PROJECT PORTFOLIO MANAGEMENT: AN ANALYSIS FROM THE ...

FUNDAÇÃO GETULIO VARGAS

ESCOLA BRASILEIRA DE ADMINISTRAÇÃO PÚBLICA E DE EMPRESAS

MESTRADO EXECUTIVO EM GESTÃO EMPRESARIAL

PROJECT PORTFOLIO MANAGEMENT: AN

ANALYSIS FROM THE INSURANCE INDUSTRY IT

AREA

Case Study

DISSERTAÇÃO APRESENTADA À ESCOLA BRASILEIRA DE ADMINISTRAÇÃO

PÚBLICA E DE EMPRESAS PARA OBTENÇÃO DO GRAU DE MESTRE

Fabio Pitorri Rio de Janeiro - 2014

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Ficha catalográfica elaborada pela Biblioteca Mario Henrique Simonsen/FGV

Pitorri, Fabio

Project portfolio management: an analysis from the insurance industry IT area / Fabio Pitorri. – 2013. 63 f.

Dissertação (mestrado) - Escola Brasileira de Administração Pública e de Empresas, Centro de Formação Acadêmica e Pesquisa.

Inclui bibliografia.

1. Administração de projetos. 2. Escritório de gerenciamento de projetos. 3.

Planejamento estratégico. 4. Investimentos – Administração. I. Escola Brasileira de

Administração Pública e de Empresas. Centro de Formação Acadêmica e Pesquisa.

II. Título.

CDD – 658.404

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Table of Content

Table of Content ......................................................................................................................... 1

Figures List ................................................................................................................................. 6

Chart List .................................................................................................................................... 7

1 Introduction ........................................................................................................................ 8

2 Theoretical Reference ....................................................................................................... 11

2.1 Main Concepts for Portfolio Management ................................................................ 11

2.2 The Standard for Portfolio Management (SPM) ........................................................ 14

2.2.1 Structure.............................................................................................................. 14

2.3 Management of Portfolios (MoP) .............................................................................. 19

2.3.1 Structure.............................................................................................................. 19

2.4 Key Portfolio Roles.................................................................................................... 21

2.4.1 Portfolio Direction Committee ........................................................................... 21

2.4.2 Portfolio Manager ............................................................................................... 21

2.5 Portfolio Definition Best Practices ............................................................................ 22

2.5.1 Understand .......................................................................................................... 23

2.5.2 Categorize ........................................................................................................... 24

2.5.3 Prioritize ............................................................................................................. 25

2.5.4 Balance ............................................................................................................... 29

2.5.5 Plan ..................................................................................................................... 31

2.6 Portfolio Delivery Best Practices ............................................................................... 32

2.6.1 Benefits Management ......................................................................................... 33

2.6.2 Financial Management ....................................................................................... 34

2.6.3 Risk Management ............................................................................................... 35

2.6.4 Resource Management ....................................................................................... 35

2.6.5 Stakeholder Engagement .................................................................................... 36

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2.6.6 Management Control .......................................................................................... 36

2.6.7 Organizational Governance ................................................................................ 37

2.7 Discrepancies between the References ...................................................................... 38

3 Research Methodology ..................................................................................................... 39

3.1 Research Strategy....................................................................................................... 39

3.2 Research Protocol ...................................................................................................... 40

4 Case Study ........................................................................................................................ 44

4.1 Company Profile ........................................................................................................ 44

4.2 Practices for Portfolio Definition ............................................................................... 45

4.3 Practices for Portfolio Delivery ................................................................................. 49

5 Conclusion ........................................................................................................................ 55

6 Abbreviations and Acronyms ........................................................................................... 58

7 Appendix A - Interview transcription ............................................................................... 59

8 Bibliography ..................................................................................................................... 64

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Figures List

Figure 1: PPM organizational context ...................................................................................... 12

Figure 2: PPM processes and process groups ........................................................................... 15

Figure 3: MoP structure - principles, cycles and practices ....................................................... 20

Figure 4: Portfolio components separated by business area ..................................................... 24

Figure 5: Single qualitative criteria prioritization model (comparison between projects) ....... 27

Figure 6: Multi-criteria prioritization model (comparison between projects) .......................... 28

Figure 7: Bubble graph ............................................................................................................. 29

Figure 8: Bubble graph (depicting categorization and category) ............................................. 30

Figure 9: Portfolio Roadmap .................................................................................................... 30

Figure 10: Capacity and Demand ............................................................................................. 31

Figure 11: Chinese ideogram for Risk ...................................................................................... 35

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Chart List

Chart 1: Relationship between Processes and Tools & Techniques (part 1) ............................ 16

Chart 2: Relationship between Processes and Tools & Techniques (part 2) ............................ 17

Chart 3: Relationship between Processes and Inputs & Outputs.............................................. 18

Chart 4: Interrelationships between MoP practices and SPM processes ................................. 22

Chart 5: Prioritization criteria for IT Portfolio ........................................................................ 27

Chart 6: Interrelationships between MoP practices and SPM processes ................................. 33

Chart 7: Research questionnaire .............................................................................................. 41

Chart 8: Interview transcription - understand practice ............................................................ 45

Chart 9: Interview transcription - categorize practice ............................................................. 46

Chart 10: Interview transcription - prioritize practice ............................................................. 47

Chart 11: Interview transcription - balance practice ............................................................... 48

Chart 12: Interview transcription - plan practice ..................................................................... 49

Chart 13: Interview transcription - benefits management practice.......................................... 50

Chart 14: Interview transcription - financial management practice ........................................ 50

Chart 15: Interview transcription - risk management practice ................................................ 51

Chart 16: Interview transcription - resource management practice ......................................... 52

Chart 17: Interview transcription - stakeholder engagement practice ..................................... 52

Chart 18: Interview transcription - management control practice ........................................... 53

Chart 19: Interview transcription - governance practice ......................................................... 54

Chart 20: Consolidated survey results (by protocol question) ................................................ 56

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PROJECT PORTFOLIO MANAGEMENT: AN ANALYSIS FROM THE INSURANCE

INDUSTRY IT AREA

Introduction

The essence of a company is its strategic initiatives. These components will

determine where the company will be in the future and, therefore, whether this company will

achieve its own vision and mission. The abovementioned strategic initiatives are the strategy

related operations, projects and programs that are a part of a group called Portfolio, which

must be properly managed to ensure that their benefits will be delivered and objectives will be

met (OGC, 2011). This path begins with selecting which components (operations, projects

and programs) will be chartered to constitute this Portfolio and finish with the delivering each

of its components including, among others, adequate delivering the communications, properly

managing the risks and appropriately controlling the resources.

Due to the strategic importance of this topic, any failure in the selection or execution

of these projects can lead to a significant impact in the future results of the organization. In

this context, several institutions (Project Management Institute, Office of Government

Commerce, among others) develop and maintain guidelines that can help these corporations to

better convert their vision and mission into reality, thru well managed operations, programs

and projects. These guidelines are composed by a collection of best practices designed to help

them to enhance their probability of success in the field of Project Portfolio Management

(PPM).

A recent study published by Project Management Institute and The Economist (2013)

shows that just 56% of the strategic initiatives have been successful in the last three years.

The same research acknowledged that only 62% of the strategic initiatives received the

required resources. These datas show that organizations are underestimating their Portfolio

and, probably, are having difficulties to deliver their proposed strategies.

In addition to the abovementioned data, Jeffery and Leliveld (2004) discovered,

based on a Portfolio management study in IT companies that, when a company reaches a

higher level of maturity in this area, it can conquer cost savings of up to 40% in its overall

project Portfolio expenditure. These datas show the benefits that PPM can provide to the

corporations that adopt this framework in a proper way. Moreover, the same authors (2004)

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warn that only 25% of the researched companies measure the ROI of the projects after its

deployment, depicting the deficiency of control over these initiatives.

Furthermore, Brown (2008, p. 2) declared that "leaders now look to innovation as a

principal source of differentiation and competitive advantage" and that "need for

transformation is greater now than before". Nevertheless the importance of the PPM to deliver

these innovations, studies done in the past 25 years indicate that 60% to 80% of companies

fall short of the success predicted from their new strategies (Kaplan & Norton, 2008).

Based on all this arguments (lack of adoption, deficiency of control and pace of

change), the main goal of this research is to evaluate how well IT areas of the insurance

organizations are managing its Portfolios. Within this context, the following question can be

highlighted: How IT areas of insurance companies are, in the present moment, defining and

delivering their strategic initiatives Portfolios?

To address the question above, two (02) assumptions will be the starting point of this

study:

Assumption 1: IT areas of these organizations are applying the best practices in the

definition of their strategic initiatives Portfolios.


delivery of their strategic initiatives Portfolios.

It is hoped that this study contribute for the understanding of how PPM is established

in the organizations, compare this information with existing theory and find gaps between

theory and practice. It is not intended to find answers to the gaps found, which will result in

new studies. Furthermore, this research focused only in the insurance industry information

technology area to narrow the scope and to improve the knowledge about how PPM is done

inside this specific extract of the largely population.

This master thesis, to adequately answer the question and verify the presented

assumptions, will be structured on the following topics:

Introduction: present the objective to the reader;

Theoretical reference: in-depth study about the theme (Portfolio management);

Research methodology: explain the methodology that was applied and the research

protocol;

Case study: presenting the case study and its analysis, demonstrating all evidence found to

answer the research question;

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Final results and conclusions: where conclusions will be made and suggestions for future

work will be presented;

Abbreviations and acronyms: explains all the abbreviations and acronyms contained in this

thesis;

Bibliography: showing all reference sources used in this thesis;

Appendices: containing the results and transcripts of interviews.

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Theoretical Reference

The aim of this chapter is to study and comprehend the main concepts, publications

and articles covering the Portfolio Management theme. The searching for theoretical

references will be concerned about their scientific legitimacy and the quality of the

publication. Due to this, the main references will be the articles published in the renowned

journals covering this field and, another important source of references, will be the well-

known books and authors covering this theme.

Main Concepts for Portfolio Management

There are some concepts and acronyms that need to be described for proper

understanding of the content and to establish a standardized lexicon for this study - and this

topic will be dedicated to it.

The first item to be discussed should be the heading of our topic of study: Portfolio

management. The acronym that is adopted to represent this field in most of the academic

papers (Castro & Carvalho, 2010) and, therefore, will be used to denote strategic initiatives.

Portfolio management in this study will be the PPM acronym (meaning Project Portfolio

Management). The main benefit of adopting this nomenclature is that it differentiates the

strategic initiatives Portfolio management in relation to Portfolio management of other

disciplines (finance, marketing and so on), since Portfolio is not only adopted by this

management field to describe their collectives. Regarding the meaning, Cooper, Edgett e

Kleinschmidt (1998) define PPM as:

Project Portfolio Management is a dynamic decision process wherein a list

of active development projects is constantly revised. In this process, new

projects are evaluated, selected and prioritized; existing projects may be

accelerated, killed or reprioritized, and resources are allocated and

reallocated among the projects in the Portfolio

Furthermore, PMI (2013b, p. 21) describes PPM as: "Portfolio management is a

discipline that enables executive management to meet organizational strategy and objectives

through efficient decision making...". And OGC (2011) includes the PPM definition in this

context:

Portfolio management is a coordinated collection of strategic processes and

decisions that together enable the most effective balance of organizational

change and business as usual (BAU).

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To better understand the abovementioned concept, it is important to comprehend the

meaning of some related and cited ideas. The figure 1 presents some of these main topics

related to the PPM area.

Figure 1: PPM organizational context

Source: PMI (2014)

The first element is the meaning of the isolated Portfolio word for the PPM context.

The Standard for Portfolio Management, published by the Project Management Institute

(2013b, p. 3), describes Portfolio as: "A Portfolio is a component collection of programs,

projects, or operations managed as a group to achieve strategic objectives". And complements

this definition with the following sentence: "A Portfolio should be a representation of an

organization's intent, direction and progress".

Another explanation of the same expression comes from OGC (2011, p. 131), and it

defines Portfolio as: "An organization's Portfolio is the totality of its investment (or segment

thereof) in the changes required to achieve its strategic objectives".

Since a Portfolio is established to enable the company's strategy, it is imperative to

understand what strategy is: "a careful plan or method for achieving a particular goal usually

over a long period of time" (Merriam-Webster, 2014).

Based on the abovementioned definition that a Portfolio is a group of programs,

projects, or operations, the correct comprehension of these concepts are important to the

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development of this content. PMI (2013b, p. 180) describes Program as: "A group of related

projects, subprograms, and program activities that are managed in a coordinated way to obtain

benefits not available from managing them individually".

In addition, PMI (2013a, p. 3) describes Project as: "A project is a temporary

endeavor undertaken to create a unique product, service, or result".

However, to group all these concepts (programs, projects and operations) into just

one denomination, PMI (2013b, p. 176) introduced the notion of Components, meaning: "A

discrete element of a Portfolio that is a program, project, or other work". For a similar

purpose, OGC (2011, p. 130) adopts the concept of Initiative, that excludes operations from

this list and denotes just a program or a project. Moreover, Kaplan and Norton (2008, p. 7)

described a discretionary project or program, of finite duration, designed to close a

performance gap as a Strategic Initiative (Kaplan & Norton, 2008, p. 7)

Since PPM is a way to improve the creation of Value to the organization, another

important concept that is usually linked to its theory is the Value notion. PMI (2013b, p. 10)

states that Value:

[...] may be created through the effective management of ongoing operations

[...] however, through the effective use of Portfolio, program and project

management, organization will possess the ability [...] to meet strategic

objectives and obtain grater business value from their project investments.

And it also defines the meaning of Value: "[...] the entire value of the Business - the

total sum of all tangible and intangible elements [...] business value scope can be short,

medium or long-term."

To sum up to the same concept, Levine (2005, p. 34) states that: "Definition of value

will certainly differ in accordance with the firm's focus, strategies, and types of projects."

In order to deliver value to the business, the Portfolio components must deliver its

benefits. Benefits that are described by OGC (2011, p. 129) as: "The measurable improvement

resulting from an outcome perceived as advantage by one or more stakeholders."

With the intention to describe the value of the initiatives and the benefits that will be

accrued with each components, a document called business case should be developed for each

of them (OGC, 2011). OGC (OGC, 2009) declares that it contain justifications for a project

like financial feasibility for what is to be made and why it should be done.

Finally, to properly understand the definition of Portfolio effectiveness, the most

preeminent explanation found was provided by Patanakul, Curtis e Koppel (2013, p. 31):

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[...] the organizational capability to (1) form and govern a project Portfolio

such that the Portfolio aligns with the organization’s strategic direction,

addresses risks and opportunities, and is adaptive to the internal and external

changes in order to provides short and long-term value or benefits to the

organization, and (2) to manage projects in the Portfolio to promote

transparency, process consistency, visibility and predictability of projects in

the Portfolio, and to promote integrity, cohesion, and the morale of the

project community.

The Standard for Portfolio Management1 (SPM)

The Standard for Portfolio Management (SPM) is a document composed of a

collection of Portfolio management best practices cataloged and compiled by the Project

Management Institute (PMI). PMI was founded in 1969 and it is the world’s largest not-for-

profit association for the project management profession. Among PMI's core values, is the

intent to engage the community and facilitate the growth of the profession (PMI, 2013d) and,

to accomplish this objective, the SPM is reviewed by PMI's volunteers at every 4 years to

ensure its validity for the practitioners (the last edition was published on January 1st, 2013).

SPM intends to depict Portfolio management processes generally recognized as good

practices and promote a common vocabulary, unfolding a guide rather than a methodology

that is valid to most Portfolios on the most of the time. It focuses on processes that are unique

to the Portfolio management field and its relationships with allied disciplines. Regarding its

application, the standard recommends an adequate adaptation of its content to the given

context to maximize the benefits of its adoption (tailoring its content to the reality of the

situation). With the adequate tailoring, the knowledge provided by this reference can be

applied by all type of organizations (profit, nonprofit and government).

Structure

This standard organizes the best practices (Portfolio management processes) into a

two dimensions matrix: process groups and knowledge areas. The best practices are

represented by processes and each one belongs only to one knowledge area and one process

group as depicted in figure 2.

1 Unless otherwise noted, the entire chapter content are based on The Standard for Portfolio Management (PMI,

2013b)

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The first aspect that organizes the best practices are the process groups and it cluster

the best practices based on its purpose for the PPM.

The Defining process group contains the process that are responsible for converting

the organizational strategy and its related objectives into a group of policies describing how

the components (operations, projects and programs) will be identified, authorized and

managed.

Figure 2: PPM processes and process groups

Source: Standard for Portfolio Management (PMI, 2013b)

Moreover, the Aligning process group executes the processes necessary to manage

and optimize the Portfolio. Among the activities that occurs during these process group are:

the management and report of the Portfolio components (operations, projects and programs),

the Portfolio value management and the fine-tuning between resource supply and demand.

These activities should respect and align to the standards established during the Defining

process group.

The last process group, Authorizing and Controlling, is responsible for the

authorization of the Portfolio components and for the ongoing Portfolio oversight. In the same

way as the Aligning process group, these activities should respect and align to the standards

established during the Defining process group.

The second aspect that organizes the best practices are the knowledge areas and it

groups the best practices based on its knowledge domain:

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The first knowledge area is the Portfolio Strategic Management, is related to the strategic

aspects of the Portfolio, ranging from alignment with corporate strategy to the realignment

necessary due to changes in initially established assumptions;

The second knowledge area is the Portfolio Governance Management, which is responsible

for the decisions related to the Portfolio, also including the completion of the studies

necessary for this to occur properly;

After is the Portfolio Performance Management knowledge area and this segment contains

the processes that set out how to measure the efficiency and effectiveness of the Portfolio

and, also, it comprises the effective implementation of these practices;

Chart 1: Relationship between Processes and Tools & Techniques (part 1)


Next is the Portfolio Communications Management knowledge area, which develop the

communications plan and implement the guidelines established;

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4.1 Develop Portfolio Strategic Plan x x

4.2 Develop Portfolio Charter x x

4.3 Define Portfolio Roadmap x x x

5.1 Develop Portfolio Management Plan x

5.2 Define Portfolio

6.1 Develop Portfolio Performance Management Plan x

7.1 Develop Portfolio Communication Management Plan x x

8.1 Develop Portfolio Risk Management Plan x x

4.4 Manage Strategic Change x x x

5.3 Optimize Portfolio x x x

6.2 Manage Supply and Demand x x x

6.3 Manage Portfolio Value x x

7.2 Manage Portfolio Information x

8.2 Manage Portfolio Risks x

5.4 Authorize Portfolio

5.5 Provide Portfolio Oversight

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The last knowledge area is Portfolio Risk Management, which is responsible for increasing

the exposure of the Portfolio to positive uncertain events and to reduce the exposure to

adverse uncertain events.

The last element of these matrix, representing the best practices, are the sixteen

processes that are distributed in the intersections between process groups and the knowledge

areas. To adequately accomplish its objectives, each of these processes contains inputs, tools

& techniques and outputs (called ITTOs). The premise adopted by the standard is that the

appropriate use of these tools & techniques to transform inputs into outputs will maximize the

likelihood of successful PPM initiative.

Chart 2: Relationship between Processes and Tools & Techniques (part 2)


There are twenty four tools & techniques recommended by this standard and they are

distributed between the sixteen processes (as depicted by chart 1 and 2) based on their utility

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s4.1 Develop Portfolio Strategic Plan x

4.2 Develop Portfolio Charter

4.3 Define Portfolio Roadmap

5.1 Develop Portfolio Management Plan x x

5.2 Define Portfolio x x x

6.1 Develop Portfolio Performance Management Plan x x

7.1 Develop Portfolio Communication Management Plan x

8.1 Develop Portfolio Risk Management Plan x

4.4 Manage Strategic Change

5.3 Optimize Portfolio x

6.2 Manage Supply and Demand

6.3 Manage Portfolio Value x

7.2 Manage Portfolio Information x x x

8.2 Manage Portfolio Risks x

5.4 Authorize Portfolio x x

5.5 Provide Portfolio Oversight x x

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related to the transformation of the input into the output. For example: it is extremely

important to do a Stakeholder Analysis while developing the Portfolio Communication Plan.

Some of these tools & techniques are adopted by more than one process and they are grouped

into four categories based on its usefulness:

Analyzing: create additional information;

Selecting: select the appropriate components;

Meeting: provide information and decision making during a reunion;

Informing: collect and disseminate consistent information.

Chart 3: Relationship between Processes and Inputs & Outputs


Moreover, the artifacts generated or required as inputs or outputs of these sixteen

processes are the documents that will help to accomplish the PPM activities. There are twelve

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4.1 Develop Portfolio Strategic Plan I I O I I I O

4.2 Develop Portfolio Charter O I I/O I/O

4.3 Define Portfolio Roadmap I O I I

5.1 Develop Portfolio Management Plan I I I I I/O I/O O

5.2 Define Portfolio I/O I/O I I I I/O

6.1 Develop Portfolio Performance Management Plan I I I/O I/O

7.1 Develop Portfolio Communication Management Plan I I I/O I/O I

8.1 Develop Portfolio Risk Management Plan I I/O I/O I/O

4.4 Manage Strategic Change I/O I/O I/O I/O I/O I/O

5.3 Optimize Portfolio I/O I/O I/O I/O I/O

6.2 Manage Supply and Demand I/O I/O I/O

6.3 Manage Portfolio Value I O I/O I/O

7.2 Manage Portfolio Information I I/O I/O I/O I

8.2 Manage Portfolio Risks I I I/O I/O I/O I/O

5.4 Authorize Portfolio I/O O I/O I/O

5.5 Provide Portfolio Oversight I/O I I/O I/O I/O

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documents (as depicted by chart 3) cited by the SPM and, in the same way as the tools &

techniques, they are organized into four categories based on its purpose:

Guiding: high-level direction to the PPM;

Supporting: facilitate the operation of the PPM;

Planning: provide guidelines on how to execute the PPM activities;

Reporting: grant PPM communication.

Management of Portfolios2 (MoP)

This British collection of PPM best practices is on its 2011 edition and it is part of a

bigger collection of standards developed by the Office of Government Commerce (OGC) and

published by The Stationery Office (TSO).

The author (OGC) is an independent office of the British government's economic and

finance ministry and it was established to support it to optimize their investments (Office of

Government Commerce, 2009). OGC responsibilities encompasses the effective use of sixty

per cent of the overall British government spending (OGC, 2013).

To help the government to accomplish this, OGC developed and regularly reviews

seven interconnected standards related to Portfolio, program, project and service

management: PRINCE2, MSP, MoP, M_o_R, MoV, ITIL and P3O (OGC, 2011) - and

Management of Portfolios (MoP) is one of these. These standards set the government

expectations in relation to how the British government and its supplier should manage its

initiatives and operations.

Structure

Management of Portfolios (MoP) has its structure based on five principles, two

management cycles (delivery and definition) and twelve processes distributed among these

two management cycles as depicted by the figure 6.

One main aspect about this guide of best practices is how it highlights the relevance

of five principles as prerequisites for the success of the overall PPM: strategy alignment,

governance alignment, senior management commitment, energized change culture and

2 Unless otherwise noted, the entire chapter content are based on the Management of Portfolios book (OGC,

2011)

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Portfolio office. OGC states clearly that these principles are pre-requisites to an effective

Portfolio management and it also declares that they should be adapted to the level of the goal

that is trying to be achieved.

The first one of these principles is the strategy alignment, highlighting the

importance of aligning the Portfolio and PPM with organizational goals and values. The

second principle is governance alignment, demanding transparency about the PPM decisions

and consistency with the organizational governance model. Next principle is the senior

management commitment, advocating that proactive and visible senior management

involvement is a valuable asset to a PPM initiative. Energized change culture is the fourth

principle and it embrace the human aspect, declaring that people must be engaged, focus on

the goals and work as a team. The last principle is the Portfolio office, stating that a PPM

corporative function is very important inside an organization and that this area can be labeled

as Portfolio Office.

Figure 3: MoP structure - principles, cycles and practices

Source: Management of Portfolios (Office of Government Commerce, 2011)

To implement a reliable PPM framework, MoP presents a set of twelve practices that

should be tailored to the reality of the context and it groups this set of processes into two

cycles: the Portfolio definition cycle and the Portfolio delivery cycle.

Portfolio definition management cycle groups five practices projected to understand,

categorize, prioritize, balance and plan the Portfolio and the Portfolio management. To

21

accomplish this cycle goal, these practices are usually performed in sequence, for example: it

is necessary to understand a Portfolio before categorize them.

Furthermore, the Portfolio delivery management cycle contains the practices

accountable for the benefits management, financial management, management control, risk

management, stakeholder engagement, organizational governance and resource management

in the Portfolio level. In this management cycle the practices are not performed sequentially,

they can overlap to deliver the value proposed by the Portfolio.

Finally, in the center of the principles and the practices, are an element called

organizational energy, which means: "The extent to which an organization has mobilized its

emotional, cognitive and behavioral potential to pursue its goals".

Key Portfolio Roles

Portfolio Direction Committee

The Portfolio direction committee is the PPM government council, and it is charged

with the responsibility for the key decisions that affect the project Portfolio (Levine, 2005).

Usually these decisions are made at relevant points in time through gate-reviews, with ad-hoc

reunions scheduled for high severity issues or during periodic Portfolio management meetings

programmed to discuss recurrent themes or new issues (OGC, 2011).

Portfolio Manager

According to PMI (2013b, p. 14) , the Portfolio manager is: "...responsible for the

execution of the Portfolio management process".

The main difference between Portfolio, program and project managers is that

Portfolio managers must be worried about doing the right work, the program manager are

concerned about delivering their benefits and project managers are concerned about delivering

the scope according to the constraints (PMI, 2013b).

The role of a Portfolio manager can be occupied by an individual, a group or a

governing body, depending on the organizational needs and on the Portfolio size and its

responsibilities may include (PMI, 2013b):

Establish and maintain framework, methodology, processes and its related infrastructure;

22

Ensure that Portfolio components are aligned to the company strategy;

Progressively elaborate the Portfolio;

Measure and monitor the value;

Support Portfolio related decision making;

Engage and influence stakeholders.

Portfolio Definition Best Practices

The Portfolio definition best practices will be separated, for research purposes,

adopting the OGC (2011) practices model (as described on section 2.3): it will be composed

of the Understand, Categorize, Prioritize, Balance and Plan practices. Each practice will be

studied along with its goals, tools and techniques to ensure the proper development of the

research protocol and adequate consistency during the data collection.

Chart 4: Interrelationships between MoP practices and SPM processes

Source: author

Since we are adopting the OGC (2011) recommended practices to organize this

section content and, relied on the assumption that MoP and SPM are the main references for

Management Cycle

Practice Number 1 2 3 4 5 6 7 8 9 10 11 12

Pro

cess

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4.1 Develop Portfolio Strategic Plan W W W W

4.2 Develop Portfolio Charter

4.3 Define Portfolio Roadmap S S

5.1 Develop Portfolio Management Plan S

5.2 Define Portfolio S S S W

6.1 Develop Portfolio Performance Management Plan W

7.1 Develop Portfolio Communication Management Plan W

8.1 Develop Portfolio Risk Management Plan W

Aligning 5.3 Optimize Portfolio W S

Auth. and Cont. 5.4 Authorize Portfolio W

S

W

Management of Portfolios (OGC)

Definition Delivery

Th

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fo

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t (P

MI)

Defining

Strong relationship

Weak Relationship

23

this study, it is relevant to understand the relationship of the MoP practices with the SPM

processes. These interrelationships are depicted in the chart 4.

The group of Portfolio Definition best practices are carried out in sequence at

specific times of PPM (OGC, 2011), i.e., there is an arbitrary dependence between these

practices to ensure effectiveness in their implementation.

Understand

The aim of the Portfolio Understand practice is to appreciate what constitutes the

current Portfolio and to obtain information to comprehend these components (Levine, 2005)

in order to permit the Categorize, Prioritize, and Balance and Plan practices to be executed

properly. This practice covers the identification and data collection not only of components

that are candidates to be chartered, but also the components that are ongoing and, often, of the

closed components (PMI, 2013b).

Since the main output of this practice is a list of components that constitute the

Portfolio (also called pipeline) and their data, a best practice that is suggested is the adoption

of a template for the proper recording of these components. The sponsor must fill this

document to request the inclusion of the new component, a change in a current component or

to add an ongoing component to the Portfolio (OGC, 2011).

To be effective, the abovementioned document should include some relevant

descriptors for the PPM processes. The main descriptors cited by SPM (PMI, 2013b) as

relevant to be detailed at the time of component inclusion into the Portfolio are: Portfolio

component number, Portfolio component code, and Portfolio component description, type of

Portfolio component, strategic goals supported, quantitative benefits, qualitative benefits,

Portfolio component customer, Portfolio component sponsor, key stakeholders and resources

required. Furthermore, OGC (2011) recommends the addition of the following data to this

list: key deliverables, risk level, business changes required, key dependencies, current status

(for ongoing components) and key milestones to be accomplished.

After the Portfolio is initially understood and inventoried, it is significant to establish

a process for the inclusion of new components into this pipeline. There are two main

strategies of Portfolio component addition: bottom-up or top-down. The main difference

between the two types is the source of the request: in the top-down method the requests are

24

originated only by top management and, in the bottom-up method, the requests are made by

lower corporate levels (Office of Government Commerce, 2011).

Categorize

The Categorize practice, according to OGC (2011, p. 53) has as its main goal: "[...]

organize changes initiatives into groups, segments or sub-Portfolios based on the strategic

objectives or other grouping as required". These groups, segments or sub-Portfolios help to

perform an appropriate comparison between the components that cover the same strategic

goal or organizational need.

A visual diagram or a spreadsheet is a useful tool to help to evaluate how the

components are separated between the categories. The figure 4 shows an example of how a

graph can be built to depict it. Thanks to this evaluation and comparison, the Portfolio

components categorization also allows the balancing of risks and investment between these

strategic goals and organizational needs (PMI, 2013b).

Figure 4: Portfolio components separated by business area

Source: SPM (Project Management Institute, 2013)

25

Additionally, OGC (2011) recommends that the categories have entry criteria to help

to adequately place the components into them. The entry criteria must be set accordingly the

related category, for example: to be allowed to incorporate the Compliance category of

Portfolio initiatives, the project must include evidence of the legislation and provide an

explanation that links it with the component deliverables.

Number of categories should be limited (not infinite) and some examples are (PMI,

2013b):

Increased profitability (revenue increase, generation, cost reduction and avoidance);

Risk reduction;

Efficiency improvement;

Regulatory/compliance;

Market share increase;

Process improvement;

Continuous improvement;

Foundational (e.g., investments that build the infrastructure to grow the business), and

Business imperatives (e.g., internal toolkit, IT compatibility, or upgrades).

Prioritize

After the components are identified and categorized, the next step is to prioritize

them (OGC, 2011). This best practice is recommended to be adopted by the PPM because the

corporations probably will have more identified Portfolio components than capacity to

implement them (Castro & Carvalho, 2010). Based on this assumption, the challenge of PPM

during this practice is to filter the inventory of components so that the programs and projects

that pass though the funnel into the Portfolio best serve the long-term interests of the firm

(Levine, 2005, p. 32).

Two prerequisites are important to properly enable comparison between the Portfolio

components. The first one is that the information provided during the Understand practice are

accurate and reliable (Levine, 2005) and the second one is the requirement that the Portfolio

components exhibit some common characteristics like: be representative of the investments

made, be aligned with the strategic plan, have common features that permits its grouping to

26

manage them more effectively, show some quantifiable characteristics and compete for

company's resources (PMI, 2013b).

Being comparable, the Portfolio components should be prioritized accordingly to

your relevance and contribution to the organization strategy, in a comparative way with the

other future or actual components (Castro & Carvalho, 2010). However, if this comparison is

not possible due to lack of common characteristics, the Portfolio components can be

prioritized by their segments or categories (OGC, 2011).

To provide a solid background for the abovementioned comparison, relevant metrics

ought to be selected and adopted (PMI, 2013b). It is important to evaluate not only the

financial benefits, but the ancillary benefits too (Levine, 2005) and, for this reason, some of

these metrics are qualitative and some of them are qualitative. Examples of metrics classes

may include, but are not limited to (OGC, 2011):

Organizational strategy alignment;

Goals and objectives;

Benefits, financial and nonfinancial;

Market share, market growth, or new markets;

Costs (lost opportunity costs);

Dependencies, internal and external;

Risks, internal and external;

Legal/regulatory compliance;

Human resources capabilities and capacities;

Technology capabilities and capacities; and

Urgency.

In accordance to the abovementioned criteria categories, Jolly (2003) developed a

more detailed list of criteria pertinent to IT Portfolio that is listed in the chart 5. A number of

these items justify a particular attention because of its strategic relevance, for instance the

mandatory group of criteria encompassing regulatory or operational requirements (PMI,

2013b). In addition, apart from the type of criteria, it is very important that each of these

factors should be tailored to the reality of the firm (Levine, 2005) to adequately reflect its

intents.

After deciding on the right metrics, the next step is to choose the right prioritization

tool to properly assess the information provided by these inputs. Some prioritization models

27

account for just one metric and another ones takes into account more than exclusively one

variable.

Chart 5: Prioritization criteria for IT Portfolio

Source: Jolly (2003)

Single criteria prioritization models can be qualitative or quantitative. Qualitative

models include the single criterion prioritization model, which compares all the components

and shows the priority between them as shown in the figure 5 (PMI, 2013b). Within the same

context, one of the quantitative single criteria existing alternative is the financial analysis of

the components, encompassing the NPV, IRR and Payback calculation and analysis.

Figure 5: Single qualitative criteria prioritization model (comparison between projects)


28

Another prioritization tool alternative is the multi-criteria analysis of the Portfolio

prospective components (PMI, 2013b). The adoption of multi-criteria generates more

reliability than adopting just one criteria but it requires more team effort to implement. One of

the strengths of this tool is that it can include qualitative and quantitative data into just one

analysis.

Figure 6: Multi-criteria prioritization model (comparison between projects)


Conquering even more reliability in its application, the multi-criteria prioritization

model can also include weights for each criteria. Weights are applied since different criteria

does not have the same strategic relevance, for example: if ROI is more significant than

resource capabilities it should be confirmed in the weights assigned to both (the weight of the

ROI should be proportionately larger than the weight of the resource capabilities).

As well as during Categorization practice, graphical tools are also applied in this

stage of the Portfolio Definition. The most known and applied visual diagram is the bubble

chart that, through its three elements (X axis, Y axis and size of bubble), helps to demonstrate

the most appropriate Components to compose the Portfolio. In the application of this tool, the

most adopted alternative is to use the X axis to represent the benefit of the component, the Y

axis to represent the likelihood of achieving its objectives and size of the bubble to represent

the cost, as shown in the figure 7.

29

Figure 7: Bubble graph

Source: PMI (2013)

Finally, to adequately pursue this objective, two additional conditions are also

fundamental: the first is to formalize a process and a policy to accomplish this set of tasks in

order to eliminate any common political, power or emotional bias (Levine, 2005) and, the

second one, is to request and store evidences that supports the information provided before

and during this decision making process (OGC, 2011).

Balance

The input for this practice is a list of prioritized (or screened) components and,

during the development of this inventory, some details are not accounted for; as an example:

resource capacity, overall coverage of strategic objectives, dependencies between

components, delivery strategies, synergy between components, overall risk-return and balance

between categories (OGC, 2011). This lack of information related to the complete set of

prioritized components happens because all the analysis done during the Prioritize practice is

performed on each component separately. For this reason this practice was established with

the goal of ensure that the final Portfolio is balanced and consistent with the overall corporate

intents.

30

As abovementioned, there are several items that are recommended to be evaluated

during this practice. The first item is the balance of the Portfolio (OGC, 2011) and it can be

measured regarding any criteria collected and analyzed in the aforementioned practiced, for

instance: the balance among various types of projects, i.e. maintenance, opportunity,

competitive edge, among others (Levine, 2005). The figure 8 shows a graphical depicts the

investments separated by categories and business unit and it is very useful to detect GAP's in

the prioritized Portfolio.

Figure 8: Bubble graph (depicting categorization and category)

Source: PMI (2013)

Furthermore, the second item is to ensure that interrelationships between

components are identified (PMI, 2013b). Sometimes, one component is dependent of another

one and it must be adequately detected to avoid any problems during the Portfolio delivery.

To accomplish this analysis, PMI (2013b) recommends the confection of a Portfolio Roadmap

depicting the relationship between the programs, projects and operations.

Figure 9: Portfolio Roadmap

Source: PMI (2013)

31

The third aspect that must be accounted for during this practice is the availability of

resources, since several components share the same resources (Castro & Carvalho, 2010).

Some organizations assume unlimited resources and some organizations are resource

constrained. Organizations that assume unlimited resources, usually outsource their

components to be able to deliver them (PMI, 2013b).

Figure 10: Capacity and Demand


Finally, an important decision that should be made during this practice is in relation

to the compromise between the speed of Portfolio components’ delivery and the number of

active programs and projects. Based on this, Levine (2005, p. 39) states that:

There is significant feedback from successful firms that tends to show that

doing fewer projects actually improves the bottom line. Limiting the amount

of work in the pipeline so that the projects can be completed as quickly as

possible results in increased profits or savings and more satisfied clients.

Plan

PMI (2013b, p. 39) describes the main deliverable produced during this practice, the

Portfolio Management Plan, as:

The portfolio management plan describes the approach and intent of

management in identifying, approving, procuring, prioritizing, balancing,

managing, and reporting a portfolio of programs, projects, and other work to

meet the organization’s strategic objectives.

Additionally, SPM (OGC, 2011) declares that this document must summarize every

part of the information created during the Portfolio Definition Cycle to produce a consistent

overview of all the Portfolio management areas, with to purpose to provide a clear line of

32

sight during the Portfolio delivery and describe the steps and measures needed to effectively

manage performance as a whole (PMI, 2013b)

Furthermore, it is recommended that this Plan should be tailored to the specific needs

of the Portfolio. To be able to add more value to the PPM, its adaptation must consider the

stakeholder expectations, the size and complexity of the portfolio, its purpose and the

environment (PMI, 2013b).

To sum up all these definitions, PMI (2013b, p. 39) recommends that the Plan should

contain the following topics:

Governance model;

Portfolio oversight;

Managing strategic changes;

Change control and management;

Balancing portfolio and managing dependencies;

Measuring and monitoring performance and value;

Portfolio performance reporting and review;

Communication model as part of the communication management plan;

Portfolio risk management planning (ABNT NBR ISO, 2009);

Procurement procedures;

Managing compliance;

Portfolio prioritization model.

Another relevant purpose of this document, is the mission of motivating all the

stakeholders to the delivery of shared goals of the PPM initiatives (OGC, 2011). To conclude,

it is imperative that, to be valid for all the organization and be recognized as a baseline, the

Portfolio Management Plan must be approved by the portfolio direction committee (OGC,

2011).

Portfolio Delivery Best Practices

In the same way as section 2.5, the Portfolio delivery best practices will be separated,

for research purposes, adopting the OGC (2011) practices model (as described on section 2.3):

it will be composed of the Benefits Management, Financial Management, Risk Management,

Resource Management, Management Control, Stakeholder Engagement and Organizational

33

Governance practices. Each practice will be studied along with its goals, tools and techniques

to ensure the proper development of the research protocol and adequate consistency during

the data collection.

Since we are adopting the OGC (2011) recommended practices to organize this

section content and, relied on the assumption that MoP and SPM are the main references for

this study, it is relevant to understand the relationship of the MoP practices with the SPM

processes. These interrelationships are shown in the chart 6:

Chart 6: Interrelationships between MoP practices and SPM processes

Source: author

The group of Portfolio Delivery best practices are not needed to be carried out in

sequence during the PPM (OGC, 2011), ie, there is a no arbitrary dependence between these

practices to ensure effectiveness in their implementation (it may overlap).

Benefits Management

As mentioned in section 2.1 of this document, a Portfolio exists to deliver benefits

that enable the organization to achieve the goals that was set in its strategic plan (PMI,

2013b). Based on the assumption that the benefits are the drivers to conquer what was

Management Cycle

Practice Number 1 2 3 4 5 6 7 8 9 10 11 12

Pro

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4.4 Manage Strategic Change S

5.3 Optimize Portfolio W S

6.2 Manage Supply and Demand S

6.3 Manage Portfolio Value S

7.2 Manage Portfolio Information S

8.2 Manage Portfolio Risks S

5.4 Authorize Portfolio W

5.5 Provide Portfolio Oversight S W

S

W

Management of Portfolios (OGC)

Definition Delivery

Weak Relationship

Th

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Aligning

Authorizing and

Controlling

Strong relationship

34

contemplated in that strategic plan, they need to be properly monitored and controlled using

the components' baselines as a reference and this is the main goal of this practice (OGC,

2011).

However, there are some elements to be observed to be able to implement this

practice effectively. The first item to be considered is the fact that the benefits can often be

delivered even after the end of the components (Barcaui, 2012), and this will demand an extra

effort of the Portfolio management team to adequately assess the results achieved. The second

and more complex item, relies on the fact that sometimes the component can affect two or

three value areas (PMI, 2013b), which increases the effort and difficulty to measure the

achieved benefits.

An important aspect of the benefits management practice is the fact that, for the

proper use of the benefits delivered by components, the transfer of deliverables generated for

the associated operations must be managed effectively (PMI, 2013b).

Financial Management

The first thing that must be done to establish a financial management process is to

seek advice from the company’s financial department that is hosting the Portfolio. It is critical

that the financial department is fully consulted (OGC, 2011) because the Portfolio financial

management must be tightly linked to the organization governance.

Two different moments should be part of this step: the initiatives initial appraisal and

the Portfolio control. During the appraisal, it is important to select the appropriate investment

criteria and tailor it to the organization, to describe rules for business cases analysis, to adjust

the optimism bias (for the costs and the benefits), to consider the risk of the components as a

business case modifier and to establish thresholds (OGC, 2011). For the moment of Portfolio

control, it is relevant to consider staged release of capital and to evaluate the consolidated

portfolio financial budget (OGC, 2011).

All these mechanisms will provide a more accurate and precise view of what is

proposed to happen with the Portfolio and what is really happening with this set of

components and, the provided information, will led to a better transparency and decision

making.

35

Risk Management

The Risk Management practice aims to increase the probability and/or impact of

positive risk events happen and to decrease the probability and/or impact of negative risk

events become fact (PMI, 2013a), reducing the overall exposure of the Portfolio to the risks.

This definition explains why the Chinese ideogram for risk shows these two aspects for the

risk: the opportunities and the threats (Damodaran, 2008).

Figure 11: Chinese ideogram for Risk

Source: Gestão Estratégica do Risco (Damodaran, 2008)

In order to accomplish this goal, it is relevant to first understand the approach of the

stakeholders in relation to the risk: they may be risk-averse or risk-takers and this will

influence the way in which this practice will be implemented. Once you understand them, the

risk management processes should be designed and implemented so that the goal could be

accomplished. According to ABNT (2009), this risk management process must follow a

process of identification, analysis, evaluation, and treatment.

It is noteworthy that the risks discussed in each context (portfolio, program and

project) are different, because they must be identified and treated in relation to the objectives

of each level (PMI, 2013b), and they are different. In a Portfolio, risks that cover all

components will be addressed, being under the responsibility of each initiative treat localized

risks.

Resource Management

This practice was conceived to guarantee and manage the sourcing of key resources

(PMI, 2013b). How resource capacity will be managed is the main issue that must be

addressed during this management step (PMI, 2013b). Resources, for the purpose of this

36

practice, encompasses not just human resources but all the resources required to deliver the

Portfolio components.

Different types of organization, Portfolio goals and resources allocation strategies

require tailored management approaches. If one of the Portfolio objectives is the effective and

efficient use of resources, it will demand for a stable workforce to be achieved, since it will be

easier to schedule all the available resources with a minimum non-scheduled periods under

this situation (Levine, 2005). In addition, transient resources may be used by the initiatives to

meet specific needs but it is best to avoid this as a standard source of resources. Furthermore,

the mix of components should be balanced, as declared by Levine (2005, p. 38):

The mix of projects the mix of resources should be manipulated to best use

the firm's resources on work that is well matched to the available strengths

and skills.

Stakeholder Engagement

PPM is a set of practices that involves the company as a whole and requires the

involvement of a large number of stakeholders (Levine, 2005) and, because of this, this

structure demands a strong and visible sponsorship.

To increase the chances of Portfolio success, stakeholders should be properly

recognized and prioritized so that their expectations and requirements are identified,

communication strategies are developed and objectives are appropriately discovered (PMI,

2013a). The key factor in this practice is the detection and monitoring of key executives and

change agents of the corporation to make sure that these leaders are part of the PPM

leadership. (Levine, 2005).

Management Control

Kaplan and Norton (2008, p. 7) declare that "if you don't measure progress toward an

objective, you cannot manage and improve it" and this is the main purpose of this practice:

obtain transparency regarding what is happening with the Portfolio (OGC, 2011). By

establishing a closed loop management system, the Portfolio manager can avoid shortfalls and

be proactive toward their objectives (Kaplan & Norton, 2008).

To conquer the mentioned transparency, performance metrics are the mechanism

used to evaluate how the Portfolio components are performing (PMI, 2013b). The large

37

majority of the Portfolio metrics are the result of the aggregation of the initiatives metrics

with a periodicity not necessarily equal (Barcaui, 2012). Feeding these metrics into these

components are very important, as cited by Levine (2005, p. 91):

Feeding the results of project status and performance back into the Portfolio

management system provides a loop ensuring that the project selection

process encompasses both proposed and active projects.

An important point to note, seeking proper implementation of this practice, is the fact

that not only the consolidated the aspects of components should be monitored, but also the

internal and external environment (OGC, 2011), evaluating whether the assumptions initially

established remain valid:

During the selection process, we make assumptions about the value of

candidate projects. But the project and business environments are not cast in

concrete. Projects don’t always go as planned. The assumptions may become

less valid with time. (Levine, 2005, p. 44)

The observation of this Portfolio aspect is very important because a change in

strategic direction or in the external environment may result in components categorization and

prioritization changes, which will generate the need to balance again the Portfolio (Barcaui,

2012).

During these practice, valuable information are produced by the Portfolio

management team and these information should be used to alter strategies and investment

decision during the Organizational Governance practice (OGC, 2011).

Besides all the managerial elements of this practice, it is very important that the

Portfolio Manager motivate everybody in order stimulate them to deliver the best

performance (Goleman, 2000).

Organizational Governance

Decisions must be made during the Portfolio management because this set of

activities are dynamic and encompasses processes that requires recurrent judgments (Barcaui,

2012). The basis for the decision-making are the data generated by other practices and

compiled by Management Control practice (OGC, 2011). To optimize this practice, it is

recommended that thresholds are agreed during the institution of the Portfolio:

The governance council approves a set of targets of limits, such as delivery

dates, cash flow, projected returns, and performance metrics. As long as the

38

project stays within the boundaries, the project team will control most of the

action and decisions. (Levine, 2005, p. 49)

Two management strategies are widely used for the governance of Portfolios: the

adoption of management committees (Barcaui, 2012) and the creation of stage gates for the

components (Castro & Carvalho, 2010). Sometimes both management approaches are adopted

and, if it happens, it is recommended to integrate them in a harmonic way (Castro &

Carvalho, 2010).

Portfolio committees are regularly spaced meetings conducted with the presence of

key stakeholders to present the status of the Portfolio and where decisions or directions are

collected (Merrow, 2011). The frequency of these events is determined according to the

characteristics of Portfolio being managed. A special committee, outside the regular schedule,

can be performed if an event with a huge impact happens.

Stage gates are control points (milestones) established in the components baselines to

discuss and decide whether if it should stop, recycle or proceed (Merrow, 2011): "At the end

of a stage, a cross-functional team evaluates the status against the pass/no-pass conditions"

(Levine, 2005, p. 48). The Portfolio initiatives should continue active while they remain valid

for the strategy and while it presents an adequate performance (Levine, 2005).

Discrepancies between the References

The study of the PPM definitions and concepts noticed that some discrepancies exist

between the references. One of the examples is: OGC (2011) states that Portfolio is a set of

projects and PMI (PMI, 2013b) affirms that it is broader and includes any component that

helps the organization to achieve their strategic objectives, encompassing programs, projects

and operations. It is outside the scope of this research to discuss what is the correct meaning

for the discrepancies found or the most adequate best practice to apply on. However, it is

scope of this research to discover what is being done by the organization being studied and

compare it with the best practices and definitions described in this chapter.

39

Research Methodology

This chapter of this research contains the theoretical insights and the description of

the strategy that was developed for the case study as a means to deliver meaningful findings

for the scientific community. Its main objective is to define the logical sequence that connects

the empirical data and the study question with the conclusions, guaranteeing that this paper

deliver the initially proposed goal (Yin, 2010).

Research Strategy

As aforementioned, the aim of this thesis is to answer the following question: How

IT areas of insurance organizations are, in the present moment, defining and delivering their

strategic initiatives Portfolios? To accomplish this, Yin (2010) describes that when a question

such as "how" or "why" is being done on a set of contemporary events (similar to the question

we aim to answer) and in a situation where the researcher has little or no control over

behavioral events, the use of the case study method is appropriate.

In order to deliver a meaningful case study it is recommended that, during its

development and deployment, the case study follows a set of steps (Gil, 2010). This case

study will respect the following steps to ensure its integrity and validity:

Question statement;

Theoretical revision;

Research strategy;

Study protocol development;

Data collection;

Data analysis.

For this purpose, the question statement was introduced in the first chapter and the

theoretical review of the related contents was developed and presented into the second

chapter. Also, the research strategy and the study protocol will be presented in this chapter

and information regarding the data collection and data analysis will be available in the

subsequent chapters (chapter 4 and 5 respectively).

To materialize the research’s objectives, a case study can be done in the following

formats:

40

Holistic single case: contains a single case and a single unit of analysis;

Integrated single case: contains a single case and several units of analysis;

Multiple holistic cases: contains several cases and each case contains only one unit of

analysis;

Integrated multiple cases: contains several cases and each case contains several units of

analysis.

For the purpose of this study and attendance to the proposed objectives, this case

study will adopted the holistic single case approach and, to ensure the quality, validity and

integrity of the data collection, this research will implement the following strategies during

this step (Yin, 2010):

Use of a protocol for the case study (presented in the section 3.2);

Use of multiple sources of evidence (documents and interviews);

Adoption of 1 interviewee;

Have key stakeholders to review the draft of the report.

To ensure proper execution of this research, it was established that the case study

should be realized in a company that meets the following criteria:

The company should have more than 4000 employees;

Must be situated in São Paulo;

Should already make use of project management practices;

Have availability and agreement of the company and participants to collaborate with this

study, including granting access to documents.

In addition, the selection criteria for the survey respondent and the reviewers were

created as follows:

Be an employee of the company for more than one year;

Be in constant contact with the PPM practices;

Have access to evidentiary documentation of the implemented practices.

This study does not want to exhaust the subject, so there are limitations on it which

does not allow to make generalizations or the development of new theories. Otherwise, this

study aims to stimulate the search for understanding about the way that Portfolios are

managed and implemented in the organizations.

Research Protocol

41

Yin (2010) orients that the protocol is an important way of increasing the reliability

of the research and is intended to guide the investigator in carrying out the data collection for

a case study. For this purpose the research protocol presented in chart 7 will be applied during

the data collection. These questions were designed based on the literature review and aims to

make the connection between this stage of the study and the data collection.

Chart 7: Research questionnaire

C Management

Cycle Process Question

Q1 Definition Understand Is the Portfolio scope clear?

Q2 Definition Understand Is there a template to introduce the components into the Portfolio?

Q3 Definition Understand Are business cases adopted / required?

Q4 Definition Understand Are the components presented to the Portfolio in a bottom-up or

top-down way?

Q5 Definition Understand Are all the components identified and registered (programs,

projects and operations)?

Q6 Definition Categorize Are categories established?

Q7 Definition Categorize Are these categories related to strategic objectives?

Q8 Definition Categorize Are entry criteria set for these categories?

Q9 Definition Categorize Are visual diagrams adopted?

Q10 Definition Prioritize There are financial analysis of the components?

Q11 Definition Prioritize Is it clear how each component contributes to the corporate

strategy?

Q12 Definition Prioritize Is risk of achieving the desired result evaluated?

Q13 Definition Prioritize Are prioritization models adopted?

Q14 Definition Prioritize Are the prioritization criteria and their weights aligned with the

strategy?

Q15 Definition Prioritize Are prioritization criteria tailored to each category?

Q16 Definition Prioritize Are supporting evidences provided with the projects' evaluation?

Q17 Definition Prioritize Are visual diagrams adopted?

Q18 Definition Balance Do investment decisions consider individual projects or it analyses

all components of the Portfolio together?

Q19 Definition Balance Are bottlenecks considered (resources and finance)?

Q20 Definition Balance Are inter-dependencies identified?

Q21 Definition Balance Are visual diagrams adopted (roadmap, graphics, etc.)?

Q22 Definition Plan Is there a Portfolio governance model?

Q23 Definition Plan Is there a change management process for the Portfolio?

Q24 Definition Plan Is there a communication plan for the Portfolio?

Q25 Definition Plan Is there a risk management framework for the Portfolio?

Q26 Definition Plan Are KPIs aligned with the strategic objectives?

Q27 Definition Plan Is clear to everyone their individual responsibilities to allow the

success of the Portfolio?

Q28 Definition Plan Is there an established methodology for managing projects and

programs?

42

Q29 Delivery Benefits

Management Do estimates (baselines) of the components exists and are reliable?


Management Is the measurement regularly made?


Management Are the information validated?


Management Are trends and deviations evaluated?


Management

Is the analysis of inter-dependencies between different components

done?

Q34 Delivery Financial









Management


done?

Q39 Delivery Risk

Management Are risks to the Portfolio identified?

Q40 Delivery Risk

Management Are risks to the Portfolio qualified?

Q41 Delivery Risk

Management Are risks to the Portfolio quantified?

Q42 Delivery Risk

Management Are responses to the risks to the Portfolio planned?

Q43 Delivery Risk

Management Are risks to the Portfolio controlled?

Q44 Delivery Risk


Q45 Delivery Resource









Management


done?

Q50 Delivery Stakeholder

Engagement Are stakeholders mapped?


Engagement

Are communications planned (based on the profile of the

Stakeholders)?


Engagement

Is there a proactive and bi-directional communication with

stakeholders?


Engagement Are stakeholders engaged in the change process?

43

Q54 Delivery Management

Control

Is the Status of the Portfolio disseminated using appropriate

channels of communication?


Control Are the components' budget provided in incremental stages?


Control Are deviations and risks treated or addressed?


Control Are interdependencies between components managed?


Control Are lessons learned collected and disseminated?


Control Are internal and external environment monitored?


Control

Is there a components' reassessment to verify that the results were

achieved (at the end of the component)?

Q61 Delivery Governance Are there "gates" for Portfolio decision making?

Q62 Delivery Governance Are there committees established?

Q63 Delivery Governance Are there rules for convening an emergency committee?

Source: author

44

Case Study

The aim of this chapter is to present what was found during the application of the

research protocol on the selected company. Firstly, a summary about the selected organization

will be presented for contextualization and, secondly, the findings will be presented separated

in the parts: Portfolio Definition and Portfolio Delivery.

Company Profile

The company selected for data collection, which will be referenced in this study as

INS_COMP, operates mainly in the insurance business and has another business units that

also works with telecommunications, financial management, among others.

The INS_COMP was founded in the 40s and currently ranks among the top business

in this field in Brazil. Besides Brazil, Uruguay has a company office too, this country was one

of the first initiatives of expansion involving other nations. The average revenue of the

INS_COMP is three billion Reais (R$) per quarter.

The data were collected in the IT area of the selected organization. This department

provides services to all areas of the company and has approximately 1,000 employees. The

main activities of this area includes: maintenance of existing information systems,

maintenance of infrastructure, and expansion of infrastructure, improvement of existing

information systems and construction of new information systems.

The IT area of the INS_COMP has a very high demand for the design of new

information systems and for changes in existing information systems. Because of this, the

infrastructure (servers, network, and storage, among others) must be modified to

accommodate the increased capacity requirements, which creates a number of additional

initiatives for this department. Despite its high number of direct employees and a large

number of additional labor and services suppliers, all the demand cannot be absorbed and

there is strong competition between initiatives to determine which one will be executed.

Due to the nature and size of the business, almost all strategic initiatives to increase

or maintain the revenue and to adhere to legal regulations require changes in the IT systems of

the organization. This fact only helps to increase the pressure on the Portfolio management of

the INS_COMP.

45

To add even more complexity to this context, projects are originated from various

customer areas and each of them wants to manage its Portfolio independently. To lessen the

impact of the competition from this areas for IT resources, annual capacity planning is done

with a view to the necessary productive capability (in hours) for each of these areas. In

possession of this information, the department is structured to allow the services to be

provided accordingly to the needs established in this plan and this is considered a constraint to

the Portfolio. A circumstance that, due to the adopted model, still generates some discomfort

is when a project involves more than one client area (called a 'cross' project). When this

occurs, the project should be prioritized by all related customers together and the initiative

budget should be divided by them.

Another element that adds further difficulty is the fact that the human resources

employed by this area are not scalable and, therefore, the productive capacity of this

department is not easily enhanced when required. The company hires IT software factories to

generate more production capacity but, due to the high customization of the environment and

the elevated complexity of the IT systems, this strategy hardly achieves satisfactory

productivity.

Practices for Portfolio Definition

After better understood the context in which the Portfolio Definition is enclosed, the

findings regarding the modus operandi of this PPM step in INS_COMP will be presented.

These information will be offered in the logical sequence that is intended to happen

(Understand, Categorize, Prioritize, Balance and Plan) and will be illustrated based on the

interviews conducted and documents reviewed.

Chart 8: Interview transcription - understand practice

Q Management


Q1 Definition Understand

Is the Portfolio scope clear?

The Portfolio scope is clear and consists of IT components

requested by other areas of the organization and components

created internally.

Q2 Definition Understand Is there a template to introduce the components into the Portfolio?

Does not exist a standardized template. Templates are applied

unevenly.

Q3 Definition Understand Are business cases adopted / required?

46

Business cases are adopted. This document presents financial

return calculations for the components among with qualitative

benefits evaluation. These artifacts are checked to ensure its

accuracy.


Are the components presented to the Portfolio in a bottom-up or

top-down way?

Bottom up.


Are all the components identified and registered (programs,


Yes. There is a tool that supports this process and records

information on all components. IT operations are also controlled in

the same tool because the resources are shared between operations,

projects and programs.

Source: author

As shown in the literature review, the first step is the Portfolio Definition is the

Understand the practice. The company assessed has a clear goal for the Portfolio, but does not

apply standardized templates for the registration of the candidates to be components. These

documents could help considerably to obtain initial information for the inclusion of the

initiative in the Portfolio. Due to the lack of this document, it is often necessary to stop the

analysis to collect further information, delaying the process. Despite not having a

standardized registration, all components are recorded and the organization is aware of all

projects and programs that are in the Portfolio pipeline. Furthermore, business cases are

adopted to assess the financial viability of projects and to determine quantitative and

qualitative goals for them.

Chart 9: Interview transcription - categorize practice

Q Management


Q6 Definition Categorize

Are categories established?

Yes. The components are categorized when it were introduced in

the Portfolio. The categories are established by the type of benefit

that will be delivered by the component.


Are these categories related to strategic objectives?

No. It is not clear the relationship of the components with the

company's strategic objectives.

Q8 Definition Categorize Are entry criteria set for these categories?

No. The IT customer selects the category where the project should

be positioned.

Q9 Definition Categorize Are visual diagrams adopted?

Yes, there are reports that illustrate the contribution of each

category.

Source: author

47

After the Portfolio was understood, the INS_COMP categorizes the components

based on the type of benefit to be delivered by the initiative. Despite the fact that this

categorization is done based on the benefits, there is no clear vision of the relationship

between the project outcome and the strategic goals of the corporation. This lack of strategic

visibility creates an enormous difficulty in Portfolio Definition, since one of the most

important aspects during this step is understanding how these initiatives will assist to enable

to company to conquer its vision. Nevertheless, visual diagrams are adopted to demonstrate

the placement of components in relation to the categories. The use of these diagrams is greatly

appreciated by stakeholders and helps to compose a more effective prioritization and

balancing of the Portfolio.

Chart 10: Interview transcription - prioritize practice

Q Management


Q10 Definition Prioritize

There are financial analysis of the components?

The analysis is performed, but the results are not used to support

the selection. These evaluation is only applied to verify if the

component is feasible or not.


Is it clear how each component contributes to the corporate

strategy?




Is risk of achieving the desired result evaluated?

No. The component risk is not evaluated and this information is not

considered as part of the decision process.


Are prioritization models adopted?

No. The prioritization is done by the client area, which does not

use any tool. The parameter that the client observes is the

productive capacity of IT and the available budget. There is a great

personal influence on this decision.


Are the prioritization criteria and their weights aligned with the

strategy?

This question does not apply because question 13 detected that no

prioritization model is adopted.

Q15 Definition Prioritize Are prioritization criteria tailored to each category?




Are supporting evidences provided with the projects' evaluation?

Yes. The controller requires documentary evidence to assess the

quantitative (financial) evaluation of the components.


Each area adopts a different model.

Source: author

48

As mentioned in the interpretation of the data collected from the predecessor

practices (Plan and Categorize), the data for prioritizing the Portfolio are not always available

or reliable, which can lead to poor decisions. Despite the fact that the financial analysis is

done and the projects have a documented business case with qualitative and quantitative

goals, the calculations presented in these documents do not follow a clear and comparable

pattern. Another concern is the lack of strategic vision for the initiatives and the absence of a

risk analysis to calculate their probability of success, often leading to unfair comparisons

between projects. The prioritization of the components is performed by the client area, since

each of these areas has a productive capacity dedicated to their projects and these areas often

select their projects based on personal influence and not on the evidence presented. However,

it is clear that there is some stage of prioritization and awareness of the stakeholders to this

necessity, a fact apparent through the use of common terminology and the massive support of

the organization for adoption of the business case.

Chart 11: Interview transcription - balance practice

Q Management


Q18 Definition Balance

Do investment decisions consider individual projects or it analyses


Individual projects.

Q19 Definition Balance Are bottlenecks considered (resources and finance)?

Yes. Availability of IT resources and budget of the client area are

evaluated.


Are inter-dependencies identified?

Yes. There is a visibility between the dependencies but without

proper standardization.

Q21 Definition Balance Are visual diagrams adopted (roadmap, graphics, etc.)?

Yes. Roadmaps are applied in a timely manner and without

standardization.

Source: author

After prioritizing the components in INS_COMP, an analysis of the Portfolio as a

whole is performed. Although relevant, the investment decisions are not reassessed during

this step to optimize the overall return and to obtain synergy between projects. In this

moment, the organization evaluates only financial capacity, infrastructure and productive

bottlenecks. All initiatives of the Portfolio are recorded and managed on a PMIS (Project

Management Information System), which supports immensely this stage because it allows the

visualization of constraints through spreadsheets and charts. One of the major difficulties

49

perceived in the assessed company is the existence of many concurrent components, which

creates a feeling of lack of effectiveness for the client, because all of them compete for the

same resources impacting the total length of each Portfolio element.

Chart 12: Interview transcription - plan practice

Q Management



There is no standardized model.

Q23 Definition Plan Is there a change management process for the Portfolio?


governance model is adopted.

Q24 Definition Plan Is there a communication plan for the Portfolio?



Q25 Definition Plan Is there a risk management framework for the Portfolio?



Q26 Definition Plan Are KPIs aligned with the strategic objectives?



Q27 Definition Plan

Is clear to everyone their individual responsibilities to allow the




Q28 Definition Plan

Is there an established methodology for managing projects and

programs?

Yes. There is a methodology developed and disseminated.

Source: author

As can be seen in chart 12, there are a huge number of gaps in relation to the Plan

practice in the INS_COMP. The projects and programs management methodologies are

established and widespread, but there is only a modest work in relation to the Portfolio

methodology. Thanks to the absence of a corporate standard, there are ad-hoc Portfolio

Management Plan models that meet the specific needs of each area, but are incomplete and/or

misaligned with the corporation intents.

Practices for Portfolio Delivery

After presenting the data regarding the Portfolio Definition, this section will present

the findings regarding the modus operandi of the PPM Portfolio Delivery in INS_COMP. The

information will be presented in the sequence adopted for the theoretical review (Benefits

50

Management, Financial Management, Risk Management, Resource Management, Stakeholder

Engagement, Management Control and Governance) and will be illustrated based on the

interviews conducted and documents reviewed.

Chart 13: Interview transcription - benefits management practice

Q Management



Management

Do estimates (baselines) of the components exists and are reliable?

Yes. There is a document that is published and describes the

benefits of the component.


Management

Is the measurement regularly made?

Yes. There is a measurement after the closure of the component to

validate that the benefits were achieved. This evaluation is

combined before the start of the component.


Management

Are the information validated?

Yes, the governance area validates this information.


Management

Are trends and deviations evaluated?

No. Control is passive. Only a warning is issued by the governance

team when trends are deteriorating very fast (no clear criteria).


Management


done?

Each component is assessed separately, there is no joint

assessment.

Source: author

Due to the importance given by the organization, the Benefits Management Practice

is treated with prudence by INS_COMP. This is demonstrated by the results of the

questionnaire and by the documents analyzed. The organization establishes and formalizes

baselines of the benefits to be delivered by the components and, after the execution of these

initiatives, checks if the expected results were achieved. Moreover, there is a policy that

demands that the benefits baseline have to be approved by the governance area before the

project is started, a fact that helps in improving the quality of the estimative produced. Despite

this, the initiatives are always evaluated in a isolated way and dependencies between benefits

are not identified and treated properly, meaning that the organization does not create the

proper synergy between the Portfolio components.

Chart 14: Interview transcription - financial management practice

Q Management


Q34 Delivery Financial Do estimates (baselines) of the components exists and are reliable?

51

Management Yes. According to the methodology applied, the components must

have a cost baseline and its manager must control it to ensure its

adherence.


Management


Yes.


Management


Yes.


Management


Yes. There are indicators linked to the bonuses of the managers

that control these metrics.


Management


done?

No.

Source: author

The financial management of the entire Portfolio and Sub-Portfolios of each

company area is done with considerable caution in the assessed organization. As the areas that

demand projects are billed by the efforts devoted for its initiatives, the financial information is

extremely important to control the Portfolio and, because of that, data are collected through

the PMIS and reports are issued regularly to the main stakeholders. Furthermore, to ensure the

results and adherence to established goals, managers have their goals and rewards connected

to the results related to this practice.

Chart 15: Interview transcription - risk management practice

Q Management


Q39 Delivery Risk

Management

Are risks to the Portfolio identified?

No.

Q40 Delivery Risk

Management

Are risks to the Portfolio qualified?

No.

Q41 Delivery Risk

Management

Are risks to the Portfolio quantified?

No.

Q42 Delivery Risk

Management

Are responses to the risks to the Portfolio planned?

No.

Q43 Delivery Risk

Management

Are risks to the Portfolio controlled?

No.

Q44 Delivery Risk

Management


No.

Source: author

52

In the next practice, the risk management, there is no evidence or statement that any

activity is implemented. The most interesting fact is that the company line of business

(insurance) is very risk averse and even has corporate areas for this activity.

Chart 16: Interview transcription - resource management practice

Q Management



Management


Yes. At first there is a need for verification of the components and

of its features and, at the second time, the resources are mobilized

according to availability.


Management


Yes.


Management


No.


Management


Yes. The component managers is responsible for determining the

necessary actions.


Management


done?

Yes. It is performed by the functional manager of the resource.

Source: author

As well as cost management, resource management is also quite mature in the

assessed company. The reasons for this to happen are similar, because the use of resources

generates a direct impact on costs. In addition to this reason, human resources are the main

bottleneck of INS_COMP and, to avoid issues in this area, this practice is strictly adopted.

The first step is the establishment of a proposed schedule for the components based on roles.

With this proposal, the resource pool manager will indicate people to build the project team

and, with this data, the official schedule baseline that will have the availability of the resource

as a constraint will be generated. During the initiative execution, the performance of resource

allocation is compared to this reference and the component manager will be evaluated by this

result. This whole process is supported by a software (PMIS) which allows the stakeholders to

check how resources are being used by the Portfolio.

Chart 17: Interview transcription - stakeholder engagement practice

Q Management


Q50 Delivery Stakeholder Are stakeholders mapped?

53

Engagement Partially.


Engagement


Stakeholders)?

No.


Engagement


stakeholders?

No.


Engagement

Are stakeholders engaged in the change process?

No.

Source: author

The stakeholder engagement is very superficial and the evidence found shows that

this practice is not being applied despite of its tremendous importance (PMI, 2013a). As

depicted in chart 17, the organization does not have a communication plan for the Portfolio,

does not create communication channels and not engage the stakeholders in the change

process. The only activity that is partially performed is the stakeholders mapping.

Chart 18: Interview transcription - management control practice

Q Management



Control



Timely Portfolio report are issued in certain contexts.


Control

Are the components' budget provided in incremental stages?

No. The funds are available in their entirety at the beginning.


Control

Are deviations and risks treated or addressed?

Specific negotiations are established without the vision of the

whole.


Control

Are interdependencies between components managed?

No.


Control

Are lessons learned collected and disseminated?

No.


Control

Are internal and external environment monitored?

No.


Control

Is there a components' reassessment to verify that the results were


Yes. Components are revalued according to the objectives initially

presented to verify if it was successful or not.

Source: author

As elucidated during the theoretical review, the Portfolio Delivery practices

presented earlier provide several inputs for Management Control Practice (OGC, 2011). This

practice consolidates these data, extract the information regarding the performance and

54

manage the Portfolio in its decision-making capacity (all other decisions are made by the

Portfolio direction committee). According to these best practices, the INS_COMP distributes

status reports providing information about the components and an overview of the Portfolio,

but there is no standard periodicity and content for this report. Another activity that is

performed to improve the PPM is to monitor the results achieved after the implementation of

the initiatives, with the aim of ensure that the results planned during the conception of the

projects were delivered. Although some control mechanisms are present, through the

questionnaire presented in chart 18, was noticed that some of them are not being applied:

deviations and risks are not properly addressed, interdependencies are not managed,

environment are no monitored and funds are not released in a timely manner.

Chart 19: Interview transcription - governance practice

Q Management



No.


No.


No.

Source: author

One of the most relevant findings for this research was the identification of the

organization's approach regarding the implementation of the Governance Practice. The

INS_COMP has no type of management committee for the Portfolio management and no

presence of component gates as a mechanism for decision making. Decisions are made only

when there is a severe need or when an executive is summoned to attend regular events. This

approach demonstrates a low maturity in this aspect of PPM and probably, the fact of not

involving the executives more appropriately (as had been identified in the stakeholder

engagement practice), brings severe consequences for the quality and effectiveness of the

Portfolio.

55

Conclusion

To initiate the conclusion of this master thesis, it is prudent to recall the reasons for

which a Portfolio is established. PMI (2013b, p. 3), states Portfolio that: "A Portfolio is a

component collection of programs, projects, or operations managed as a group to achieve

strategic objectives." and complements this definition with the following sentence: "A

Portfolio should be a representation of an organization's intent, direction and progress".

Furthermore, OGC (2011, p. 131), defines Portfolio as: "An organization's Portfolio is the

totality of its investment (or segment thereof) in the changes required to achieve its strategic

objectives".

Based on these statements, the following question was highlighted in the introduction

of this document:

How IT areas of insurance companies are, in the present moment, defining and delivering

their strategic initiatives Portfolios?

And two (02) assumptions were made as the starting point of this study:


definition of their strategic initiatives Portfolios.


delivery of their strategic initiatives Portfolios.

After the establishment of the question and assumptions, the main premise adopted

during this study is that the application of the practices and activities studied during the

theoretical review have a strong correlation with the success of the Portfolio, this is the reason

why the study protocol was based on these Portfolio elements. In this chapter, conclusions to

answer the initial question will be made evaluating the results presented on the section 4 (case

study) and proposal for future researchers on this subject will be offered.

First, it's interesting to evaluate the whole context assessed through a consolidation

of the applied protocol. For this combination, each positive response from the questionnaire

will be considered as a ratio (relative to the number of questions - with equal weight) relative

to the best practices adopted. After evaluating the number of positive responses, the overall

percentage of practice and management cycle adoption can support the conclusions that will

be presented in this section. This consolidation, with their respective proportions, are

presented in chart 20.

56

Chart 20: Consolidated survey results (by protocol question)

Management

Cycle Practice

Question (Practice-oriented activities)

Adopted Total % Adopted Adopted Total % Adopted

Definition Understand 4 5 80%

12 28 43%

Definition Balance 3 4 75%

Definition Categorize 2 4 50%

Definition Prioritize 3 8 38%

Definition Plan 0 7 0%

Delivery Financial Management 4 5 80%

14 35 40%

Delivery Resource Management 4 5 80%

Delivery Benefits Management 3 5 60%

Delivery Management Control 3 7 43%

Delivery Risk Management 0 6 0%

Delivery Stakeholder Engagement 0 4 0%

Delivery Governance 0 3 0%

Source: author

Regarding the first assumption made (application of Portfolio Definition best

practices), the research detected that 43% of the questions were answered positively. The

practices that were further adopted were Understand e Balance with, respectively, 80% e 75%

of adoption. In the last place resides the practice Plan, which had 0% of application.

The first steps of the Portfolio Definition are performed with caution, but at the end

of this set of successor’s practices, the adoption of best practices is very low or even null. The

Portfolio of INS_COMP is well understood initially, but falls short in its categorization and

prioritization. The situation is even more immature when it comes to Portfolio management

planning, as were not identified the application of best practices during this stage.

Concerning the second assumption done (application of Portfolio Delivery best

practices), the research noticed that only 40% of them were adopted. The practices that were

more adopted were Financial and Resource Management, with 80% of adoption for both.

Were tied in last place with 0% of adoption the following practices: Risk Management,

Stakeholder Management e Governance.

The results presented for the Portfolio Delivery clearly demonstrate that the

organization's approach is highly driven by cost management, a fact that also explains the

high compliance with the Resource Management practices. Despite this practices being

mature and almost fully implemented, the other elements of Portfolio management are

immature (with the exception of Benefits Management) and applied only superficially. The

57

biggest surprise is in relation to the governance activities, whose implementation was 0%,

since these elements are extremely important for stakeholder engagement and direction of the

Portfolio (OGC, 2011).

This research did not evaluate causal conditions or relations between the

environment and the results presents so, our recommendations for future studies are to study

this relationships and the cultural aspects of the Portfolio management. Furthermore, there are

several opportunities of studying specific segments of PPM inside this industry to obtain a

better insight of each one. Another recommendations for potential studies are to adopt weights

related to each question in order to compensate the value of each practice associated to the

benefits delivered and to explore the origin of the best practices lack of adoption.

Concluding this study, considering the interviews conducted and evaluated artifacts,

the answer to the question posed is that initially established assumptions are not correct, based

on the fact that the means of adoption of each Management Cycle is less than 50% with

various practices achieving 0%. Therefore, INS_COMP in this study is considered as an

organization that:

are not applying the best practices in the definition of their strategic initiatives Portfolios

and;

are not applying the best practices in the delivery of their strategic initiatives Portfolios.

58

Abbreviations and Acronyms

ABNT - Associação Brasileira de Normas Técnicas

BAU - Business as Usual

ISO - International Organization for Standardization

IT - Information Technology

MoP - Management of Portfolios

OGC - Office of Government Commerce

PMBoK - Project Management Body of Knowledge

PMI - Project Management Institute

PMIS - Project Management Information System

PPM - Project Portfolio Management

SPM - The Standard for Program Management

TSO - The Stationery Office

59

Appendix A - Interview transcription

Q Management



Is the Portfolio scope clear?

The Portfolio scope is clear and consists of IT components

requested by other areas of the organization and components

created internally .


Is there a template to introduce the components into the Portfolio?

Does not exist a standardized template. Templates are applied

unevenly.


Are business cases adopted / required?

Business cases are adopted. This document presents financial

return calculations for the components among with qualitative

benefits evaluation. These artifacts are checked to ensure its

accuracy.


Are the components presented to the Portfolio in a bottom-up or

top-down way?

Bottom up.


Are all the components identified and registered (programs,


Yes. There is a tool that supports this process and records

information on all components. IT operations are also controlled in

the same tool because the resources are shared between operations,

projects and programs.


Are categories established?

Yes. The components are categorized when it were introduced in

the Portfolio. The categories are established by the type of benefit

that will be delivered by the component.


Are these categories related to strategic objectives?




Are entry criteria set for these categories?

No. The IT customer selects the category where the project should

be positioned.


Are visual diagrams adopted?

Yes, there are reports that illustrate the contribution of each

category.


There are financial analysis of the components?

The analysis is performed, but the results are not used to support

the selection. These evaluation is only applied to verify if the

component is feasible or not.


Is it clear how each component contributes to the corporate

strategy?



60


Is risk of achieving the desired result evaluated?

No. The component risk is not evaluated and this information is

not considered as part of the decision process.


Are prioritization models adopted?

No. The prioritization is done by the client area, which does not

use any tool. The parameter that the client observes is the

productive capacity of IT and the available budget. There is a great

personal influence on this decision.


Are the prioritization criteria and their weights aligned with the

strategy?




Are prioritization criteria tailored to each category?




Are supporting evidences provided with the projects' evaluation?

Yes. The controller requires documentary evidence to assess the

quantitative (financial) evaluation of the components.


Each area adopts a different model.


Do investment decisions consider individual projects or it analyses


Individual projects.


Are bottlenecks considered (resources and finance)?

Yes. Availability of IT resources and budget of the client area are

evaluated.


Are inter-dependencies identified?

Yes. There is a visibility between the dependencies but without

proper standardization.


Are visual diagrams adopted (roadmap, graphics, etc.)?

Yes. Roadmaps are applied in a timely manner and without

standardization.


There is no standardized model.

Q23 Definition Plan

Is there a change management process for the Portfolio?



Q24 Definition Plan

Is there a communication plan for the Portfolio?



Q25 Definition Plan

Is there a risk management framework for the Portfolio?



Q26 Definition Plan

Are KPIs aligned with the strategic objectives?



61

Q27 Definition Plan

Is clear to everyone their individual responsibilities to allow the




Q28 Definition Plan

Is there an established methodology for managing projects and

programs?

Yes. There is a methodology developed and disseminated.


Management


Yes. There is a document that is published and describes the

benefits of the component.


Management


Yes. There is a measurement after the closure of the component to

validate that the benefits were achieved. This evaluation is

combined before the start of the component.


Management


Yes, the governance area validates this information.


Management


No. Control is passive. Only a warning is issued by the governance

team when trends are deteriorating very fast (no clear criteria).


Management


done?

Each component is assessed separately, there is no joint

assessment.


Management


Yes. According to the methodology applied, the components must

have a cost baseline and its manager must control it to ensure its

adherence.


Management


Yes.


Management


Yes.


Management


Yes. There are indicators linked to the bonuses of the managers

that control these metrics.


Management


done?

No.

Q39 Delivery Risk

Management

Are risks to the Portfolio identified?

No.

Q40 Delivery Risk

Management

Are risks to the Portfolio qualified?

No.

Q41 Delivery Risk

Management

Are risks to the Portfolio quantified?

No.

Q42 Delivery Risk

Management

Are responses to the risks to the Portfolio planned?

No.

62

Q43 Delivery Risk

Management

Are risks to the Portfolio controlled?

No.

Q44 Delivery Risk

Management


No.


Management


Yes. At first there is a need for verification of the components and

of its features and, at the second time, the resources are mobilized

according to availability.


Management


Yes.


Management


No.


Management


Yes. The component managers is responsible for determining the

necessary actions.


Management


done?

Yes. It is performed by the functional manager of the resource.


Engagement

Are stakeholders mapped?

Partially.


Engagement


Stakeholders)?

No.


Engagement


stakeholders?

No.


Engagement

Are stakeholders engaged in the change process?

No.


Control



Timely Portfolio report are issued in certain contexts.


Control

Are the components' budget provided in incremental stages?

No. The funds are available in their entirety at the beginning.


Control

Are deviations and risks treated or addressed?

Specific negotiations are established without the vision of the

whole.


Control

Are interdependencies between components managed?

No.


Control

Are lessons learned collected and disseminated?

No.


Control

Are internal and external environment monitored?

No.


Control Is there a components' reassessment to verify that the results were


63

Yes. Components are revalued according to the objectives initially

presented to verify if it was successful or not.


No.


No.


No.

64

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