Project Portfolio Management (PPM) has emerged to become one of the most crucial ways of achieving strategic advantage in a business organization. In order to be competitive, business leaders recognize that they must be able to effectively plan and manage their project or product portfolio in a way that best achieves the financial goals of the organization. The question I would ask is: How well are university MBA programs responding to industry needs and preparing graduates who can effectively do PPM?
In the U.S. alone there are currently 214 graduate business or MBA programs offering either courses or emphases in PPM. But this number doesn’t necessarily reflect how many MBA programs do an adequate job of teaching PPM. Many programs treat PPM as just an extension of project management (PM), or they are content to treat it at a high, conceptual level rather than at an actual working level.
PPM is Not Just PM on Steroids
Traditionally, MBA programs have tended to focus on the management of projects, not the management of project portfolios. However, as universities have increasingly become aware of the fact that most organizations manage multiple projects rather than individual projects, PM courses have expanded to ostensibly address the issues associated with multiple projects. Unfortunately, in many of these instances the real issues associated with managing multiple projects are trivialized as though they are little different from those connected with managing a single project. One MBA program advertises that they provide an entire series of four courses on PM, yet only in the last course is the subtopic of “multiple projects” even raised. The mindset seems to be: if you can plan and manage one project, you can plan and manage multiple projects.
This practice of tacking PPM onto PM, as though it is simply a matter of planning and managing a bunch of individual projects, grossly underestimates the complexity of the decisions associated with competing projects vying for the limited resources of an organization, not to mention the strategic level of thinking that is required to make such decisions.
PPM is more than learning how to manage multiple projects. It is learning how to look at the entire portfolio of projects holistically with the goal of maximizing overall ROI. PPM blends strategy and decision making to allocate resources across competing opportunities for maximum value creation. These decisions are based on risk assessment and financial management and therefore go beyond the simple scheduling and cost estimating activities associated with PM. What this all means is that a good project manager isn’t necessarily a good portfolio manager.
PPM, a Learn-by-Doing Skill
Once an MBA program gets over the habit of treating PPM as simply an advanced exercise in PM, the next challenge is to treat PPM as a skill rather than simply a topic of discussion. Unfortunately, in many MBA programs PPM is addressed as simply one of many topics covered in a business strategy course where students are barely given enough exposure to it to know what it is.
Even where an entire course is dedicated to the topic of PPM, it is often treated at a high level with little attention given to the actual nuts and bolts of how it is done. It goes without saying that one can learn a great deal about PPM without really learning how to do PPM. I recently read one PPM course description in an MBA program that stated: “This course provides the basic concepts of portfolio management and differentiates portfolio management from project management, program management and the PMO. The course content defines the steps necessary to develop a project portfolio, including selecting portfolio components and applying financial and resource constraints. Portfolios have different risks than individual projects and programs, therefore an explanation of portfolio risk management is included.”
Such a course, if taught as advertised, could hardly give students a working knowledge of how to do PPM. While perhaps useful to someone interested in obtaining only a cursory knowledge of PPM, it is of little practical use to someone anticipating filling any kind of leadership role in PPM.
To develop a real working knowledge of PPM, students need to develop a sense of how project selection, prioritization and timing affect financial performance. They also need to get a good grasp of the way resource allocation over time and across multiple projects affects both cost and revenues. Gaining insight into the impact of uncertainty and risk on timing and financial performance is also vital. Especially useful is the ability to generate accurate statistical estimates of performance based on uncertainty. Such capabilities are best developed through actual experience in working with project portfolios.
EPS for MBA Programs
ProModel has developed a PPM simulation exercise using its powerful Enterprise Project Portfolio (EPS) product that is designed to take students through a realistic project portfolio planning scenario. It gives students an experience of what it is actually like to make portfolio planning decisions and helps improve their strategic thinking skills. Since this EPS module is hosted in the cloud, no software needs to be downloaded and students can work through the exercise at their own pace, usually only taking a couple hours to complete.
The EPS module provides both training and assessment so that students receive immediate feedback on the consequence of their decisions and are allowed to iteratively improve their decision making skills. Students come away with confidence in their ability to effectively plan a project portfolio.
ProModel is excited to be working with several MBA programs to pilot this EPS module. Preliminary results are promising, and it is definitely proving to be a bold move for professors to stretch beyond their comfort zone of classroom lecturing. Giving students this hands-on experience in PPM is sure to make them better business leaders. It is more than a simulation game; it is a game changer.
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Dr. Harrell, great work. Definitely game changer.