Portfolio management has become popular as a way to help organize the processes that drive decisions within organizations. While a successful work portfolio depends on how you plan, prioritize, and manage work, another key aspect is managing change, a constant of business.

The larger your portfolio, the more chances that changes will occur throughout the year. The changes could be the result of business priorities, new ideas that become important, or regulatory requirements. Changes could also be forced on the portfolio because you weren’t able to meet all of the previously agreed-on commitments for delivering on time and within budget. Portfolio changes must be managed similarly to the initial planning process. The process of collaborating with the business stakeholders allows them to help manage the changes, reestablish priorities, and rebalance the portfolio of work for the remainder of the year.

Nothing stays the same for long
The job of managing a large portfolio of work would be difficult enough if everything could be executed as planned. However, you rarely have that luxury. Instead, you barely have time to get a stake in the ground when business changes put your carefully constructed plans in flux. You know the causes. Profits and revenue are down. Budget cuts are required. New management comes in with different priorities. Your company acquires another company. Government regulations change. Someone comes up with a new, great idea.

Portfolio management series

This is the fourth article in our series on portfolio management. Read the whole series:
“Use portfolio management to maximize IT spending”
“Plan and prioritize work within the context of an entire portfolio”
“Manage the entire year’s work with a portfolio”

There’s nothing wrong with change. In general, change is good. But you’ll find that when business conditions and business priorities change, the approved work within your portfolio may need to change as well. The question now is to determine the best way to make the changes required.

If you manage work as a portfolio, you should be able to respond intelligently. You should already have an up-to-date portfolio plan, such as the one shown in Figure A, that accounts for all the work going on today, with a mapping of how and when the remaining work will be scheduled. When work priorities change, you should go back to your previous prioritization process to determine how to proceed.

Figure A

Approved work may be canceled
Sometimes changes in business priority mean that previously approved work is stopped or canceled. In this scenario, your portfolio team should have additional capability to do other work. On the surface, you might say that the business unit that canceled the project should be able to approve a replacement. However, in true portfolio management, it doesn’t work like that. Instead, all the stakeholders are informed as to the current status, and all of them should have a chance to offer up their highest priority work as a replacement.

For instance, let’s say a manufacturing project is canceled because of priority changes. All stakeholders need to have input into the new plan. It may turn out, for instance, that a marketing project may have higher business priority than a substitute project from manufacturing. It’s also possible that your organization may have been relying on a number of contract resources to complete the manufacturing project, and a viable alternative may be to not hire the contract resources and to not approve a replacement project at all. Another scenario is that manufacturing is cutting back on projects because of a need to cut the budget. You may find yourself in a position in which staff is laid off for business reasons rather than working on replacement projects.

New work is identified
The other scenario that happens frequently is that new work comes up that wasn’t identified in the earlier planning process. Should you just go ahead and add the work? Although that’s what the business wants, you can’t do it. If your planning process was successful, you already have a full plate of approved work for the entire year. Besides that, you’re typically fighting just to complete the approved work you already have. Project delays in some areas may make it difficult for even all of the approved work to be completed. Instead, you have to go back to your major stakeholders for help in reprioritizing the work.

The question now is whether you receive incremental funding to do the new work or something that was previously approved gets bumped. If you get incremental funding, you may be able to make everyone happy—assuming you have the capacity within the portfolio to do the extra work. However, if you can’t get new funding, one or more projects that were previously approved need to be postponed. Depending on how you did the initial planning process, you may have a sense for the relative priority of all the approved work, and you may have to drop the ones on the bottom of the list and then slot the new work into the appropriate spot.

For instance, if you approved 40 projects for the year, you may have to drop the lowest three projects to make room for a new one, and the new project might be slotted at number 20 in priority. Again, this process can be painful, since other business units may lose their projects to make room for new work in another division. The good thing, from an IT perspective, is that the business unit managers are collectively making the priority decisions.

Changes result from not meeting expectations
Changes also evolve as a result of normal fluctuations in approved work. For instance, if approved projects start to go over their budget or deadline estimates, you could be in trouble. This situation will be offset somewhat by any projects that come in early and under budget. However, it seems like there are never enough early ones to make up for the late ones.

As you’re updating and rescheduling the portfolio each month, you may find that you can’t get all of the approved work done. Your first priority will be to try to put corrective action in place to get on target for the portfolio. However, if you can’t, you’ll need to get the clients involved to determine whether you can get incremental funding to cover all the work or whether some projects need to be dropped.

Remember that just because a project starts later in the year doesn’t mean that it’s a lower priority. So the process of determining what work will be postponed and then rebalancing the work for the remainder of the year becomes even more complex.