Why Portfolio Level Opportunities and Risks Management is So Essential
While most project-driven organizations nowadays implement some level of Opportunity and Risk management process, portfolio-level processes are often non existent. We find that it is a striking issue that greatly impedes Opportunity and Risk management processes to reach an acceptable effectiveness.
Portfolio-level processes are extremely important when it comes to the overall performance of the organization, in particular because the organization shares resources across projects. Much more structured portfolio-level Opportunities and Risk management processes should be implemented. Our new White Paper 2015-02 ‘Why Portfolio Level Opportunities and Risks Management is So Essential in Project-driven organizations’ describes what are the issues that need to be covered, and in general how to implement such process.
At portfolio level, in principle, except in the case of rare catastrophic risks, the Opportunities and Risks of different Projects should tend to average out. This is the way most businesses manage their risks. However there are some instances where it is not the case – in particular, because the averaging out supposes that the Projects in the portfolio are independent. All possible dependencies, which are in effect managed by the organisation, are sources of Opportunities and Risks for the organization.
Portfolio-level Opportunity and Risk management processes are essential for the sustainability of any project-driven organization. Structured processes are rarely implemented and portfolio-level decision-making such as resource allocation between projects and the decision to take or not a new project as part of the portfolio are often left to the feel of the senior executives.
We believe that a much more structured approach can to be implemented, adding a lot of value to the organization, in particular with regard to common resources and to the monitoring of the diversification of projects. Our new White Paper 2015-02 ‘Why Portfolio Level Opportunities and Risks Management is So Essential in Project-driven organizations’ gives principles which, if they are followed, will greatly improve the resilience of organizations.
Find all these principles of Project Risk Management exposed in a comprehensive manner in our new Handbook, Practical Project Risk Management for Project Managers (now published – click on the link to see it on Amazon!)
How to Be More Cost-Effective in Project Execution
In those days of low commodity prices, it is essential for Contractors to propose cost-saving approaches so as to help make developments economically feasible – and become more competitive on their market. The solutions to be deployed will be very different depending on the type of projects, in particular regarding size and complexity. Our new White Paper 2014-18 ‘How to Be More Cost-Effective in Project Execution’ explains the steps that can be taken, depending on project type.
Two very different approaches need to be implemented, one for small projects and one for large projects, because the drivers of effectiveness are significantly different.
For smaller projects of low complexity, a number of processes that are currently implemented repetitively in each project can be usefully transferred to the portfolio level; that will save cost, limit the supporting resources required and at the same time make those processes more effective.
For large projects, cost effectiveness needs to be sought in those activities that are not part of the critical chain, and on leveraging procurement savings.
It is as always critical to deal with small and large projects in different ways because their drivers are very distinct.
Every downturn is the occasion to review the work processes and seek more effectiveness. Small & simple projects need to be dealt with differently from large & complex projects, and the drivers for improving effectiveness will be notably different. It will go through the establishment of differentiated process – an additional complication that is warranted to make the organization more adapted to its markets. Find more about this topic in our new White Paper 2014-18 ‘How to Be More Cost-Effective in Project Execution’.