt and Eskerod (2008) demonstrated the findings of empirical study that have been conducted on 30 companies, and the most remarkable finding is that most of the companies are suffering from performing too many projects while they suffering from lack of resources. The projects managers are facing a battle of resources; they have a lot more projects than they able to work on. In addition to that they do not have enough people to do the work.

Although most of companies greatly involved in project management and project portfolio management but have not overcome the resources crisis for projects because the PPM list a lot of different projects and the top management does not aware of all these projects in turn they spend many resources on some projects and fail to allocate the resources to other projects.

Elonen and Artto (2003) believed that resource shortage and allocating resources improperly has a vital impact on the project portfolio management. When the projects is not planned properly, and go decision is made on a project without considering available resources precisely, in turn this affect the entire project portfolio in term of prioritizing the projects. Moreover, few experts are responsible for too many tasks in too many projects, which make them incapable to handle the workload. In most of the projects in the portfolio the personnel competencies are not managed properly, which affect the entire PPM performance. The top management is reluctant to stop any ongoing projects when they discover they can not reach the objectives of the projects, because they consider the stoppage of the projects as a management failure.

Researchers and practitioners considered that the human resources are the most important factor in successful projects, and have a direct link to PPM performance. In the development institutions human experience is the most needed and most rare resource. Proper distribution the right manpower to a project is very important. The management meets challenges in the allocation process if there are more projects in his/her tab and they all require very specific knowledge (Hendriks, Voeten and Kroep 1999)

Cooper (1999) declared in his study that there are very many tasks being carried out and but there is a deficit in the amount of resources to ensure that they are carried out well. This is a global challenge within organisations focussing on development. The need for additional new projects coupled with corporate restructuring has to some extended come along to deal with this resource shortage.

Techniques and methods to increase the efficiency of PPM

Ioannis and Lefteris (2001) illustrated that a common activity in the fundamental phases of a project is the estimation of the required task development resources (cost) and time. The three primary criteria for managing instabilities in task portfolio cost approximation are professional estimation, approximation by analogy and algorithm cost approximation. Professional judgment is dependent on the cumulative experience of a group of experts.

Shepperd (1997) defined the approximation by analogy strategy as a process of establishing comparisons between the software task under consideration with a number of already-completed similar projects. Finally, the algorithmic cost approximation approach requires the input of a cost model, i.e. a number of mathematical formulae which, basically, have been arrived at by utilizing methods of statistical data evaluation.

Most institutions, whether in the private or the public sector, actively participate in developmental projects. The number of tasks per organization may be many or few depending on the size of the organization. Most projects require a process of analysis and evaluation to establish whether or not they are viable and how they compare in terms of priority to other projects when the provided resources cannot fully sustain all of them. Traditional cost-benefit analysis can provide an economic assessment of projects, but because it is time consuming and costly to conduct, it is normally only used on large projects.

Alternative methods that are relatively inexpensive and easy to use are available for assessing the relative priority of projects. Where a number of projects of a similar nature are to be compared, it is possible to identify a common factor in each that will enable the projects to be ranked in order of priority. However, the common factor should be chosen with care to ensure that it actually reflects the objectives of the organization (Michael Angling 1984)

Based on the findings of the research, we have come up with a framework for establishing the efficacy levels in MGMP, structured around the determining elements and approximation criteria.

A framework for determining the efficiency levels in the management of a number of concurrent projects

In order to attain efficiency in the management of a number of concurrent tasks, all multiple-project managers and their junior associates in our study came to the agreement that the support from their parent institution has a significant impact. This support can be described in terms of task assignment, resource distribution, and institutional culture. First and foremost, the efficiency in MGMP lies in the achievability of the assignment (proposition 1).

Such tasks should factor in the strategic relevance of the project, the ideal match between project requirements and effectiveness of the multi-project manager, and some other elements like the time available. Consequently, a critical project will be given to the project manager with the appropriate skills and time to effectively complete it. Secondly, it is necessary that the available resources be distributed properly (proposition2).

Proper allocation is linked to the sufficiency and sustainability of resources, hence supporting the maintenance of continuity in the project. Third, the most efficient MGMP requires an organisational culture which enhances commitment, communication, team-work, and appreciation of desired performance. This type of organizational culture provides the basic ground rules for the task, resulting in effectiveness of the concerned parties (proposition 3).

It is not just the institutional backing that is important for MGMP effectiveness in the functional level. All collected evidence guided the conclusion that understanding the procedures involved in relation to MGMP and having credible multiple-project managers are also determinants of the efficiency in MGMP. With respect to the project management strategies, aside from managing each individual project procedure just like in basic project management, MGMP has to have structured method of managing inter-task frameworks and role inter-dependency (proposition 4). Having multi-project managers with the professional ability for guiding each individual project and coordination of relations among projects are also important criteria for the attainment of MGMP efficiency (proposition 5). Such administrators need to have various credibility enhancing elements such as managerial competencies, commercial competencies, interdependency administration, multi-tasking, and leadership.

When asked about the determinants used for estimating the MGMP effectiveness, a case informant proposed that at the institutional level, the general effectiveness of MGMP needs to be assessed with the consideration of input productivity and institutional learning (proposition 6). Pertaining to task success indices, time-to-market and client satisfaction need to be emphasized (proposition 7). Personal growth and satisfaction are also appreciated as proper measures of effectiveness in MGMP at a personal project level (proposition 8). At this instance, the main intention was to suggest a strategy that could be used to develop a clear illustration of the main issues influencing the effectiveness of MGMP (Patanakul and Milosevic 2009)

We propose the heuristic approach depicted in figure 12. Individual tasks are basically classified without regarding the input constraints; then resource strain is appreciated and a basic hypothesis of the project portfolio is identified. Subsequently, a multi-project portfolio analysis is done in order to appreciate the challenging interactions that come between tasks at portfolio level, affecting both the appropriateness and the risk of the general portfolio until the ensuing result is considered satisfactory, measures for improvement are implemented that may either influence the institutions as an entity or on individual tasks.

Projects are then studied again and a new portfolio is identified. Once an amicable situation is arrived at, the strategy is compiled as one whole entity and then distributed to follow up procedure for further detailed task evaluation. At the task execution level, projects are analysed and, when some appropriate changes are made, a re-classification for a new loop of multi-project management. (Adriano, Roberto and Mariano,1994)

Heuristic approach to multi project management

The inception point of the suggested model is the evaluation of individual tasks in terms of importance, risks and the requirement of critical-resource input. The analysis of the above three variables is however not just targeted at distinguishing the most appropriate tasks; from a PM viewpoint the main reason for this is the identification of the most relevant strategy and, in relation to the anticipated critical issues, to establish both assessment and control systems for the task. Depending on their appropriateness, risks-involved and the resources needed, projects can be distinguished by different institutions such as functional matrix or task force (Larson and Gobeli, 1987).

During the last years several scholars wrote on the topic of resource-allocation for projects. In 1994 a ‘rough-cut-project-and-portfolio-planning’ was published by Platje et al (1994). In this method the planning and control cycle for single projects level and projects portfolio level is made (figure 13)

Portfolio planning procedure in multi-project organization

This concept was implemented and tested in a small R&D organisation which grew quickly towards 200 professionals in 80 different projects. The allocation process was designed in such a way that periodically checking of an inventory on a projected project portfolio by using simple ‘resource claim’ and ‘resource-offer’ spreadsheets (see figure 14). This provided a rapid and overall overview of the demanded project portfolio.

Each claim and each offer were made clear by a percentage of resources needed for the next period. The projects leader and the group leader all together discuss the claims by implementing this concept the project leaders contact directly the group leaders in a controlled way. Also, management was obligated to decide on what projects were positioned in the portfolio and a decision on the allocation of the resources. Without this tool the decisions on the portfolio can be delayed or made too late and due to the daily stress often no time was left for a hard resource’s discussion between project leaders and group leaders (Hendriks, Voeten and Kroep 1999).

Flow resource allocation

Most of the project portfolios constitute of repetitive projects that require the manpower to repeat the same activities with the similar materials in different projects and locations. Hence, the manpower plays a main factor in the improvement of the productivity and the accomplishment of the projects, the planning and scheduling methods focus on exploiting team work continuity. Team work continuity enables each team to finish the activity in one location and move to the next order to minimize work stoppages.

Applying this concept lead to improve overall efficiency of the PPM, many researches had studied the influence of the team work continuity on the planning and scheduling of repetitive projects. Efficient planning and scheduling of exploiting resources in the repetitive projects can lead to minimize the lead time of the subsequent projects and improve the overall PPM efficiency (Hyari and El-Reyas 2006).