Monday, July 24, 2017

The Project Portfolio Funnel

Project Portfolio Funnel
When you look at the project portfolio funnel of the Simple Portfolio Management Framework (SPMF) it looks like the diagram below. Like I explained in previous articles, this is not greatly different from how PMI defines the project portfolio funnel. What is greatly different, is how you manage your funnel. SPMF is a framework within which people can address complex portfolio management problems while productively and creatively delivering projects of the highest possible value. The SPMF works well with any project delivery method. From Scrum to Waterfall, and anything in between.
So let's walk through this funnel step by step to understand the dynamics of a project portfolio funnel. For this example we will start with an empty funnel at time point X. We will follow the suggestion of the SPMF Guide and have monthly portfolio cycles. At time point X we have a bunch of project ideas on our Project Backlog. These ideas are collected by the demand management process.
These eight ideas will be categorized and afterward evaluated. During categorization or in the evaluation phase ideas can be removed from the Project Backlog for reasons as described in the linked articles. In short: when it is clear there is no value in the idea at this point of time it will be marked as such and removed from the project backlog. 
At a portfolio planning meeting, the remaining ideas have the chance of being selected for validation. When they are selected for validation the ideas are placed on the Portfolio Backlog and additional information will be gathered. This can be a business case validation or a technical proof of concept.
On successful validation, the execution phase of the project will start. Duration of the validation phase can be different for each project, depending on the needs and accepted risk. In the funnel below you see that two projects are still in the validation phase, and for one project the delivery phase has started.
Of course one result of the validation phase can be that the project will not be executed. This is shown in the funnel below. One project continuous to the delivery phase and is joining the one that was already started, and one project is stopped.
When all goes well the project (or parts of it) will be delivered and you can start monitoring its benefits. When it does not go well or the priorities of the portfolio have changed the portfolio committee can decide to stop a project as well in a portfolio review meeting. Both are shown in the funnel below.
After a while of monitoring the benefits (or lack of them), you then do a project retrospective. This is essential for learning and improving within the organization. But like I said, this retrospective only make sense after a phase of benefits monitoring and not directly after the closing of the project.
The above example of the project portfolio funnel is of course extremely simplified because in reality new ideas will come in on an ongoing base, and every portfolio cycle new ideas need to be evaluated and could be selected.
The duration of the phases after evaluation can span between one and many portfolio cycles.
Projects will be delivered, and new ideas keep on coming in.
Benefit monitoring starts, and still, new ideas keep on coming. Which is a very good thing. When you run out of ideas your portfolio quality will suffer greatly.

So after a while of running SPMF your funnel will look like below. And that is why transparency and backlog management are essential for managing your portfolio. Displaying this funnel in the form of a Kanban Board is a great start.

You can buy my books The Art of Technology Project Portfolio Management and The Science of Technology Project Portfolio Management separate or as a bundle in my store. Just click here or on the image.
Posted on Monday, July 24, 2017 by Henrico Dolfing