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Best Practices in Portfolio Management

Best Practices in Portfolio Management

Introduction

The Benefits Realization Management (BRM) approach focuses on aligning the objectives and activities of all projects within the organization with the set organizational goals and objectives as a way of ensuring efficiency and effectiveness. The BRM approach is generally created to improve the portfolio by ensuring that all projects run smoothly and seamlessly. As a result, the BRM approach is specifically aimed at streamlining the operations of the organization under an effective portfolio program management system. The most definitive aspect of the BRM approach is its focus on restructuring the various projects in order to ensure that they work together rather than against each other. In order to accomplish it, the approach applies a number of critical components as will be discussed in the current paper. They include financial management, risk management, change management and procurement management. Each one of these components must be effectively integrated into the BRM approach for better outcomes in the program management.

Financial Management

The main focus of BRM approach is placed on ensuring that all projects at hand go according to plan. Consequently, the BRM approach focuses on ensuring that there are no delays or wastage within the organization. To accomplish this, the attention has to be paid to the financial component of the projects. Financial management and control is affected at the planning level of the program where it is crucial to understand where money is spent, how it is spent and how the expenditure can be minimized and controlled to avoid losing funds before the project is finished (Kester, Griffin, Hultink & Lauche, 2011, p. 651). At the planning phase of each project, there is a need to present a complete budget with provisions for miscellaneous expenses as required within the given project. Correspondingly, each project may have a comprehensive budget aimed at ensuring that all the activities are effectively funded to completion. However, program management, in this case, involves streamlining the company’s expenses, reallocating any potentially wasted resources to other projects and ensuring that all the available funding is channeled into the critical projects. It is done to avoid a negative impact on the organizational operations in the event when there is a shortage of funds.

Equally important, the program manager is required to understand the financial needs of each project to ensure that there are not any avoidable complications as a result of limited funding (Koh, Crawford & Project Management Institute, 2012, p. 4). Financial management, thus, is extremely important at the planning phase where the financial needs of each project are mapped and defined in relation to the significance within the program. Projects that are more pivotal within the program have to be effectively funded from the beginning to avoid causing a ripple effect in the event of a funding delay. Most organizations do not provide all the required funding for their projects at the beginning of the program and thus, there is a need to manage the available funds without compromising the organization’s operations. Consequently, financial management and control is integrated at the beginning of the program when each project is identified for its significance throughout the program. After that, the funding is allocated in accordance to the needs of the company and for the benefit of the organization as a whole.

Risk Management

In order to develop a complete program map, the program manager needs to study each project individually and understand the risks such program map poses to the entire organization. Equally, each project manager is tasked with reporting his or her risk situation after a thorough risk assessment as part of the project planning exercise (McLaughlin, 2011, 29). As a result, these project managers are expected to submit an effective risk assessment with detailed information about any challenges that the project may face and any effects that these challenges may have on he organization’s operations as a whole. The risk assessment component in the BRM approach involves assessing all the risks submitted for each project and determining how they will affect the other projects. The project manager is then expected to restructure other projects to mitigate the risks that are expected from another project.

As an illustration, if the risk in one project involves delays from suppliers, it would limit their ability to complete the project. All projects that depend on the completion can be prepared for the delay by postponing their start or simply by restructuring their operations to be performed without implementation of the main project. If the construction project for building A depends on the completion of the construction project for driveway C, and there is a risk that driveway C will be delayed owing to limited supplies from the source, the building A project can be reorganized to continue without the driveway C provided the risk is noted early enough to re-organize the project. Risk identification, assessment, mitigation and control mechanisms are all integrated at the very beginning of the program management once the reports have been submitted from the project managers (Bannister & Cantor, 2013, p.24). Each project is unique but the role of the BRM approach is to align the projects and make them to work together rather than against each other. The role of the program manager in this context is to identify the overlapping risks that will influence more than one project and reorganizing the affected projects to circumvent the said risks. Mitigation and controls can also be affected in the planning phase when the projects can be easily redesigned to accommodate the unavoidable risks with minimal impact on the program and the organization as a whole.

Change Management

Effective program management entails making everyone involved in the activities and objectives of the organization. It is also important to identify what the main purpose of the change management is. As the projects progress, the organization often needs to make adjustments on a number of levels based on unforeseen circumstances limiting either the timeline that the company had initially given to complete the projects or the funding that they can access for their projects in the given program. The main role of the program manager is to ensure that any necessary changes are embraced and effectively implemented as a way of avoiding delays or waste of resources within the organization. In order to accomplish this, the BRM approach is tailored to enable the program manager to ensure effective communication across all projects. It means that the program manager often has a direct access to all the teams working on each project within the program. It can be appreciated that change management mostly deals with communication and negotiation. First, the changes have to be communicated to all parties that will be affected and then the leader has to negotiate for their support in implementing the changes (Ward, Zhang, Jain, Fry, Olavson, Mishal, Amaral & Zhou, 2010, p.13). Consequently, the program manager is tasked with the identification of any potential changes within the program early enough. Once the changes are identified, the management will have to identify all the affected projects and communicate with the affected teams in order to ensure that everyone understands the essence of the change is about and how it will affect their work. Integrating change management within the BRM approach entails mapping the projects to identify potential changes and the affected projects, then developing a plan to communicate the changes and negotiate their implementation. At the same time, a successful implementation process with minimal impact on the program as a whole is possible only when the whole team members support it. The main function of program management is to oversee the projects within the organization (Eric, 2015, p.1). Considering that changes are a big threat to the success of the program, program managers applying the BRM approach oftenn have to consider mapping potential changes for each project and determining the teams that would be affected. While the changes are likely to occur after the projects have started, the program manager should be able to identify them as soon as possible and communicate immediately. It will help mitigate the negative effects of the changes and ensure that the change management component is effective for all projects.

Procurement Management

Considering that portfolio management is an overall practice that covers all projects within the organization, it is expected that the BRM approach would entail procurement management and controls for effectiveness and efficacy. Procurement is a process that involves dealing with suppliers and essentially sourcing for all required materials and services within the organization. As part of the driving force to streamline the company’s projects and limit the expenses to avoid wasting resources, procurement management can be integrated into the BRM approach for portfolio management at the planning phase, as well (Kawas & Thiele, 2011, p. 216). After understanding the needs and requirements of each project, there is a need for the program manager to ensure that the project managers have access to these needs and requirements within the right time frame. Furthermore, each project manager could procure his or her own materials. At the same time, buying in bulk often attracts a discount, which may save the organization some amount of money. It follows that in order to exercise procurement management, the portfolio manager would have to map the projects and determine any shared needs and resources, thus planning for their procurement together rather than leaving each project to handle its own procurement (Bronshtein & Kondrat’eva, 2013, p. 838). By taking care of the pooled procurement component within the organization, the program manager is able to manage and monitor the overall expenditure, while also ensuring that all the requirements for the various projects are available within the best time frame for the effective and timely completion of the projects at hand. Program managers may not be focused on performing the roles of the project managers. Nevertheless, their role is to streamline the operations of the organization in all areas that present a potential opportunity for cost reduction and the improvement of project outcomes. Procurement management in this case helps in both contexts and allows the organization to achieve its bottom line without compromising on anything.

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Conclusion

Effective portfolio management deals with highlighting the areas of the organization’s projects that can be streamlined for the effectiveness and efficiency and using them for better business outcomes and lower operational costs. The ability to integrate critical components of the organization, such as financial management, change management, risk management and procurement management, makes BRM the best portfolio management approach. Considering that the BRM approach operates by mapping each project and aligning all related components of each project with the rest of the projects in the organization, it remains one of the most effective project management approaches with the capability of ensuring seamless and simultaneous effectiveness of the organization performance. Program managers practicing the BRM approach have the capacity to integrate all the required components into the program. Such move will ensure that the organization not only receives timely completion on all projects but is also able to reduce expenditure through effective financial and procurement management. At the same, it will receive an opportunity to manage the risks within the program, as well as limited negative impacts stemming from any potential ripple effect when one project is exposed. The BRM approach is built on a careful and well-mapped planning phase, ensuring that all the unexpected situations are excluded and the organization can move towards a balanced scorecard and competitive advantage in regard to its projects.

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