Optimising the value of Portfolios through Governance

Optimising the Value of Portfolios through Governance [P065]

Effective portfolio governance is not the same as effective portfolio management. Both processes require an overarching philosophy, appropriately skilled and organized people and appropriate technology and systems; but they are different.

The corporate governance framework is there to encourage the efficient use of resources by an organisation's managers, and equally to require accountability for the stewardship of those resources. Its aim is to align as nearly as possible the interests of individuals, the organisation and society. Project, Program and Portfolio governance is a subset of corporate governance, it focuses on areas of corporate governance related to project activities, including:
- Portfolio direction
- Project sponsorship
- Project & Program management & efficiency
- Disclosure and reporting

Effective portfolio governance ensures that an organisation selects the right projects to do based on its strategic objectives and then does the selected projects right by deploying effective project, program and portfolio management processes.

Within this framework, the organisation's stakeholders determine the appropriate balance of:
- Risk -v- Reward
- Short term -v- Long term
- Enhancement -v- New business
Consequently, the key stakeholders need to be identified and managed as part of the portfolio management processes needed for effective governance.

Portfolio Governance is a ‘top down’ process lead by the ‘board’. Without an overall philosophy actively supported by the CEO / Chairperson, people running the governance processes lack direction and authority. Without funding to employ appropriately skilled and trained staff to work in a properly resourced PMO, it is difficult to operate most EPM tools to their full potential and the data gathered by the tools is ignored and does not become vital information used by senior management.

The information needed for effective governance and management is readily available, what is laking is either awareness or willingness to adopt best practices:

The processes for effective governance are defined in the GoPM booklet published by the Association for Project Management (UK).
The information needed for effective portfolio, program and project management is readily available, in PMI’s Standards, and the effectiveness of an organisations use of these ‘best practices’ can be measured using OPM3 and the OPM3 ProductSuite.
Technical standards including CMMI (systems engineering) and AS8015 – 2005: Corporate governance of information and communication technology are also well established, but need the support of an overall governance system to be deployed effectively.

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