Porfolio Management Guidelines

Programmes & Projects
Portfolio Management Guide

Final Public Consultation Draft
www.ogc.gov.uk
Acknowledgements
Author Primary Review Group

Craig Kilford, Cansoti.com.
Alan Ferguson, AFA; Andrew Hudson,
ChangeDirector UK Ltd; Anthony Close, SMS
Further Contributions Management and Technology; Arumza Rashid,
CHMA; Bruce McNaughton, Process Aide;
To ensure that the Portfolio Management Guide Charles Cross, Department of Health;
reflects current Best Practice in this emerging field, Chris French, SERCO Consulting; Darren Hughes,
the OGC has consulted widely among key HM Prison Service; Helen Goulding, Audit Commission;
stakeholders and experts during the authoring James Butler, Program Framework;
process. The OGC would like to thank the John Sherwood, Highways Agency; John Kenyon, OGC;
individuals and their organisations set out below for Kaye Law, Serious Organised Crime Agency;
their contributions to the new guide. Kevin Hardy, Astellas Pharma; Liz Underhill,
Government Olympic Executive; Mark Fensome,
Editorial Review Group Department for Children, Schools and Families;
Martin Crumpton, Department for Transport;
Andrew Honeywood, OGC; Chris Thirkell, Cabinet Nicky Bloomer, ACPO (TAM);
Office; Felicity Pickering, Cabinet Office; Fiona Nick Walker, Department for Children, Schools and
Moore, OGC; Michael Acaster, OGC; Stephen Families; Paul Hurren, Audit Commission; Paul
Jenner, Ministry of Justice (on secondment to the Rayner, Logica and ProgM; Philip Cooper, OGC;
Cabinet Office – Transformational Government Rod Sowden, Aspire Europe Ltd; and
Group); Sue Vowler, Project Angels Ltd. representatives from the Ministry of Defence.
Sean Redmond, for copy-editing and proofreading.
2
Executive Summary
Introduction
Irrespective of an organisation’s Programme and
Project Management maturity.
Programmes and Projects have dominated the
headlines in recent years, becoming the focus of an Adopting Portfolio Management is a big step for
organisation’s ability to manage Change. But how everyone involved, particularly the Senior
can organisations really be sure that the Management Board, who must be the Portfolio
Programmes and Projects they are delivering are Management champions, and in today’s economic
the right ones? Can Senior Management be sure climate must recognise that using Portfolio
that customer needs will be met, that the Strategic Management is absolutely non-negotiable.
Objectives will be delivered? Can government
departments be certain that their visions and targets
will be achieved? Portfolio Management: what is it?
In times of rapid change, budgetary constraints and Portfolio Management is a co-ordinated collection of
high risk, it is shocking that some organisations strategic processes and decisions that together
continue to waste effort and resources by delivering enable the most effective balance of organisational
the wrong Programmes and Projects. Change and Business as Usual.
This is where Portfolio Management will help. Portfolio Management: why bother?
Portfolio Management is critically important because
it ensures that the ‘right’ Programmes and Projects
are started and the ‘wrong’ ones are not (or are The most recent Cabinet Office research1 identified
stopped if already underway). The right that organisations who adopt a Portfolio
Programmes and Projects are those that collectively Management approach realise benefits through the
make the greatest contribution to an organisation’s following factors.
strategic objectives and targets. • More of the ‘right’ Programmes and Projects
This Portfolio Management guidance provides being undertaken.
flexible principles, including Senior Management • Removal of redundant and duplicated
commitment, alignment of the Organisational Projects.
Governance and Organisational Strategy together
with the use of a Portfolio Office Model working • More effective implementation of
within a culture that is energised and motivated to Programmes and Projects
change. The Portfolio Management Practices are • More efficient resource utilisation.
grouped within two cycles: the Portfolio Definition
Cycle and the Portfolio Delivery Cycle. When the • Greater benefits realisation.
Practices are used to complement existing • Improved transparency, accountability and
organisational structures they will help to facilitate Organisational Governance.
key Portfolio Management activities, such as
prioritisation, balancing, planning and controlled • Improved engagement and communication
delivery, at both an organisational and unit level. between senior management.
Importantly, the guidance highlights that Portfolio
Management is most effective when done ‘top-
down’ across an organisation as a whole, although
some improvements will be seen wherever it is
applied within an organisation. Equally, while
Portfolio Management will be more effective where
robust Programme and Project Management
structures exist, this is not a prerequisite. Portfolio
Management will be effective whenever it is used, 1
Benchmarking Reliable Delivery, June 2008.
3
Portfolio Management Cycles What Portfolio Management is not
At the top level all Portfolio Management activities There are a number of misconceptions that can
can be grouped into two cycles: Portfolio Definition cause confusion and detract from the successful
and Portfolio Delivery. Both of these have to be implementation of Portfolio Management.
constant due to the ever-changing environment in • Easy to implement. Implementing Portfolio
which the organisation operates. This model Management will bring about Changes to
(illustrated in Figure S1.0) encapsulates the cyclical Management Board decision making and
and constant activities of Portfolio Definition and Organisational Governance processes.
Portfolio Delivery. Therefore, it is critical that the person or
team leading the development of Portfolio
Management has the necessary skills and
experience.
Portfolio Definition Portfolio Delivery
Benefits
Management
Categorise Understand
Financial
Management
Management
Control
Organisational Risk
Energy Management
Prioritise
Stakeholder
Resource Engagement
Management
Balance Plan
Organisational
Governance
Figure S1.0. Portfolio Management Cycles. • A group of ‘Project people’ that sit in
isolation and produce a plan every year.
Portfolio Management must integrate
What could Portfolio Management be for you? seamlessly within the Organisational
Governance decision-making and Strategic
In practice, Portfolio Management can be used at Planning process.
many different levels within the organisation. For
example, while this guidance focuses at the • Programme or Project Management on a
organisational level of Business Change bigger scale. Programmes and Projects
Management (the totality of an organisation’s focus on implementing Change in the ‘right’
Change), there is no reason why Portfolio way; Portfolio Management is about
Management cannot be used at directorate level, choosing the right Change in order to
within specific business units and even within realise the agreed Strategic Objectives.
individual Programmes.
4
• A process that the Management Board How do Changes link to strategy?

can pay lip service to. Portfolio In almost every case, an organisation’s Strategic
Management creates a transparent Objectives identify some form of improvement.
evidence-based environment that will
provide the mechanism to inform Linking Changes to the Strategic Objectives can
Management Board decisions. only be achieved via benefits – i.e. the benefits
realised by implementing the Change. In order to
• A rigid, bureaucratic or individual successfully realise benefits from the Portfolio, the
process. Portfolio Management is a following two critical prerequisites must be satisfied:
collection of flexible processes (existing and • A strategy must exist, containing well-
new) which, when used collaboratively, defined and agreed Strategic Objectives
enable effective decision making. with associated targets and measures.
• A list of all existing Projects or • Every Change must have a justifiable
Programmes. The Portfolio contains Business Case clearly defining the benefits
current and future Changes that have been in sufficient detail to enable alignment to
prioritised, scheduled, endorsed by the one or more Strategic Objectives.
Management Board and aligned to the
Strategic Objectives with benefits,
resources and dependencies identified.
• A bureaucratic process that prevents or

stops Programmes or Projects for no
reason. Portfolio Management will clearly
highlight which Programmes or Projects are
not adding value to Strategic Objectives.
Portfolio Management links Business as Usual

and strategy
In Figure S2.0 this relationship is represented in a

simple concept: ‘Run the business, change the
business’. This describes how Portfolio
Management and Business as Usual can
Figure S2.0 ‘Run the business, change the business’
collaboratively realise Strategic Objectives.
Portfolio Management controls the Changes to A prerequisite to effective Portfolio Management is
Business as Usual. When Changes are successfully the existence of an Organisational Strategy that
implemented, Business as Usual improves and contains well-defined and agreed Strategic
benefits are then realised. The benefits realised Objectives with associated targets and measures
from Business as Usual are managed by Portfolio (or, if you are implementing PfM at a departmental
Management. It is this cyclical relationship between or team level, departmental or team objectives).
Portfolio Management and Business as Usual that
achieves the Strategic Objectives.
Portfolio Management ensures that decisions are
made collaboratively, in the context of the whole
organisation, and by the appropriate people at the
appropriate level.
5
1.0 Introduction to Portfolio Management
1.1 Purpose of the guidance financial benefits and contribution to

Strategic Targets, business priorities and
The purpose of this guidance is to provide
fewer ‘wrong’ ones started or more killed off
universally applicable principles and practices that
earlier via active management of the Project
will enable individuals and all organisations (large or
Portfolio.
small) to successfully introduce or re-energise
Portfolio Management structures. • Removal of redundant and duplicated
Projects.
Specifically, this guidance provides:
• More effective implementation of
• A baseline definition of Portfolio
Programmes and Projects via management
Management, together with easy-to-
of the Project pipeline, Project
understand descriptions of the Portfolio
dependencies, interdependencies and
Management Principles and Practices.
constraints (including resources, skills,
• Real-life examples of Portfolio Management infrastructure, change appetite, etc.) and
that can be adopted by any organisation redirecting resources when Projects do not
and will add immediate benefits. deliver or are no longer strategically aligned.
The Portfolio Management Principles and Practices • More efficient resource utilisation.
discussed in this guidance are simplified in such a
• Greater benefits realisation via active
way that, should an organisation choose to
approaches to exploitation of the capacity
implement them, they can expect to see real
and capability created.
benefits in a short time. If your organisation is
already fairly mature in its use of Portfolio • Improved transparency, accountability and
Management, this guidance will be a useful Organizational Governance.
crosscheck.
• Improved engagement and communication
1.2 Portfolio Management: why bother? between Senior Management in
Most organisations operate in a complex understanding and meeting organisational
environment, with many Changes being needs and expectations.
implemented at any one time. New Changes will be
started and delivered in these environments so
1.3 Structure of the guidance
there will always be inevitable challenges, including
(but not limited to) conflicting priorities for scarce This guidance first introduces the definition of
resources, understanding the sheer complexity of all Portfolio Management, the key terminology and an
the Changes as well as the interdependencies overview of the strategic context. Following this, the
between Changes. Portfolio Management Principles and Practices are
discussed in detail.
The most recent Cabinet Office research2 identified
that organisations who adopt a Portfolio The appendices contains additional useful
Management approach realise benefits through the information, including governance terms of
following factors. reference and a Portfolio Management Briefing
specifically created for Management Board
• More of the ‘right’ Programmes and Projects
Members.
being undertaken in terms of greater
Table 1.1 gives a brief summary of each chapter.
2
Benchmarking Reliable Delivery, June 2008.
6
Chapter Name Summary

1 Introduction to Portfolio Introduces the key terminology, purpose and target
Management audience.
2 What is Portfolio Introduces the Portfolio Management Principles and
Management? Practices. Highlights what Portfolio Management can be for
you, what is it not and answers the question ‘Why bother with
Portfolio Management?’.
3 The Strategic Context Identifies how Portfolio Management links to Business as
Usual, the organisational strategy and other teams.
4 Portfolio Management Discusses the Portfolio Management Principles, including
Principles Senior Management Commitment, Organisational
Governance and Organisational Strategy alignment, the use
of P3O® and an energised Change culture.
5 Portfolio Management Discusses the two Portfolio Management Cycles, Portfolio
Cycles Definition and Portfolio Delivery.
6 Portfolio Definition Cycle: Defines in detail the Portfolio Management Practices within
Portfolio Management the Portfolio Definition Cycle, including Understand,
Practices Categorise, Prioritise, Balance and Plan.
7 Portfolio Delivery Cycle: Defines in detail the Portfolio Management Practices within
Portfolio Management the Portfolio Delivery Cycle, including Management Control,
Practices Benefits Management, Financial Management, Risk
Management, Stakeholder Engagement, Organisational
Governance and Resource Management.
Table 1.1. Chapter summary.
Throughout the guidance you will notice the use of

Important Notes and Keys to Success boxes, as in
Figure 1.2.
Important Notes are sometimes needed to emphasise a point or to ensure understanding of a

specific element of the discussion.
Keys to Success
Key These are re-emphasised points and real-life lessons learned which aim
to help you become more successful in implementing Portfolio
Management.
Figure 1.2. Examples of Important Notes and Keys to

Success.
7
1.4 Target audience Programme, Project and Business Change

Managers; and teams from departments, including
This guidance has been written specifically for use
(but not limited to) Finance, IT, Procurement,
within the UK Government and, as such, references
Strategic Planning and Performance.
other UK Best Practice, including Managing
Successful Programmes (MSP™) and PRINCE2®. A key thought to bear in mind as you read is that no
However, the Portfolio Management Principles, organisation is the same as another, no two
Cycles and Practices are applicable to any organisations are managed in the same way and,
organisation irrespective of type, size, market or given the relative immaturity of Portfolio
geographical location. Management, many organisations and people have
differing needs and views concerning its application.
Portfolio Management touches all elements of an
organisation. Therefore, most people with an
interest in Business Change Management and/or
organisational strategy would benefit from reading
this guidance (as shown in Table 1.3), particularly:
Directors of Change; Portfolio,
Stakeholder Value
Board Members, Senior An overall understanding of Portfolio Management and how it

Management, Departmental Heads links with Strategic Management and delivery of Programmes
and Projects.
Use the Senior Managers Portfolio Management Briefing (see
end of Appendix 6) to get a quick overview of what to expect
from Portfolio Management.
SROs, Portfolio Office and Strategic Understand the Portfolio Management Principles and
Planning Teams Practices and how this aligns with your current working
practices.
Programme Managers, Programme Understand the relationships between Portfolio Management

Office Management Teams, and Programme and Project Management, how your
Business Change Managers Programmes fit into the wider Portfolio mechanism, Benefits
Realisation Management, Risk Management and how
Change and Business as Usual are linked.
Project Managers, Project Teams, Understand the alignment to Project delivery and the links to
Operational Management and operations and Business as Usual from a strategic
Teams perspective.
Table 1.3. Summary of key stakeholders and the value they can expect to get from reading this guidance.
8
Important Note: It is critical that you do not view this guidance as a cookbook for implementing
Portfolio Management; rather you should read, acknowledging and understanding the discussions,
principles and practices, taking the time to pause occasionally and reflect on how the content relates to
your own organisation. No doubt, you have some elements of Portfolio Management already in place
and whilst they probably will not have the same names, as long as they are adding the value discussed
in this guidance there may be no need to modify your approach.
1.5 Key terminology Business Change Lifecycle: Many organisations

Before you continue reading, it is important to develop some form of organisational process or
understand some key terminology and acronyms, as framework which helps to guide the delivery of
these are referred to throughout this guidance. For a Programmes and Projects using a collection of
fuller glossary of terms, see Appendix 7. repeatable processes and decision points/stage
gates. Some call it the Business Change Roadmap,
Programme and Project Delivery Framework, or
Portfolio Management (PfM): From this point on, Business Change Lifecycle. For the benefit of this
Portfolio Management will be referred to as ‘PfM’. guidance, the term ‘Business Change Lifecycle’ will
be used to refer to any such process. Appendix 1
contains an example of such a process called the
Programmes and Projects: For ease of reading, Project Control Framework, which has been
from this point on Programmes and Projects will be implemented within the Highways Agency.
referred to as ‘Change’ (unless it is critically
important to an understanding of the specific
section). This is because, irrespective of the size Management Board: The top-level senior
and complexity, Programmes and Projects Management Board that consists of the Chief
implement Changes to the organisation. Executive (or equivalent) and other Board of
Directors.
PPM: This refers to the use of Programme and

Project Management Best Practice processes. Business as Usual: Includes all the activities and
processes that the organisation undertakes in order
to run its business on a day-to-day basis.
P3O: This refers to the OGC guidance for Portfolio,
Programme and Project Offices.
P3M3™ Maturity Model: The OGC’s P3M3
Maturity Model enables organisations to measure
OGC Gateway: The OGC Gateway Process themselves against a set of standard processes and
examines Programmes and Projects at key decision to create Performance Improvement Plans to enable
points in their lifecycle (Gateway Reviews). It looks focused and continuous improvement in Portfolio,
ahead to provide assurance that they can progress Programme and Project Management.
successfully to the next stage.
9
2.0 What is Portfolio Management?
2.1 Purpose of this chapter guidance is specifically written to focus on

organisation-level Business Change Management.
This chapter provides definitions of Portfolio,
This aligns to the OGC’s existing selection of Best
Programme and Project Management. The chapter
Practice guidance relating to Programme
then leads on to discuss the differences between
Management, Project Management and Risk
the three and introduces, in summary, the PfM
Management.
Model, Principles, Cycles and Practices (discussed
in detail in later chapters). Finally this chapter
highlights what PfM could be for you and what it is
2.3 PfM: the definitions (PfM, Programme,
not.
Project, P3O)
When implementing PfM, an area where confusion
2.2 Background can arise is the differences between Portfolios,
Programmes and Projects and how Business as
The success of Programmes and Projects has
Usual fits in. It is important that each is defined to
historically been gauged by the extent to which the
ensure a collective understanding by all
implementation has delivered on time, within the
stakeholders. The following are the OGC definitions3
budget and to customer quality expectations.
for Portfolio, Programme and Project Management.
However, organisations are realising that true
Links to Business as Usual are described in detail in
success is only possible if the Project or Programme
Chapter 3.
was the correct Change to implement in the first
place.
Portfolio: The totality of an organisation’s
investment (or segment thereof) in the Changes
With this in mind, Senior Management require
required to achieve its Strategic Objectives.
answers to the following questions and in doing so
enter the world of Portfolio Management.
Portfolio Management: Portfolio Management is a
co-ordinated collection of strategic processes and
• Are all the Changes to the organisation that
decisions that together enable the most effective
are being delivered at the moment (and
balance of organisational Change and Business As
those in the pipeline) bringing us closer to
our organisation’s Strategic Objectives? Usual.
• Are these the best Changes to get us there?
• Are we allocating our precious resources in
the right areas? PfM achieves this by ensuring the following.
• Changes to Business as Usual are agreed
Today, depending on the field of work you are at the appropriate management level and
involved in, the term Portfolio Management can contribute to at least one strategic objective.
mean different things. It can be used to describe the • Strategic decisions are made based on a
clear understanding of cost, risk, impact on
management of investments in housing, or, in
Business as Usual and the strategic
finance, it can be used to co-ordinate hedge fund
benefits to be realised.
investments or prioritise a range of IT Projects.
Whilst these examples are similar in terms of the 3

concept of investment, risk and benefits, this Portfolio Management definitions developed in
collaboration with The Cabinet Office and OGC in 2008.
10
P3O: This provides a decision-enabling/delivery-

• Resources and Changes are prioritised in
line with the current environment, existing support model for all Business Change within an
Changes, resource capacity and capability. organisation. This may be provided through a single
• All Changes are reviewed frequently in permanent office, which may exist under several
terms of progress, cost, risk, priority, different names – e.g. Portfolio Office
benefits and strategic alignment. (strategy/organisation or business unit focused),
Strategy or Business Planning Unit, Centre of
Programme Management: OGC’s related Excellence, Enterprise or Organisational
guidance, Managing Successful Programmes (MSP) Programme Office – or be provided through a linked
defines Programme Management as the action of set of offices (Portfolio Office, Programme Offices,
carrying out the co-ordinated organisation, direction Project Offices), both permanent and temporary,
and implementation of a dossier of Projects and providing a mix of central and localised services.
transformation activities (i.e. the Programme) to The role of P3O and the Portfolio Office is discussed
achieve outcomes and realise benefits that are of in detail in Chapter 4.
strategic importance to the business.
The key differences between Portfolios,
A Programme is defined as a temporary, flexible Programmes and Projects are outlined in Table 2.1.
organisation created to co-ordinate, direct and
oversee the implementation of a set of related Important Note: Wording in this Guidance:
Projects and activities in order to deliver outcomes
When you see the word ‘Portfolio’, we are referring to
and benefits related to the organisation’s Strategic
the Portfolio of organisational change and not a
Objectives.
personal Portfolio of responsibilities, the total
Project Management: A Project is also a temporary investment Portfolio or the IT Portfolio. However,
organisation, usually existing for a much shorter elements of this guidance can be applied to those
time, which will deliver one or more outputs in situations and add considerable value.
accordance with a specific Business Case.
When the term ‘P3O Model’ is used, it refers to the
A particular Project may or may not be part of a totality of a Portfolio Office, a Programme Office and
Programme. OGC’s related guidance, PRINCE2, a Project Office structure. When more specific
should be referred to for the management of explanations are required, they will be discussed from
Projects. the perspective of the Portfolio Office and not a
Programme or Project Office.
Portfolio Programme Project

An organisation’s total A single vision of Change leading A focused delivery of a single
investment (or a segment to specific outcomes aligned to output or multiple outputs
thereof) in the Changes to meet one or more strategic contributing to a Programme
the Strategic Objectives objective/benefits vision or directly to a strategic
benefit
Permanent (continually changing Temporary (can last for many Temporary (relatively short-term
and aligned to the Strategic years) in comparison)
Planning process)
Ongoing process of prioritising High Level Plans supported by Project Level Plans with focus on
and aligning the Portfolio to meet detailed Plans detailed delivery using Stage
Strategic Objectives Plans
11
Overall strategic perspective of Wide scope that changes over Narrow defined scope with
the whole organisation time as requirements and (ideally) no change
solutions are clarified
Office should sit in a Business Office should sit in business area Office should sit in business area
Change Department, strategy or affected or in corporate services affected
finance, reporting directly to
Management Board
Table 2.1. Key difference between Portfolios,

Programmes and Projects.
2.4 The PfM Model: Principles, Cycles and

This contrasts with the reality of PfM because
Practices
there is no defined start, middle or end, which
means that linear, sequential processes do not sit
2.4.1 PfM Model and PfM Principles comfortably.
Programmes and Projects have a start, they have
At the top level, all PfM activities can be grouped
a middle and they will end at some point because into two areas: Portfolio Definition and Portfolio
they have delivered the Changes they were set up Delivery, both of which have to be constant due to
to deliver. To ensure focus, methodologies such
the ever-changing environment in which the
as PRINCE2 and Managing Successful organisation is operating.
Programmes (MSP) contain a number of
sequential processes that are used to help deliver
The PfM Model in Figure 2.2 highlights how the
successfully, i.e. Identify a Programme, Define a PfM Principles encapsulate the cyclical and
Programme, Deliver the Capability, Realise the constant activities of Portfolio Definition and
Benefits and Close the Programme4.
Portfolio Delivery. Both are introduced here in
summary to help give you an early understanding
ahead of a more detailed discussion in Chapters 4
to 7.
PfM Principles
PfM Cycles
Figure 2.2. The Portfolio Management (PfM) Model.
4
Managing Successful Programmes Transformational
Flow.
12
2.4.2 PfM Cycles and Practices managed in effectively.

PfM activities focus on either defining a Portfolio or • Organisational Energy represents the
delivering a Portfolio. Therefore, Portfolio Definition collective effort, motivation, teamwork,
and Portfolio Delivery are represented in the centre management and leadership that is critical
of the PfM Model (Figure 2.2) as perpetually rotating in order to keep the PfM Cycles rotating.
Cycles containing all PfM Practices.
• The rotation speed of the Cycles will vary for
Chapters 6 and 7 discuss the PfM Practices found in each organisation. Some organisations work
in highly volatile markets and energy will
each Cycle in more detail. However, for now it is
transfer between the two Cycles regularly,
important to introduce the PfM Cycles (Figure 2.3)
which will cause a change in rotation speed.
and note a few points before you continue through
However, for organisations operating in less
the guidance. volatile environments (and with longer
• Both Cycles must continuously rotate Strategic Planning Cycles) the energy
because planning and delivery are constant transfer between the two Cycles is less and
activities in PfM. therefore the rotation speed does not
change as much.
• Both Cycles contain the totality of all PfM
Practices.
• All PfM Practices are continuously used
(albeit at different times they may attract
more emphasis).
• The Cycles can only rotate successfully
when the collective energy of the people
within the organisation is directed and
Benefits
Management
Financial
Management
Management
Control
Organisational Risk
Energy Management
Prioritise
Stakeholder
Resource Engagement
Management
Balance Plan
Organisational
Governance
Figure 2.3. PfM Cycles
13
2.5 PfM: What it can be and what it is not Programme and Project Management
together with Strategic Management
The implementation and interpretation of PfM varies experience will create a high risk of failure.
between organisations, and it is assumed that your
existing PfM processes may be slightly different in • A group of ‘Project people’ that sit in
name and practice. This does not mean that what isolation and produce a plan every year.
you are doing is wrong, as long as your PfM PfM must integrate seamlessly within the
structures are aligned to the PfM Principles and PfM Organisational Governance decision-making
Practices providing the target value highlighted in process, align to the Strategic Planning
this guidance. process and ensure the engagement with
2.5.1 What could PfM be for you? many departments, including IT, HR,
Finance, Performance and Commercial.
In practice, PfM can be used at many different levels
within the organisation. For example, while this
Important Note: PfM will not make decisions
guidance focuses at the organisational level of
regarding the content of the Portfolio, changes
Business Change Management (the totality of an
to be included or changes to be stopped; it will,
organisation’s Change), there is no reason why PfM
however, make such recommendations whilst
cannot be used at directorate level, within specific
ensuring the responsibility for making the
business units and even within individual
decision remains with the Management Board.
Programmes5.
Important Note: Programmes and Projects are

about ‘doing things right’; Portfolio Management is • Programme or Project Management on a
about ‘doing right things’. bigger scale. Programmes and Projects
focus on implementing Change in the ‘right’
way; Portfolio Management is about
choosing the right Change in order to realise
the agreed Strategic Objectives. However,
2.5.2 What PfM is not PfM does have some similarities with
As well as defining PfM, it is also useful to highlight elements of MSP and PRINCE2. This is
what it is not, as there are a number of because both already provide Best Practice
misconceptions that can cause confusion and processes for planning and delivering
detract from the successful implementation of PfM. Change. Elements of that Best Practice are
transferable to any situation that requires
planning and delivery, not just PfM. It is for
PfM is not: this reason that using elements of MSP and
PRINCE2 during both PfM Cycles – e.g.
• Easy to implement. Implementing PfM will Vision, Plan, Blueprint, Programme
bring about changes to Management Board Definition and Business Case – will add
decision making and Organisational significant value if used appropriately.
Governance processes. Therefore, it is
critical that the person or team leading the • A process that the Management Board
development of PfM has the necessary can pay lip service to. PfM creates an
skills and experience. A person seconded evidence-based environment that will
from another department without a provide the mechanism to inform
combination of experience in Portfolio, Management Board decisions. This
transparency also makes it clear when
decisions are not made.
5
Only use selected PfM content within programmes to
complement an existing use of Managing Successful
Programmes (MSP).
14
• A rigid, bureaucratic or individual • A bureaucratic process that prevents or

process. PfM is a collection of flexible stops Programmes or Projects for no
processes (existing and new) which, reason. PfM will clearly highlight which
when used collaboratively, enable Programmes or Projects are not adding
decision making relating to an value to Strategic Objectives. PfM will
organisation’s ability to change make clear recommendations to the
Management Board, who are the
• A list of all existing Projects or owners of all start and stop decisions.
Programmes. rigid, bureaucratic or PfM will also ensure the effective use of
individual process. The Portfolio the Business Change Lifecycle, which
contains current and future Changes provides a review and viability
that have been prioritised, scheduled, mechanism/stage gates during the life of
endorsed by the Management Board the Change being implemented.
and aligned to the
Strategic Objectives with benefits,
resources and dependencies identified.
Simply creating a shopping list of
Projects does not constitute PfM.
15
3.0 The Strategic Context
3.1 Purpose of this chapter organisation, and by the appropriate people at the
At this point, you should have a good understanding appropriate level.
of what PfM is and an overall picture of how the PfM
Principles, Cycles and Practices fit together.
Chapter 3 is all about understanding the context of 3.3 How do Changes link to strategy?
PfM, which includes discussions about the links with In almost every case, an organisation’s Strategic
Business as Usual, organisational strategy and Objectives identify some form of improvement. It is
other key teams within the organisation. extremely rare that an organisation’s Strategic
Objectives are to stay the same.
3.2 PfM links to Business as Usual
Linking Changes to the Strategic Objectives can
The relationship between PfM, Business as Usual only be achieved via benefits – i.e. the benefits
and Change is a discussion that takes place in most realised by implementing the Change. In order to
organisations when implementing PfM. In Figure 3.1 successfully realise benefits from the Portfolio, the
this relationship is represented in a simple concept: following two critical prerequisites must be satisfied.
‘Run the business, change the business’. This
describes how PfM and Business as Usual can • A strategy must exist, containing well-
collaboratively realise Strategic Objectives. defined and agreed Strategic Objectives
with associated targets and measures.
• Every Change must have a justifiable
Business Case6 clearly defining the benefits
in sufficient detail to enable alignment to
one or more Strategic Objectives.
Important Note: A prerequisite of effective PfM is

the existence of an Organisational Strategy that
contains well-defined and agreed Strategic
Objectives with associated targets and measures
(or, if you are implementing PfM at a department
or team level, departmental or team objectives).
Why? PfM focuses on delivering the right

changes in order to realise the Strategic
Objectives. If the Strategic Objectives have no
Figure 3.1. ‘Run the business, change the business’.
targets or measures it will be impossible to
PfM controls the Changes to Business as Usual. understand which changes contribute most and
When Changes are successfully implemented, which ones should not be invested in.
Business as Usual improves and benefits are then
realised. The benefits realised from Business as
Usual are managed by PfM. It is this cyclical
relationship between PfM and Business as Usual
that achieves the Strategic Objectives.
6
All Business Cases should follow the Green Book
PfM ensures that decisions are made
guidance published by HM Treasury. In addition, MSP
collaboratively, in the context of the whole and PRINCE2 provide detailed guidance for the
development of a Business Case.
16
Figure 3.2 contains a simplified example of the how Important Note: Creating valuable Benefits
benefits from Changes align to Strategic Objectives. Models is a very challenging task. It is usually
This type of modelling can form the basis of more best achieved via the use of team workshops,
detailed Benefits Modelling techniques, which define ensuring the right mix of operational and change
each step of the progression from the Change people. The person leading on creation of the
output to the strategic objective. See Managing Benefits Models will require a good understanding
Successful Programmes (MSP) for more detailed of the business, Changes and the Strategic
examples of benefits and outcome relationship Objectives.
modelling.
Figure 3.2. Alignment of benefits to Strategic Objectives.
17
3.4 Links to other key teams

The collaborative working brought about with Table 3.3 contains a selection of key points taken
effective PfM is critical to overall success. There are from conversations with teams working in various
a number of key teams with whom the Portfolio PfM environments, all of which have described how
Team should engage with continuously, sharing their work links to other departments and people
information, tools, techniques and processes. within their organisation.
The Portfolio Office needed to engage with the members of the Management Board,
both individually and as a team. The Management Board’s involvement was critical
as it ensured that the new ways of working were supported from the very top of the
organisation, which led to departments understanding that PfM was a serious
change.
Management
Board It was important to ensure that the Management Board understood how they were
going to be involved with PfM before it was implemented. Once they were satisfied
that the Portfolio Office ensured they were presented with the correct information,
they were involved in the Portfolio definition and were happy to be key decision
makers throughout. They were also critically involved and supportive of the
communications that were published to the organisation.
When PfM was first being implemented, the Portfolio Office did not have expert
financial skills, so collaborative working with the Finance Department was critical.
This was particularly relevant with detailed financial planning aspects of Business
Finance
Cases and defining and realising financial benefits from the Changes. Finally, the
finance team were key players in helping with the overall Portfolio reporting and
ongoing links to the organisational financial decision making.
A key challenge for the Portfolio is to ensure that technology-enabled Changes are
resourced appropriately. This was only achieved because we worked closely with
the IT Programme Office to ensure that resources were being prioritised in line with
the Organisational Portfolio priorities and that the mechanism to initiate technology
IT
Changes within the organisation was aligned to the Portfolio Office’s Business
Change Lifecycle. As well as the development aspects of IT implementation, the IT
Programme Office also helped to ensure that all service management elements
were in place.
A significant proportion of Changes in the organisation require procurement and
commercial advice in order to follow defined procurement processes. An Investment
Board existed and was aligned with the PfM Governance. This ensured that key
Procurement/ personnel, such as the Commercial Director, had early sight of proposed new
Commercial Changes in addition to increased exposure to Business Cases and planning, which
proved critical to ensure that plans realistically incorporated procurement and
commercial timescales.
18
45
During the process of creating the organisational strategy, the Strategic Planning
Team were working extremely closely with the Portfolio Office, primarily because the
Portfolio Office has the most up-to-date information on all Changes and understands
Strategic
how those Changes are contributing to the Strategic Objectives.
Planning
The Strategic Planning Team produced the Annual Plan, which contains a snapshot
of information on the Portfolio and, as such, it was critical that the two teams were
aligned, particularly during reviews and creation of the Annual Plan and the
Organisational Strategy.
Without the expertise of the Performance Management Team the Portfolio Office
would have struggled to identify how each of the Changes adds value to the overall
organisational performance measures. The Performance Team also benefited from
working with the Portfolio Office because they were able to integrate the information
from the Portfolio into the organisational Balanced Scorecard mechanism; they were
Performance involved at the start of Changes and could begin planning the overall organisational
performance.
The Performance Team also provides performance-related support to Changes via
the Portfolio Office. Historically, people did not think about the impact on the
performance before starting a Programme or Project, but the introduction of PfM
ensured that performance was included during the planning stages of every Change.
Working closely with the Programme and Project Management community is key.
The Portfolio Office provided the standards for delivering Programmes and Projects,
provided assistance with planning and helped managers’ work through the steps to
start up. Building a strong relationship with the Programme and Project Managers
PPM Delivery was critical, particularly when the monthly progress reporting mechanism was
Team introduced. The relationship was the key reason why the reporting mechanism was
successfully implemented, because the Programme and Projects knew that the
Portfolio Office would get feedback and support on big issues directly from the
Management Board, whereas historically there was nowhere to escalate to and
everything was a battle.
Changes will almost always impact the structures and working practices of people.
The Portfolio Office engages early on with the HR team so they have an early view
of Changes coming over the horizon, and have input into them. Importantly, training
HR is something that used to be overlooked and the lack of training skills has caused a
few Projects to be delayed in the past. However, since the Portfolio Office made
sure that HR were involved during the planning and prioritisation, the training
department knew how to align resources to priorities which pleased everyone.
19
The Business Architecture Team (sometimes called Design Authority and situated in
Strategic Planning, Finance or IT Departments) manage the overall organisational
Blueprint (sometimes referred to as the Future Operating Model). This defines the
current and the future organisational design in terms of working practices and
Business
processes, information requirements and the technology that supports its
Architecture
operations. Because each of the Programmes created a Blueprint during the start, it
Planning
was possible to align it to the Organisational Blueprint. The Business Architecture
Team were involved in creating Programme Blueprints, aligning them at the start,
and assisted with the analysis of any proposed modifications via the Change Control
process.
The Centre of Excellence (COE) formed part of the Portfolio Office, which was
important because this was a key Knowledge Management area. The COE was
Centre of involved in the implementation of the Business Change Lifecycle and assisted the
Excellence Portfolio Office in the assurance of consistency of information. The COE was
involved in the resource capacity planning due to its focus on training across the full
Portfolio.
The optimal real estate flexes with the shape and functions of the organisation.
Real Estate and Major changes to staff numbers (up or down) or to working practices required
Property various changes to property. Equally, there were additional opportunities in terms of
Services relocation to other areas, which helped maximise the use and availability of staff and
other resources.
Table 3.3. Description of collaborative working between

Portfolio Office and key departments.
20
4.0 PfM Principles
4.1 Purpose of this chapter

Important Note: The Target Situations described
Chapter 2 introduced the PfM definitions and in this chapter are examples of real-life situations
Chapter 3 provided the PfM Strategic Context. from a number of public and private sector
This chapter is where we start to get into the detail organisations.
of how the PfM Model works, by first describing
the PfM Principles. The Target Situations are included here as
examples only – whilst they will be useful in
4.2 Introducing the PfM Principles helping help you to understand how PfM works,
they are not mandated for every organisation.
The PfM Principles must be considered
continually during the Portfolio Definition and
The Target Situations should be used as
Portfolio Delivery Cycles. The PfM Principles are
inspiration for PfM enhancements and not a
flexible and they will mean different things to
prescription for enhancements to your
different organisations. They will be interpreted
organisation.
differently and, as such, will take various forms
when implemented.
With this in mind, rather than creating an

unrealistic ‘to-do list’ for each PfM principle, this
chapter describes a Target Situation for each. The
Target Situations have been written from the
perspective of the organisation that has
experience of implementing elements of the PfM
Principle.
From each Target Situation it is possible to extract

the keys to success; these can be used as a quick
checklist for your own use.
The PfM Model is shown again in Figure 4.1 to

refresh your memory.
Figure 4.1. PfM Model.
PfM Principles
PfM Cycles
21
4.3 Senior Management commitment As part of the Business Change Lifecycle, the
Management Board make the decision on
The Target Situation whether or not new Changes can start. They
actually like this involvement because they all have
The commitment from our Management Board was to make the decision that puts them in control. If the
critical in the adoption of PfM within the starting of a Change is agreed, it is added to the
organisation. Once the Management Board Portfolio reporting and included in the monthly
received the report that defined the current Management Dashboard that provides the
position of all of the Changes and highlighted the Management Board with the key information on
fact that lots of Changes could not be aligned to Portfolio level progress, strategic risks and issues,
our strategy, they understood that PfM was needed dependencies and recommendations for any
to ensure that Changes were not only delivered Management Board decisions.
successfully but that the right Changes were
implemented. The Management Board recognised The Management Dashboard is created by the
there was a strong need for enhanced Portfolio Office, which works closely with all
collaborative working and a standard way to Projects, Programmes and key departments.
manage change if they were to make informed
decisions. This is particularly important regarding
communications and the internal communications
team are heavily involved with the Portfolio
It was the Director of Business Change who Office, together ensuring that all departmental
ensured that the Management Board mandated the communication teams are engaged so regular and
use of a P3O Model in the form of a Portfolio right messages can be sent out with the
Office. The Management Board subsequently Management Board’s support. This helps people to
endorsed the use of our own standard Business see direct leadership from the top of the
Change Lifecycle (which every Programme and organisation.
Project now uses as a standard) and were engaged
as the key decision makers in the categorisation Furthermore, because of this collaborative working,
and prioritisation of all the Changes within the when a Change attracts a ‘red’ status, it is not
Portfolio. This prompted some very interesting viewed as a personal failing any more, but is seen
discussions, one of which led to a Management more as an area that requires teamwork and
Board decision to stop three Projects. This had remedial action by the Management Board. When
never happened before. this happens, everyone works together to bring it
back on track.
22
Senior Management Commitment: Keys to Success
A Management Board member must own the implementation of PfM.

Ownership of PfM
At the very start, produce a report defining the current status and alignment of
Understanding now
Changes (or lack of alignment) to the Strategic Objectives.
The roles of Management Board members (and the PfM team) are understood
Defined roles
and agreed.
Resources for a Management Board agree the resources to implement a Portfolio Office.
Portfolio Office agreed
Management Board Management Board must make decisions regarding the categorisation and
make decisions prioritisation of Changes within the Portfolio.
Business Change A standard Business Change Lifecycle is used for all Changes, which defines all
Lifecycle decision points and accountabilities (including Management Boards).
Management Board receive regular Portfolio Level Management Dashboards

Reporting containing strategic information on Portfolio progress, risks, issues, dependencies,
costs, benefits and decisions required.
Collaborative working between Management Board members, Portfolio Office,

Collaborative working
Project, Programme and departments is critical.
Complement existing PfM Governance is built into Senior Management existing structures and not an
structures additional overhead.
23
4.4 Organisational Governance Alignment Once the Business Change Lifecycle was agreed,
the Management Board became involved at key
The Target Situation
decision points and ensured that decisions
A perception once existed that Project people deal concerning PfM and Business as Usual were not
with the Programmes and Projects and the rest of made in isolation. This helped significantly with
us deal with the real business. This was caused communications because the Management Board
primarily because the Management Board were understood their role and became visible key
not provided with a clear description of all the champions of PfM.
Changes within the organisation (Changes were
something that just happened). Furthermore, there
was no single Management Board member The Portfolio Progress Group continued but with a
responsible for managing the organisation’s Change modified remit to review all new Changes and
activities, such as a Director of Business Change. make recommendations to the Portfolio
Direction Group, in addition to retaining its key
A Director of Business Change was later
focus on the detailed status of the Portfolio.
employed, with the key responsibility to
Members of the Portfolio Direction Group were
implement PfM across the organisation. A
usually members of other key organisational boards,
Portfolio Progress Group was set up to oversee
such as the Finance Board or the IT Board, which
the PfM implementation, with the Director of
enhanced communications and enabled more
Business Change as the Chair. The Portfolio
collaborative working.
Progress Group consisted of heads of departments
from key departments (such as IT, Procurement and To ensure that existing board structures were
HR) and SROs of the Changes (not Management aligned within the PfM mechanisms, the Portfolio
Board members). Although it was useful for the Office made sure that the appropriate processes
people to meet and discuss detailed progress, after were in place to support decision making at every
a while it was clear that the Portfolio Progress level of the Portfolio. The Portfolio Office also set up
Group had the expertise to make recommendations, the PM Forum, which was a monthly meeting
but key decisions relating to the start-up and where all Programme and Project Managers
recovery actions needed to take place at would attend to discuss progress and key issues.
Management Board level. This was a particularly useful communication
mechanism for everyone that attended.
Finally, the Portfolio Progress Group meeting was
With this in mind, and without wanting to set up a
moved to precede the Portfolio Direction Group,
new Management Board meeting, the Director of
which enabled the Portfolio Direction Group to
Business Change obtained agreement to add a one-
have the most recent information as well as being
hour agenda item called Portfolio Direction Group
able to address escalations from the Portfolio
to the existing monthly Strategy Day meeting
Progress Group relatively quickly, which pleased
(attended by all Management Board members).
the Programme and Project Managers.
During this agenda item, the Management Board

were briefed via the Portfolio Level Management
Dashboard. This was received very well because it
summarised progress and clearly defined the top
issues and risks that needed addressing. This
informed their decision making regarding the
Changes in the context of Business as Usual and
the Strategic Objectives.
24
Example Governance Structure 4.5 Other important considerations

Based on the target situation described above, an 4.5.1 Existing Governance structures
example PfM Governance structure is discussed in
There will no doubt be other organisation-level
this section.
Boards in existence that manage specific elements
Figure 4.2 provides a high-level overview of an of the organisation, such as the Performance
example PfM Governance structure. Management Board, Organisational Risk
Management Board and perhaps a Capital
The Portfolio Office must lead on the design and
Investment Board. It is important that these be
implementation of the governance structure and
considered as part of the PfM Governance design.
ensure that the relevant processes are implemented
The relationship between PfM and other boards
successfully. This will ensure that the right Portfolio
should be documented and agreed by the relevant
information gets to the right stakeholders, enabling
parties at the same time as the PfM Governance is
them to make effective decisions.
agreed.
Figure 4.2. Example of PfM Governance structure. Important Note: The naming convention of
Portfolio Direction Group and Portfolio Progress
Group is used for consistency only and
Example Terms of Reference for the Portfolio organisations should not feel restricted to using
Direction and Progress Groups can be found in this in their own PfM structures. Equally, the PfM
Appendix 2, along with draft role descriptions for two Governance structure in Figure 4.2 contains
key roles, Director of Change and Portfolio suggested PfM roles – these are not mandated but
Management. All other role descriptions (or the logic should be followed, i.e. that a
variations thereof) can be found within P3O, MSP or Management Board member champions PfM and
PRINCE2 and therefore are not included in this that some form of Portfolio Manager role exists to
guidance. co-ordinate the Portfolio delivery on a day-to-day
basis
25
4.5.2 Multi-level Portfolios: more than These strategies will identify Changes that need to
Portfolios, Programmes and Projects? happen in order to deliver departmental Strategic
Objectives. However, some of them will be
Some organisations may require more complex
important enough that they add direct benefits to the
Portfolio Governance structures, particularly in the
organisational strategy. This is where the confusion
case where the hierarchy of Change has many
can start: if a Change is important enough and adds
levels or a number of organisations are working
organisation-level benefits, it will usually be included
together. For example, some organisations have
in the Organisational Portfolio, which then triggers
more than just Portfolios, Programmes and Projects.
questions about ownership, decision making and
There could be an organisation-level Portfolio, a
budgets.
Portfolio for each department, work-streams within
those Portfolios and Programmes, and Projects Some organisations choose to mandate that every
within them. In addition some organisations use Change is included within the Organisational
other terminology, such as ‘Strands’ or ‘Super Portfolio. This means there is a clear overview of all
Programmes’. Changes within the organisation, which can be
aligned to the Strategic Objectives. It also a better
While it is important to ensure that people
opportunity to understand the entire Change
understand the naming conventions for the multiple
resource capacity and requirements. However, the
levels, the critical point is that the structures must be
value of this will only be realised if the organisation
supported by clearly defined processes for
is already good at capacity planning (and most are
escalation, decision making, delegation (which may
not).
be aligned to financial sign-off level), planning and
reporting. Organisations that do not put all Changes in the
Organisational Portfolio usually group the Changes
In all cases, particularly with multi-level Portfolios,
in some way based on the level of the strategy. For
an effective P3O Model will be crucial to success.
example, Changes that directly benefit the
4.5.3 Should every Change be in the Organisational Strategic Objectives and those that
Organisational Portfolio? benefit only unit/departmental objectives.
In some organisations there will be various levels of
strategies which together will align to the
organisational strategy. For example, an
organisational strategy will exist for the entire
organisation and within that it is not uncommon for Important Note: The example governance
there to be an IT strategy, HR strategy and Estates provided in this section is relatively simple.
strategy (amongst others). There are other important considerations to
be borne in mind when designing a Portfolio
Governance structure that will be completely
dependent on your organisation’s structure,
culture, decision-making abilities and current
maturity in terms of delivering change.
26
Organisational Governance Alignment: Keys to Success
Existing management Portfolio decisions are incorporated into existing Management Board
structures meetings where Business as Usual and the Portfolio are discussed. In
very large organisations selected decisions may be delegated to an
existing formal sub-board (chaired by Management Board members).
Ownership A Management Board member must own Portfolio Management.
Strategic understanding The Director of Change (or equivalent) provides clarity of all the Changes
of Changes and and their current status, using the Management Dashboard.
progress
Escalations and Portfolio Progress Group provides escalations and recommendations to
recommendations Portfolio Direction Group regarding proposed new Changes, prioritisation,
top risks and issues.
Effective processes The Portfolio Office manages clearly defined processes, ensuring that
correct information is provided to relevant decision makers at each level of
the Portfolio.
Communication Decisions are proactively communicated to the Portfolio in line with the
Stakeholder Engagement processes.
Align meetings where Irrespective of the number of levels in your organisation, try to ensure that
possible key meetings are scheduled as close to each other a possible. This will
lead to more effective decisions due to the timely provision of information
and recommendations.
Share knowledge Provide an environment where Programme and Project Managers can
communicate, share knowledge and learn lessons from experiences.
27
4.6 Organisational Strategy Alignment Important Note: If an organisation does not

have well-defined objectives, the reality is
that the Portfolio will not stop. However, you
The Target Situation should ensure that this issue is
Our organisation has a Strategic Plan communicated concisely to the right people
containing well-defined and agreed Strategic and included in key Portfolio documentation,
Objectives, each one also having associated such as the Portfolio delivery strategy and
targets and measures, which we review regularly Portfolio risks and issues registers.
and update as required.
Changes, because everyone has an interest in

The Portfolio Office works closely with the how their Change will be prioritised.
Performance and Strategic Planning team, who
own the Strategic Planning process and are
responsible for developing the Organisational Whilst Performance Management was already
Strategy. The Portfolio Office is heavily fully integrated into the Strategic Planning
involved once the Strategic Objectives are process, during the early days of PfM it was
defined. This is because they have the skills to almost impossible to understand how the
take the Management Board through the PfM Changes in the Portfolio would improve
Practices involved in defining the Portfolio. performance. This was because there was no
single place from which to obtain the
information about the Changes – we did not
The Strategic Planning process is on a three-year use a Business Change Lifecycle and so most
cycle incorporating an Annual Plan that defines Changes did not have a Business Case (with
the strategy in more detail – this includes well-defined benefits). Finally, benefits are usually
information on the performance targets and realised some time after the Change has been
Changes to the organisation for that year. Initially implemented and because of this time without a
we thought this could be our Portfolio Plan. PfM structure in place most people had moved on.
However, it became clear that the entirety of our
Portfolio Plan information was too much, so now
we provide a top-level Portfolio delivery 4.7 Collaborative working Portfolio Office and
diagram each year along with a summary and Strategic Planning Team
links to online Portfolio information.
For the benefit of this guidance, the Strategic
Planning process refers to the all-encompassing
This cycle works well because the Portfolio business planning process that has been
Direction Group goes through a Portfolio review summarised into the following two top-level steps
and prioritisation process every six months. (although it is recognised that in reality Strategic
Planning is more complex than this).
This ensures that the Portfolio continues to be
aligned to the Strategic Objectives (sometimes • Review the existing position, define the
Strategic Objectives need to be amended due Strategic Objectives, performance targets
to changes in legislation, an external event or and all other supporting information.
government agenda). So doing this every six • Identify how those Strategic Objectives
months not only ensures alignment but also will be achieved.
ensures that the Changes in the Portfolio
continue to be correctly prioritised and
resources continue to be allocated in the right
places. This also keeps people interested in the
28
In order to support the first step, the Portfolio At this time, the functions of particular importance
Office will be able to provide the most up-to-date provided by the Portfolio Office will be as follows.
information on the current Changes. The
• Analysis of the existing Changes currently
Management Board and the Strategy Team (often
being delivered.
the owners of the Strategic Planning process) will
• Assessment of those Changes based on
need this in order to identify where they are
the new Strategic Objectives.
before they can discuss where they want to go.
• Facilitation of top-level Portfolio planning
Supporting the second step, the Portfolio Office regarding the proposed new Changes to
will lead the work that is required to define the be included.
Portfolio and the Changes that need to be • Collation and definition of those Changes
included in order to realise the agreed Strategic into a Portfolio Delivery Strategy that
Objectives. The Practices within the Portfolio categorises and prioritises the Changes.
Definition Cycle provide the focused support at
this time. This ensures that the existing Changes Figure 4.3 outlines the Strategic Planning
continue to be delivered. process and the alignment of PfM.
Strategic Environmental Strategic Strategic

Confirmed Strategic Strategy
Planning Analysis Objectives Review
Changes Published
Team Setting
Categorise Ongoing Portfolio info

Existing Changes Strategic Objectives
Prioritise & Balance Six-monthly reviews
Portfolio Understand, Categorise, Prioritise, Balance, Plan

Office
Portfolio Delivery
Figure 4.3. Summary of the Strategic Planning process,

identifying the alignment of PfM.
29
Organisational Strategy Alignment: Keys to Success
An organisational strategy exists, containing well-defined and agreed Strategic Objectives

Strategic
with associated targets and measures.
objectives exist
Collaborative Portfolio Office works closely with Performance and Strategic Planning departments.
working
Performance expertise works with the Portfolio Office and helps specifically during the
Use experts planning and reporting elements.
The Portfolio Office leads on the Portfolio-related activities, ensuring alignment with the
Portfolio Office
Strategic Planning process.
leadership
A full review of the Portfolio should happen on a regular basis (every six months works
Regularly review well in many organisations).
Business Use of Business Change Lifecycle will ensure that the Management Board are involved in
Change decision making regarding which Changes will contribute most to the Strategic Objectives.
Lifecycle
Benefits of each Change are defined in the Business Case. This will allow performance
Benefits in
contribution to be understood.
Business Cases
Involvement of key departments in early Business Case impact assessment enhances
Early
collaborative working and quality of Business Case.
involvement
improves quality
30
4.8 P3O Managers) have to provide standard progress

reports. Initially this was an effort, but because
people now plan Changes properly and the
The Target Situation Portfolio Office uses standard templates it has
become far easier; plus managers know that if
A P3O Model exists to facilitate the levels of
they raise an issue it will be addressed by the
Change within the organisation, including a
right people much more quickly than it used to
Portfolio Office, Programme Offices and Project
be – so it is worth the effort. The Portfolio Office
Offices. The Portfolio Office reports to the
publishes the Management Dashboard on our
Director of Change, who is a Management Board
intranet each month so we can see how our
member and owner of PfM. Initially, when the
information is used.
Portfolio Office was set up, people thought it
would be a bureaucratic overhead. That was until
the Portfolio Office Vision and Blueprint7 was
The Portfolio Office also does other things that
agreed by the Management Board, which enabled
are important to the delivery of the Portfolio. For
everyone to understand what it would mean for
example, engaging with other key departments
them and how things would work in the future.
to make sure that people work together and have
a common understanding of the Portfolio. The
Portfolio Office team are experienced with PPM
Since then the Portfolio Office has implemented
and strategy, so the direct support they provide
and managed the Business Change Lifecycle
to the Programme and Project Managers is
and, very usefully, they published it on the intranet
credible and welcomed, especially with things like
with all the documents and guidance. Initially
planning workshops, Business Case
people didn’t want to invest the time to write a
development, benefits identification workshops
Business Case and a realistic plan, but once they
and helping work though the Business Change
saw that the Management Board actually used
Lifecycle.
the information and advice from the Portfolio
Office to agree (and reject) Business Cases,
everyone realised that if their Change was agreed
Communication is a key element to all of this
it would be included in the Portfolio.
and the Portfolio Office issues short briefings
regularly. They are also piloting enterprise
Programme Management software, which allows
Being in the Portfolio meant that the Change had
Plans to be centralised for all to see, as well as
the Management Board’s full commitment and
discussion forums and workflow, which is useful.
it would be prioritised and resourced
appropriately. Although some were unhappy
because their Change was given a lower priority,
4.8.1 The role of the Portfolio Office
or was even stopped, ultimately they recognised The OGC’s P3O guidance provides detailed
that the decision was made for the greater good information on all elements of a Portfolio,
of the organisation as a whole. Programme and Project Office. P3O highlights
that a Portfolio Office provides the means to do
the following.
The Portfolio Office publishes a Management • Assess whether new requirements can be
Dashboard each month, which accurately defines accommodated within existing
the progress of the Changes within the Portfolio to organisational capability, capacity and
the Management Board. This means that all of the maturity.
Programme Managers (and some Project
• Allocate the right resources to the right
7
Detailed examples of a P3O Vision and Blueprint can • Ensure scrutiny and challenge.
be found in OGC’s P3O Guidance.
31
• Identify and manage dependencies

between Programmes and Projects. Figure 4.4. Example P3O Model with key functions.
• Resolve conflicts and contentions for
scarce and costly resources (these could Figure 4.4 aligns the P3O Model to the Portfolio
be technical or business resources as Governance structure and indicates the key
well as Change resources). functions at each level, including Portfolio,
• Assist with identification of threats and Programme and Project.
opportunities and evaluate the true
implications of the aggregate level of
Programme and Project risk. In summary, Portfolio Offices differ from
• Monitor progress of Programmes and Programme and Project Offices in the following
Projects against key objectives. ways.
• Ensure ongoing successful delivery of
• Portfolio Offices are primarily concerned
with making the right Changes;
• Adopt Value Management – active
Programme and Project Offices are
management of the Portfolio to optimise
primarily concerned with making the
value, realise benefits and feed back
Change in the right way.
learning into the investment selection and
Portfolio prioritisation process. • Making the right Changes means those
• Achieve Value for Money savings and Changes that align best to the Strategic
efficiency gains from Programme and Objectives and at that particular time
Project rationalisation. attract acceptable risk, complexity, cost
• Ensure that the organisation has a and impact on Business as Usual.
balanced Portfolio with consideration
• Portfolio Offices are usually permanent
given to the ability to absorb Change with
and align with organisational financial
the least disruption to Business as Usual.
governance structures and decisions.
• Link Change benefits to the Performance Ideally they should have direct contact
Management structure. with the Senior Management Board.
• Ensure investment in Research and
Development activities for the long-term • Programme and Project Offices are
survival of the organisation. temporary structures set up to support a
specific Change initiative.
• A Portfolio Office is not simply a bigger
Programme and Project Office.
32
4.9 What is a Management Dashboard?

The P3O is responsible for designing and An example of a Management Dashboard from
implementing Management Dashboards at the main P3O guidance is shown in Appendix 3.
relevant levels of the Portfolio – i.e. the Portfolio
Direction Group and Portfolio Progress Group.
The Management Dashboard represents a rolled- Important Note: To assist with a number of P3O
up view of larger volumes of detailed reporting concepts, an online repository of sample sets of
information, allowing the Senior Management generic tools and techniques has been provided
Board to more effectively determine progress and electronically.
understand where attention and management To access this, go to http://www.best-management-
intervention may be required. practice.com/ and follow the P3O links. The tools and
The key input into the Management Dashboard is techniques are provided as a starting point for
information and progress reporting from the tailoring and alignment to the organisation’s
Programmes and Projects within the Portfolio. It requirements.
should be highlighted that this technique will only
be valuable if there is confidence in the
information, and this is directly related to the
quality of the Programme and Project information.
P3O: Keys to Success

The use of a P3O Model, including a Portfolio Office, is non-negotiable
Use of P3O is non-
because PfM cannot be implemented without it.
negotiable
The Portfolio Office management role must report directly to the Management
Direct link to
Board member to ensure ownership of the Portfolio at the highest level.
Management Board
Vision and Blueprint Management Board agree the Portfolio Office Vision and Blueprint which will
agreed support the implementation throughout the organisation.
Portfolio Office owns

The Portfolio Office owns the Business Change Lifecycle and provides expert
Business Change
advice to Programme and Project Managers where required.
Lifecycle and processes
PPM and strategy skills The Portfolio Office team is skilled and experienced in both PPM and
Strategic Management.
The Portfolio Office focuses on collaborative working with departments –
including Performance, Finance, Commercial, IT, HR – and is fully integrated
Collaborative working into the governance and decision-making processes at all levels of the
organisation.
Communication is key and creative mechanisms are in place to ensure a

Communicate creatively common understanding of the Portfolio.
The P3O designs and implements Management Dashboards that contain

Management
timely and accurate information enabling Senior Management to make
Dashboards
informed decisions.
33
4.10 Energised change culture aligned to the Strategic Objectives and focused
on performance. In some cases the actual
success of the Portfolio was linked to people’s
The Target Situation objectives and bonuses.
We were launching the five-year strategy and An HR Project was also included in the Portfolio,
decided to introduce PfM at the same time as which focused on people’s well-being. We
the launch. We did this for a number of reasons. asked people what they wanted and, most
First, because we knew that the improvements in importantly, we listened and implemented the
the strategy (which formed our Strategic ideas where we could. This included better
Objectives) were extremely tough and high risk, facilities, such as a crèche and gym, flexible
and that they would only be realised if everyone working time, more appealing office interior, home
pushed in the same direction. working, investment in training and a range of
other things which seemed to have an almost
Secondly, we were conscious of an internal
instantaneous positive effect.
perception that ‘the strategy is just a document
that gets produced and does not really affect me’. Communication became a critical aspect when
Finally, we felt that, while a clear strategy is the Changes started to deliver successfully,
critical in terms of talking about where you are because historically people did not have the time
going and how you are going to get there, we or the energy to celebrate success. This is not the
needed a vehicle to actually get us there, so case now, and we make sure that everyone
the introduction of PfM was seen as that knows when there has been a success. In
vehicle. return, when things are tough, people work to
make it a success.
This presented us with a challenge: we needed to
make the team (the whole organisation) feel
engaged, inspired and motivated. Someone
asked ‘Do we have the energy for all this
change?’ and there was a realisation that the
organisation as a whole needed to be energised.
Historically the organisational strategy was
created by the Management Board alone.
However, this time a number of consultation
workshops were used before it was published,
which enabled people to be engaged and
present questions directly to the Management
Board.
The Management Board’s communication of
the strategy and the Portfolio was designed to
be much more informative and compelling, and it
translated the strategy into real-life situations in a
way that people could instantly relate to. There
was a key message that people working in the
organisation were viewed as part of one team
and not just departments. Everyone was
important to the new strategy, everyone had to
be engaged and everyone needed to feel
ownership. A key part of this was to review
people’s objectives (starting with the Management
Board) and make sure they were accurate,
34
Energised Change Culture: Keys to Success
Collaborative working View the organisation as one team and focus on creating a collaborative
Business Change focused environment.
Proactive Ensure that regular, proactive and compelling communication is published
communications from the Management Board, particularly communicating decisions made and
successes from the Portfolio Direction Group.
Share information Share information within and across teams and create a learning environment
in which everyone can take part – online learning centres and lessons
learned presentations work very well.
Business Change Use of a standard Business Change Lifecycle used by all Programmes and
Lifecycle Projects to enable people to understand what they need to do and to work in
standard way.
Effective processes Portfolio Office processes (including Portfolio Reporting) must add value and
be perceived as consistent, transparent, accurate, objective and fair. In
addition, there are a number of other organisational processes that must be
effectively aligned to those of PfM to ensure success, such as financial and
Strategic Planning processes.
Roles and relationships Document roles and relationships with individuals and groups. Communicate
creatively and effectively, ensuring that the role descriptions focus on
performance and help people to understand their links to the Strategic
Objectives.
Listen Involve people, listen to them and get them to contribute. Ensure that they
can see how their contribution has been incorporated into the Portfolio.
35
5.0 PfM Cycles
5.1 Purpose of this chapter Why Cycles and not stages or steps?
This chapter discusses in detail the two PfM Cycles The PfM Cycles and PfM Practices are both
(Portfolio Definition and Portfolio Delivery), with completely interrelated and continuously working at
Chapters 6 and 7 discussing the PfM Practices varying speeds. As such, the PfM Model does not
found within each Cycle. have a mandated starting point, middle or end.
In these chapters, each of the PfM Cycles and PfM Different organisations have different triggers and
Practices are discussed by answering the following needs to start using PfM, which could come in the
questions. form of a cut in budgets, an external event or a
sudden realisation that ‘We can’t keep doing
• What is the purpose?
everything’. Similarly, organisations will usually have
• What happens if we do this well? different starting points, which can be dependent on
many things, including their existing Portfolio,
• What happens if we do not do this well?
Programme and Project Management capability,
culture, financial position and leadership.
5.2 PfM Cycles As long as an organisation is energised to start
using any of the PfM Practices, and that energy is
The PfM Cycles were introduced in Chapter 2, but it
maintained, it will begin rotating the Cycles and the
is useful to review the diagram again here to refresh
interrelated nature of the PfM Practices will
your memory (see Figure 5.1).
automatically instigate the use of other PfM
Figure 5.1. PfM Cycles and PfM Practices.
Practices at a pace relative to the amount of effort
that is invested.
Benefits
Management
Financial
Management
Management
Control
Organisational Risk
Energy Management
Prioritise
Stakeholder
Resource Engagement
Management
Balance Plan
Organisational
Governance
36
Important Note: Whilst it has been highlighted that

there is no mandated starting point to implementing
PfM, the PfM Practices within the Portfolio Definition
Cycle are ordered in such a way that they reflect the
ideal approach to progressing through the Cycle, and
each is discussed in this chapter.
5.2.1 If you are saying there is no defined start, • A planned approach and confirmed Senior
how do you start to implement PfM? Management buy-in significantly reduces
the risk of failure.
Most organisations start using PfM by one of two
• In the majority of cases, the Creation
ways, or in some cases using a combination of both. approach will be quicker.
For the benefit of this guidance, the two approaches
will be described as Creation and Evolution, To support the Creation approach of implementing
described in Table 5.2. PfM, OGC’s P3O guidance contains a
recommended implementation lifecycle that can be
used to implement the Portfolio Office. Following
Implementing PfM is viewed as a this lifecycle will guide the implementation of the
Business Change Project in its own PfM processes and procedures in a structured and
right and is therefore planned in planned way.
detail with specific targets and
outputs and agreed by the
Management Board. Although the 5.2.3 Why does Organisational Energy link the
starting position on the PfM Cycles PfM Cycles?
Creation is not mandated, the optimum
Organisational Energy will be a new expression to
position would be by progressing
many people (and possibly a reminder of the 1970s
through the Portfolio Definition
to others).
Cycle starting with the ‘Understand’
PfM Practice whilst the existing However, the use of the phrase is extremely
Change continues to be delivered. significant because, similar to PfM itself, it is a
relatively new and rapidly evolving reality within
management practices. Organisational Energy is
Implementing PfM does not have a defined by the NHS Institute for Innovation and
defined plan; it is more about Improvement8 as ‘the extent to which an
evolution. As soon as the first PfM organisation has mobilised the full available effort of
Practice becomes useful, its its people in pursuit of its goals’.
interrelationships with all other PfM
It is not within the scope of this guidance to further
Practices means the others begin
Evolution develop the field of Organisational Energy.
working too. Provided that the
However, it is critical to appreciate that, while PfM
momentum of effort is sustained,
will provide principles and practices to enable
the PfM Cycles rotate to a point
informed decision making, it is the collective effort of
where effective PfM is being used
the people (and the effective management of that
and the desired PfM maturity is
effort) within the organisation that will be the
achieved.
deciding factor on whether or not the Strategic
Objectives are achieved.
Table 5.2. Creation and Evolution approaches to
Therefore, Organisational Energy, from the
implementing PfM.
perspective of PfM, refers to a collection of critical
5.2.2 What is the best approach? organisational elements – including leadership,
direction, management, motivation, well-being,
Either approach can be suitable for different effective communication, teamwork, skills and
organisations. However, the optimum way of experience – all of which must come together in
implementing PfM would be to adopt the Creation order to release the organisation’s collective energy
approach. The reasons for this are as follows. in the right direction.
• Planning the implementation of Changes is
recognised Best Practice. 8
Organisational Energy in the NHS, by Stanton Morris,
May 2007.
37
5.3 Portfolio Definition 5.4 Portfolio Delivery

5.4.1 What is the purpose?
5.3.1 What is the purpose? The purpose of the Portfolio Delivery Cycle is to
implement the Changes as agreed in the Portfolio
The purpose of the Portfolio Definition Cycle is to
Delivery Strategy, ensuring that the Strategic
bring together the key information that will provide
Objectives are achieved.
clarity to Senior Management (and the wider
organisation) of which Changes to Business as
Usual will contribute the greatest benefits to
5.4.2 What happens if we do this well?
Strategic Objectives. The key output of the Portfolio
Definition Cycle is the Portfolio Delivery Strategy, The Portfolio Office will ensure that all governance
which will enable the Management Board to make procedures, processes and standards defined in the
confident decisions regarding the scope of the Portfolio Delivery Strategy are implemented
Portfolio, the justification for undertaking the effectively.
Changes and how the Portfolio will be delivered.
This means there is a much higher chance of
5.3.2 What happens if we do this well? collaborative working being maintained, the
organisation being energised and Changes being
The overriding benefit of the Portfolio Definition
delivered successfully, all of which will drive the
Cycle is its focus on providing clarity, which enables
realisation of the Strategic Objectives.
the Management Board to make informed PfM
decisions.
Defining the Portfolio does not mean that everything 5.4.3 What happens if we do not deliver the
in the Portfolio must be planned in detail. Indeed, it Portfolio?
is wrong to attempt to do that because that is the
The Portfolio delivery is aligned to the longevity of
role of Programme and Project Management.
the organisational strategy, which means it will be
However, being able to understand a top-level
managed over a number of years (usually three, but
schedule (supported by a description of the
it can be up to ten in some organisations). During
Changes), estimated resource requirements,
that time, Changes will occur both externally and
timescales and risk will enable Senior Management
internally. If the Portfolio Delivery Cycle is not
to agree the way forward and in so doing enable the
managed properly, the consequences are very
whole organisation to understand the Portfolio.
simple: the Changes will not be delivered
successfully and the Strategic Objectives of the
organisation will not be achieved.
5.3.3 What happens if we do not define the
Portfolio?
If the Portfolio Definition Cycle has been excluded or 5.5 Symptoms of poorly managed Portfolio
not managed properly, you can guarantee that the Definition and Delivery Cycles
Portfolio delivery will not be successful. Yes, one or
Where the Portfolio Delivery Cycle and Portfolio
two of the Changes may well be implemented on
Definition Cycle are not managed effectively, an
time, to budget and to quality, but that will probably
organisation will experience some of the symptoms
be due to luck and shouting the loudest, rather than
identified in Table 5.3.
informed decision making.
Even if one or two Changes are delivered, in the
absence of the Portfolio Definition Cycle you cannot Important Note: Without effective PfM, it is
be sure that the benefits of that Change actually very easy to successfully implement the ‘wrong
contributed to the organisation’s strategic objective. change’ – i.e. one that does not contribute
The chances are that they did not, and so the benefits to the organisation’s Strategic
Change was not a success at all. Objectives.
38
PfM element Symptoms of Portfolio Definition and Portfolio Delivery mis-management
No evidence, and therefore limited confidence, that Changes will enhance Business
Strategic Objectives
as Usual and achieve Strategic Objectives.
Resources are wasted because they are not aligned to priorities. Timescales
continually slip and run over budget because resources are not allocated effectively
Resources
to the most important Changes. On occasions, Changes are implemented and cause
operational disruption, triggering further resource issues for recovery.
There is no consensus view of which Changes need to be delivered, Changes are
not prioritised and people have to battle continuously for resources that are quite
Which Change?
possibly already working over capacity. New changes appear from nowhere and no
one is really sure what they are delivering.
Changes that do not support the Strategic Objectives, or even Changes that impact
Existing ‘rogue’ negatively on the Strategic Objectives, continue to be delivered. Even though people
Changes may know there are ‘rogue’ Changes, there is no mechanism to prove it or make a
decision to stop the Change.
Heightened political intensity and reduced organisational teamwork exists,
particularly at Senior Management levels, due to a lack of understanding of the
Teamwork Changes and links to Strategic Objectives. People have to battle for resources and
do not have the energy or desire to work collaboratively. People do not feel
committed to the organisation and many people may be looking for other jobs.
Senior Management will not have a collective view of the future and therefore cannot
lead towards it or communicate the end state and the new organisation. Decision
Leadership making at the top level is not forthcoming, which causes more confusion within the
organisation. People are not motivated to invest time writing Business Cases,
planning or implementing Changes using Best Practice because they do not have to.
Many people are saying many things and it is hard to understand what is going on.
Mixed messages cause continual fire-fighting in order to correct stakeholder
Communication
perceptions. Key internal and external key stakeholders feel excluded and are not
happy.
Teams delivering the Change and teams receiving the Change are not motivated or
Motivation
energised to change due to limited leadership and support from Senior Management.
Lack of PfM process and leadership support creates a de-motivated working
Staffing environment, which causes key people with key skills to leave the organisation
before the Change is implemented.
Table 5.3. The symptoms of not managing the Portfolio

Definition and Portfolio Delivery Cycles properly.
39
6.0 Portfolio Definition Cycle: PfM Practices
6.1 Purpose of this chapter Changes; they will also require information from
other areas of the organisation, including
This chapter provides a detailed discussion of the
performance information, budget positions, and
PfM Practices found within the Portfolio Definition
SWOT and PESTLE analyses.
Cycle. For ease of reading, each PfM Practice is
described by answering the following two questions. Once the Strategic Objectives are defined, the next
step is to identify a collection of proposed Changes
that will deliver those objectives. This will usually
• What is involved? involve another Management Board meeting and it
is essential that the Portfolio Office facilitates or
Important Note: All PfM Practices are attends this particular meeting, because not only
discussed by providing examples of how can it provide a framework for identifying Changes –
organisations have made use of them. It is i.e. capturing the key information – but during the
critical that you appreciate fully your own discussions it can prompt questions such as initial
existing processes before you implement any thoughts on priority and resources considerations,
of the following within your organisation. which are often forgotten in the freedom of blue sky
thinking.
6.2 PfM Practice 1: Understand The output of this meeting will be strategic-level
proposed Changes that will include a number of
existing Changes. This is the point at which you can
6.2.1 What is the purpose? start to define the proposed Change in more detail
During the Strategic Planning process, Strategic and it is this information that will provide the level of
Objectives will be created. In order to create these, understanding required to categorise and prioritise
the Management Board will need to understand the Portfolio.
information relating to the existing Changes within The Portfolio Office will clarify the detail of each
the organisation. During the agreement of the Change by consulting with the relevant
Strategic Objectives the Management Board will Management Board members (and their teams).
discuss existing Changes and proposed new Capturing this information can be challenging,
Changes, all of which need to be analysed in more particularly if the information does not already exist
detail as part of the Portfolio Definition Cycle. or if it concerns future Changes which might still be
a mere concept. Therefore, working through a
standard template (such as a Programme and
6.2.2 What is involved? Project Information Template) will help to capture
During the Strategic Planning process the Portfolio the correct and standard information for each
Office will be working closely with the Strategy Change. See Appendix 4 for suggested contents of
Team. In order to enhance the Management Board’s a Programme and Project Information Template.
setting of Strategic Objectives, the Portfolio Office
will provide a collection of information relating to a Important Note: When all of this information is
review of the existing Portfolio (or, if a Portfolio does collated and the Portfolio Office has undertaken
not yet exist, the Portfolio Office would have initial analysis, it is worth drafting an interim
undertaken a review of existing Changes). report and issuing it to the Management Board
for information. At that point, be sure to highlight
The Management Board will not create the Strategic that initial categorisation and prioritisation is
Objectives by using only the review of existing currently being undertaken based on the
information.
40
Understand: Keys to Success

Portfolio Office and The Portfolio Office works closely with the Strategic Planning Team to
Strategic Planning ensure that both processes are aligned.
Portfolio Office The Portfolio Office should facilitate the Management Board meeting that
facilitates planning identifies of proposed Changes.
meeting
Engaging Management When the Portfolio Office works with the Management Board members
Board and teams and their teams, populating the Programme and Project Information
Template, it should be seen as a good opportunity to build relationships.
Interim report Collation of all populated Programme and Project Information Templates
into an interim report will ensure that the Management Board maintain
involvement and understand the other activities taking place.
41
6.3 PfM Practice 2: Categorise Figures 6.1 and 6.2 are simplistic, yet powerful,
examples of Portfolio categorisation. They highlight
Strategic Objectives, their Portfolio categories and
6.3.1 What is the purpose? how the proposed Changes are aligned.
Categorisation helps to organise the Changes into From this it is possible to see that proposed Change
groups of similar organisational needs based on the number 6 is not aligned to any strategic objective
Strategic Objectives (or other grouping as required). and should be removed. It is also clear that the
‘partnership working’ category has no Change
aligned to it and should either be removed as a
6.3.2 What is involved? category or Changes added if needed.
Organisations will categorise Changes in different Once each Change has been aligned to a category,
ways. Some might be based on direct Strategic the data can be modified and represented in various
Objective alignment – i.e. the category is the same formats. It is particularly useful (especially for the
theme as the objective – and some might be based Management Board) to review this early balance of
on the type of technology – i.e. web services, the Portfolio in a graphical format, as seen in Figure
disaster recovery and networks. 6.2.
For the benefit of this guidance, focus will be on the It is worth highlighting that the relationship of
use of categories that are based directly on the Change to category may not always be a one-to-one
themes of the Strategic Objectives. Sometimes it relationship, and in such cases you should be
may be suitable to break down the category into particularly careful to ensure that the links from the
sub-categories. For example, ‘Reducing the fear of Changes to the Strategic Objectives are well
crime’ as a category is too broad, so it would be defined.
useful to have a number of sub-categories to
Please note that all information is used purely for
increase the focus and alignment of each Change.
illustration purposes.
The information captured in the Programme and
Project Information Template can be used to identify
which category (or sub-category) the proposed Important Note: At whatever point PfM is
Change should be aligned to. This is achieved by implemented, it is highly likely that an
linking the benefits to the category in question. organisation already has a number of
In mature PfM environments there may be ‘entry changes in progress. These must be
criteria’ for a given category – i.e. only Changes that included when considering the scope of the
contribute x amount of value to the strategic Portfolio.
objective will be included.
Only when you have aligned the proposed Changes
to the categories for the first time and undertaken
initial analysis will you see early signs as to the
balance of the Portfolio.
42
Figures 6.1 highlights how the selection of Changes

can be aligned to the various Portfolio categories,
which in turn are aligned to the Strategic Objectives.
Figure 6.1. Simplified Portfolio Categorisation Model.
Figure 6.2 is another simple representation of the

amount of Change per category. Other information
can be added from the Programme and Project
Information Template, such as financial investment
requirement for each category or total risk.
Figure 6.2. Number of Changes aligned to Portfolio

categories.
43
Important Note: Getting to this position is an achievement and it is always interesting to see the
trends that were not recognised before, such as categories having too much change assigned to
them or gaps where no change is assigned. In the example above, failure to go through just this
key practice alone would have meant that 33% of the Improve Public Access to Service Strategic
Objective would not have been delivered!
Beware: During this process you may have identified that some proposed Changes do not
contribute to the Strategic Objectives. The communication of these must be managed very
carefully as there is a high chance that the Change should be stopped. If this is the case, it would
be the first time a change has been rejected, which is a big indication of improvement.
Categorise: Keys to Success

Enables a clear understanding of which Changes contribute to the
Strategic Alignment strategic objectives and which ones do not.
Time spent populating the Programme and Project Information

Define Changes Template pays dividends during categorisation.
Categorisation allows you to see for the first time the balance of all the
Balance for the first
Changes across the categories.
time
The use of creative graphical representation helps to understand the
Be creative contribution of the Changes to the Strategic Objectives.
Entry criteria can be applied to each category, which can be based on a

range of aspects, for example the amount of financial return or
Entry criteria
efficiency savings.
Ensure Management Board are kept fully up to date with the work
being carried out, be especially clear if the analysis indicates that some
Communicate
existing changes are not aligned to the strategic objectives.
44
6.4 PfM Practice 3: Prioritise concepts will be discussed using simplified

examples that can be used (and enhanced very
easily) to suit any organisation.
Prioritising ranks the Changes within the Portfolio
6.4.3 Prioritisation criteria
based on one or more agreed measures. It is critical
that the strategic measures are tailored to your OGC uses a tiered model that allows Changes to be
organisation, some of which can include strategic prioritised as Mission Critical, Highly Desirable or
alignment, reputational risk, contribution to the Desirable. Some organisations venture deeper and
Organisational Blueprint, complexity, business create ranking criteria using weighted scoring
benefits, attractiveness, achievability, costs and techniques. This is a particularly useful exercise,
return on investment. especially in organisations where everything is top
priority.
Prioritisation information helps Senior Management
answer the following questions. The steps to weighted prioritisation are:
• Should we do it? 1. Create a prioritisation criterion that
represents the things your organisation
• What are the most important Changes? views as important when considering an
• What Changes must be resourced above all investment in Change.
others? 2. Agree the importance of each criterion on
• What Changes have the most risk attached? the list by assigning a percentage of
importance to each criterion (ensure the
total percentages of all criteria add up to
6.4.2 What is involved? 100).
3. Agree the evaluation scoring model. A basic
The above questions can only be answered when example being:
the proposed Changes have been prioritised, • 0 = no contribution
meaning each of the Changes have been ‘ranked’ • 5 = some contribution
based on agreed criteria that suit your organisation. • 10 = high contribution.
In mature PfM environments prioritising can be a 4. For each Change, use the scoring model for
highly complex and mathematical process. Some each prioritisation criterion.
organisations use software tools to enable robust
5. Collate all prioritisation information and
and repeatable prioritisation processes, and some analyse.
include prioritisation of the Strategic Objectives
before prioritising the Changes in the Portfolio.
However, for the purposes of this guidance the key
45
Name: PROPOSED CHANGE 1 Contribution
Weight None Some High Score Total
Prioritising Change Criteria

Supports at least one strategic
1 20% 0 5 10 10 2
objective
Realises significant benefits in a short
2 20% 0 5 10 5 1
time with low risk
3 Contributes to external targets 10% 0 5 10 0 0
Complies with a legislative
4 25% 0 5 10 10 2.5
requirement
Addresses an area of under-
5 5% 0 5 10 5 0.25
performance
6 Improves efficiency 5% 0 5 10 5 0.25
7 Mitigates against corporate risk 10% 0 5 10 10 1
Honours an existing contractual
8 5% 0 5 10 10 0.5
obligation
Change Priority Score 7.5
Figure 6.3. Scoring a proposed Change against weighted

prioritisation criteria.
Based on this information it is possible to develop

more creative representations of the information.
6.4.4 Example prioritisation mechanism For example, Figure 6.5 illustrates a simple bubble
This section provides an example of how to prioritise matrix, which shows a combination of important
Changes and link decision making to the information such as risk-versus-benefit mapping.
prioritisation findings. The size of the bubble represents the relative size of
the budget and the organisation’s tolerance to risk,
Figure 6.3 is an example of a proposed Change that which is defined by the position of the red dotted
has been assessed using the weighted prioritisation line.
score.
Immediately it is clear to see that Change 8 is high
When each Change has been scored, the risk and returns low benefits, despite having the
information can be collated into a single chart. third largest budget. It is therefore likely that this
Sorting by descending priority order allows you to Change should be reviewed.
see immediately which Changes are most important
to your organisation. Table 6.4 contains a basic
prioritised list of Changes. Also added to this is a
simple risk and benefit grading, which can be based
on the Business Case (your chart will no doubt
contain more detailed information for each Change).
46
Priority
Score
Priority Change Name Budget Benefit Risk

1 Proposed Change 2 £5.1m H H 10
2 Proposed Change 6 £1.6m H M 10
3 Proposed Change 5 £4.1m H M 10
4 Proposed Change 1 £1.1m M M 7.5
5 Proposed Change 8 £550k M M 6
6 Proposed Change 7 £100k M L 5
7 Proposed Change 3 £2.1m H H 2
8 Proposed Change 4 £3.1m L H 2
Table 6.4. Collection of proposed Changes that have

undergone prioritisation assessment.
High Reject
8 1
5 3
4
Level of Risk Med 2
Consider
7
6
Low High
Med
Benefits Return
Figure 6.5. Bubble matrix mapping Changes based on

benefits and risk.
47
Prioritise: Keys to Success
Focus minds The prioritisation practice focuses people’s minds on the most important
Changes and clearly identifies the Changes that are least important.
Tailored for your The prioritisation criteria must be suitable for your organisation and can
organisation include reputational risk, political need, and a weighted measure for the
contribution to the Organisational Blueprint (or Future Operating Model).
Management Board Management Board must agree the prioritisation criteria and are the key
involvement decision makers regarding the final prioritised Changes.
Weighted scoring helps Weighted prioritisation criteria help to rank the Changes.
Prioritise each Change Work through the prioritisation criteria for each proposed Change.
Be creative Be creative with how you represent the findings. Graphical representation can
be particularly useful.
48
6.5 PfM Practice 4: Balance It is rare that a balanced Portfolio will be agreed
from a single meeting, so the Portfolio Office should
be prepared to go back and modify the balance to
6.5.1 What is the purpose? accommodate amendments.
Balancing a Portfolio means juggling all Portfolio
elements in order to find the ideal mix of Changes.
6.5.3 Being creative to support decision
For example, the mix that has the greatest potential
making
to collectively achieve the organisation’s Strategic
Objectives within the constraints of resources The value added by the Portfolio Office should
(money, people, facilities, etc.), time and risk. include the development of creative and easy-to-
understand representations of the balanced
Portfolio. Sending one chart with all the information
6.5.2 What is involved? to the Management Board will definitely not suffice
in this situation.
Whilst some form of balancing occurs throughout
the Portfolio Definition Cycle, it is only when the The bubble matrix in Figure 6.5 provides a good
collection of proposed Changes are categorised, example of how to graphically represent Changes
prioritised and viewed together with other key based on budget, risk and benefit return. In addition
organisational information that detailed analysis and to this, you should consider what other elements are
balancing decisions can be made. important to your organisation’s Portfolio and how
they relate to organisational constraints.
Balancing is not achieved by the Portfolio Office
working on one spreadsheet in isolation; other The following are examples of information that is
information is required from various teams within the useful to graphically represent.
organisation. This will consist of resource capacity,
• High-level Portfolio showing indication of
organisational performance information, asset
resource availability.
management and organisational financial
information. • Cost of investment per category.
It is for this reason that the Portfolio Office must • Percentage contribution towards Strategic
work collaboratively with other departments, Objectives by category.
ensuring a joined up approach.
• Overall cost profile based on initial schedule.
While there are many books on the process of
• Areas of the organisation impacted by the
balancing a Portfolio, the application to an
totality of Changes.
organisation is perhaps more individual than any
other PfM Practice. It can be complex and time • Anticipated performance Changes based on
consuming. Therefore, it is unrealistic to expect the initial Portfolio schedule.
Management Board to be involved directly. The
• Risk associated with each category.
Portfolio Office must keep the Management Board
up to date while they lead on relevant consultations • Resource levels and capability.
via workshops or individual meetings.
Only after this consultation and analysis can the
Portfolio Office present to the Management Board
the proposed balanced Portfolio together with
supporting recommendations. Bear in mind that
many organisations implement far too many
Changes at the same time and it is therefore not
uncommon for the recommendations to include the
closure or one or more Changes.
49
Important Note: Portfolio and Programme Management software packages can be extremely
useful when balancing because most packages enable a range of constraints to be added and
changed to suit your organisation. Provided that the software has been configured correctly and is
populated with the right information, various calculations and balancing analyses can be instantly
available.
Balance: Keys to Success
Some form of balancing exists throughout the entire Portfolio Definition

Cycle. However, it is most powerful when all categorisation,
Power in balancing
prioritisation and other key information is available.
Ensure that the Management Board understand their role in the

Set expectations of balancing processes, the information they will receive and the decisions
Management Board they will be required to make.
Portfolio Office must ensure appropriate consultation with the

Consultation is key Management Board and various teams when balancing the Portfolio.
Present findings and information to Management Board in creative and

Present findings easily understandable formats. The information should be summarised
creatively but enable drill-down of key information where required.
Ensure that recommendations such as stopping or re-scoping a Project

Evidence findings
can be justified.
Provide additional information where required that will help the

Additional information
decision-making processes.
helps
50
6.6 PfM Practice 5: Plan The Portfolio Delivery Strategy should be presented
to the Management Board by the Director of
Change. While the name of the various sections in
6.6.1 What is the purpose? the Portfolio Delivery Strategy may vary between
organisations, the value realised from them should
The Planning Practice focuses on collating
not.
information from the Portfolio Definition Cycle (along
with other planning information where required) and Appendix 5 contains a description of the key value
creating a Portfolio Delivery Strategy. The objective that should be realised from the Portfolio Delivery
of the Portfolio Delivery Strategy is to enable all Strategy.
stakeholders to understand the Portfolio and, most
importantly, to enable the Management Board to
make informed decisions regarding the content and Important Note: Some elements of the Portfolio
delivery. Delivery Strategy have not been described in detail
in this guidance. Comprehensive guidance for
areas such as Risk Management, Benefits
6.6.2 What is involved? Realisation Management, Blueprint,
Creation of the Portfolio Delivery Strategy is a Communications Planning, Stakeholder
complex process. It is completely individual to your Engagement, Business Case development and
organisation and extremely challenging. It will Portfolio Office set-up are available in other OGC
undoubtedly vary in both format and name. published guidance and online at www.ogc.gov.uk.
Depending on your organisation, it could be a single
document, a presentation or a collection of new and
existing documents. Some organisations may call it
6.7 Dependency Management
a Strategic Delivery Plan, a Portfolio Plan or a
Change Strategy. A critical part of any plan at any level of Business
Change – be it Project, Programme or Portfolio – is
Irrespective of the name and format in your
dependencies. Within a simple Project this is
organisation, fundamentally the Portfolio Delivery
relatively easy, but in a complex Programme and
Strategy should contain concise and accurate
Portfolio environment it is particularly challenging to
information, so that when presented appropriately it
identify, track and manage dependencies effectively.
will enable the Management Board to make
informed decisions regarding the following. The P3O is critical to the success of this because,
as part of the planning process, the dependencies
• Confirmation of the Portfolio scope,
should be identified within each Project, Programme
categories, prioritisation and schedule of
and Business Plan. It is also the responsibility of the
Changes included in the Portfolio.
P3O to work with the Programme and Project
• Key benefits, impacts on performance, Managers to ensure that dependency information is
contribution to Strategic Objectives and accurately summarised at the Portfolio level within
Public Service Agreement (PSA) Targets. Management Dashboards.
• The estimated overall resource If dependencies are not managed properly there is a
requirements (including skills and finance) high risk that that the Plans at all levels will not be
and capacity to change. realistic. Furthermore, when Changes occur within
• Key risk areas and key issues that need the Portfolio it will be very difficult to assess the
immediate resolution. overall impact.
• Stakeholder Engagement and Some of the key challenges and solutions in

Communication. Dependency Management are set out in Table 6.6.
• Clear illustration of the interdependencies

between Changes and their outcomes.
51
Typical Dependency Management Possible Solutions

Challenges
Even if all Plans are of poor quality, as a minimum the

P3O team can work with the Programme or Project
Managers to investigate what they deem to be the key
Our Programme and Projects are not
dependencies in their work. This information can be
planned very well, so how do we get
captured, investigated and reported at a wider Portfolio
dependency information?
level. A dependency should be added to the Portfolio
schedule, highlighting that Management Board decision
making is dependent on quality Plans.
A dependency can be anything that will influence the
schedule of the Change. Most dependencies come in
What type of dependencies exist? the form of key decisions (internal or external), linked
products, resource capacity, benefits, outcomes and
risks.
There is a wide range of approaches to documenting
dependencies. For example, as part of Benefits
Realisation Management in MSP, Outcome
Relationship Modelling is used. In some organisations a
central planning software tool can link all dependencies
and aggregate the impact on benefits and provide a
How do we document dependencies? report automatically. In others the Portfolio Office has a
basic list which is updated each month as part of the
reporting process.
The key is to gauge the information available to you and
how that should be best represented within your
organisation based on your current maturity. The skills
of the P3O team are critical.
The P3O team must clearly highlight the most important
dependencies at the Portfolio level, which will usually
include external factors. A useful way to represent this
How do we present this complex is by highlighting key dependencies in the Portfolio
information to the Management schedule. These should be numbered and defined
Board? within the Management Dashboard, with clearly defined
decisions required. Some organisations link
dependencies to the Risks and Issues Log, which can
also be incorporated into monthly reporting cycles.
Modify a version of the prioritisation practice to focus on
How do we know what the most dependencies. The P3O team should work through
important dependencies are? each dependency and calculate which are the most
important.
Table 6.6. Key challenges and solutions for managing

dependencies.
52
6.8 Portfolio capability, capacity and resourcing Planning the most effective use of internal resources
must be balanced against engaging external
An important factor to be taken into account during
resources with appropriate skills and capability. It
the PfM Definition Cycle (and also as part of
may be more cost effective to delay a Programme or
Resource Management during the PfM Delivery
Project until the appropriately skilled internal
Cycle) is the organisation’s ability to deliver its
resources are available. However, organisational
commitments through a suitably skilled resource
strategy may dictate fixed delivery timescales, in
base.
which case external staff will need to be employed.
This is an example of how Resource and Capacity
Plans can help with forward planning for recruitment
The key questions to ask are as follows.
and training, whether on a permanent or temporary
• Do we have the right people with the skills basis.
and capabilities to deliver the Portfolio? and
Without effective resource and capacity planning,
• Are those people available in a timely
‘just in time’ recruitment may incur delivery delays or
manner to meet the commitments of the
Portfolio? excessive costs, or in some cases both. The P3O
main guidance provides more details on capacity
planning for Resource Management.
Each Programme and Project within the Portfolio will
require one or more people to deliver products and
carry out tasks. These people require specific skills
Important Note: While it was highlighted previously
and capabilities to carry out their assigned roles. As
that PfM is not just ‘bigger Programme
part of the planning process within the Business
Management’, the Portfolio Delivery Strategy has
Change Lifecycle, each Programme and Project
similarities with the Programme Definition within
must schedule the required skills and resources,
Managing Successful Programmes (MSP).
including those required from the Business as Usual
Therefore, you should ensure familiarity with MSP
functions. All this information will contribute to
before creating the Portfolio Delivery Strategy.
Resource Plans at Project, Programme and Portfolio
level.
In a Portfolio, the Resource Plans of all
Programmes and Projects should be amalgamated
to enable an understanding of the Portfolio resource
requirements – i.e. what resources (people with
skills and capability) are required and for what time
periods.
A key PfM function is to flex this Portfolio view and
negotiate resources with stakeholders to ensure
best use across the entire Portfolio, while taking into
account the operational needs and requirements.
This should be complemented by a forward-looking
capacity plan highlighting commitments and
availability (including holidays, courses, etc.).
Therefore, the capacity plan can be used in planning
new Programmes and Projects to show where spare
capacity exists. Capacity planning should be aligned
with the risk and issues process, as it is surprisingly
common for entire Programmes to stop due to one
key person’s absence through illness.
53
Plan: Keys to Success
The Portfolio Delivery Strategy is the main output from the Portfolio Definition
Portfolio Delivery
Cycle. It is critical that everyone understands its purpose and importance.
Strategy is key
The size and format of the Portfolio Delivery Strategy is irrelevant; the value
Focus on value that it should provide to all stakeholders is not.
Management Board must agree and fully commit to the Portfolio Delivery
Management Board
Strategy.
endorsement
The Portfolio Office should lead on the creation of the Portfolio Delivery
Portfolio Office takes Strategy, ensuring that all stakeholders are engaged in its development and
the lead support the recommendations to Management Board.
Although the Portfolio Delivery Strategy represents a highlight complex

situation, it needs to be kept relatively simple otherwise there is a high risk of
Keep it simple
confusing and alienating stakeholders.
54
7.0 Portfolio Delivery Cycle: PfM Practices
7.1 Purpose of this chapter Change is aligned to the organisational Blueprint,

thereby allowing clear alignment to the future needs
This chapter provides a detailed discussion of the
of the organisation.
PfM Practices found within the Portfolio Delivery
Cycle. For ease of reading, each PfM Practice is Using a standard Business Change Lifecycle is the
described by answering the following two questions. key enabler for the Portfolio reporting mechanism.
The Portfolio Office controls the progress reporting
from each of the Changes on a regular basis and
• What is involved?
collates this information for the Management Board
in the form of a Management Dashboard.
Important Note: All PfM Practices are
discussed by providing examples of how This contains the top-level progress information, key
organisations have made use of them. It is risks and issues, decisions required and (when
critical that you appreciate fully your own existing required) other more detailed information regarding
processes before you implement any of the performance, dependencies and achievement of
following within your own organisation. Strategic Objectives.
The top-level Portfolio Plan is agreed and forms a
baseline of what is to be delivered and how it is
7.2 PfM Practice 6: Management Control controlled during the course of the Portfolio. The
Portfolio Office will ensure that all processes are in
place to enable escalation of risks, issues and
7.2.1 What is the purpose? decision making at the right level regarding
alterations to the Portfolio schedule, priorities,
A standard Business Change Lifecycle exists,
dependencies and resources.
ensuring that effective decision-making processes
are implemented at all levels in the Portfolio and Controlling such processes can be extremely
continue to add value as the Portfolio delivers complex and this is why the Portfolio Office provides
Changes. and facilitates training/awareness on PfM elements,
the Business Change Lifecycle and/or software
packages where required.
7.2.2 What is involved?
Further information can be found in other OGC
The Business Change Lifecycle is used to control guidance.10
the delivery of all Changes in the organisation. This
contains definitions of all processes that need to be
followed to ensure that decisions are made at the Important Note: When designing the PfM reporting
correct times. This will include go/no-go gates, process, ensure that you include the stakeholders
independent assessment points, Portfolio-level who will be contributing to the design of the report.
reviews,9 health checks and formal sign-offs. Equally, provide the Management Board with an
example and note their feedback prior to delivering a
The use of the Business Change Lifecycle provides finalised version.
standards to be followed by all Changes. This
ensures that Business Cases are created for each
Change, enabling alignment to the Strategic
Objectives. Furthermore, it ensures that each
9 10
Criminal Justice Information Technology (CJIT) P3O, MSP and P3M3 Management Control
Approach to Investment Appraisal. Perspective.
55
Management Control: Keys to Success
Defined roles and Ensure that people are aware of their involvement and that the
relationships relationships between the Portfolio Direction Group and Portfolio
Progress Group are understood by everyone.
Visible processes Ensure that key PfM processes are defined and understood. Provide
direct support to people and help them work through new processes.
Particularly important is the Business Change Lifecycle and the reporting
process.
Skills and experience Employ people within the Portfolio Office who are experienced, skilled
and good communicators. If they do not have these abilities, they will
have no credibility and the skilled Programme and Project Managers will
not listen to them.
Pragmatic reporting Do not make the reporting process too cumbersome. The only way to
processes make reporting work is to make the Programme and Project Managers
want to report. Therefore, you must make sure they understand that
reporting is a supportive mechanism for them. Clearly identify the
escalation processes for risks and issues, the information flows and
levels where decision will be made.
Manage stakeholders Ensure that a thorough Stakeholder Analysis has taken place and that
people from external groups, the Portfolio team and the teams from
within Business as Usual are engaged with appropriately.
Supportive Provide supportive advice and training to the Programme and Project
advice/training Management Teams where required.
Timeliness and Ensure that Programme and Project information is presented in a timely
accuracy and accurate manner. If the reporting process is not aligned correctly to
the governance structure, the information will be out of date by the time it
is presented to Senior Management.
56
7.3 PfM Practice 7: Benefits Management

Benefits Management: Keys to Success
7.3.1 What is the purpose? Benefits Ensure that the Benefits Management
To clearly identify and manage the benefits Management strategy is concise, easy to read and agreed
being realised from the Changes, ensuring that strategy by the Management Board.
they contribute to performance and Strategic
Objectives as defined in the Business Case. Ensure that skilled resources are available to
Skilled undertake the Benefits Management activities
resources and that Business as Usual and Performance
7.3.2 What is involved? Departments are committed to being involved.
A Benefits Management strategy has been Do not measure everything in detail; identify
agreed and clearly defines how the benefits will Do not the important benefits and work with those
contribute to the realisation of the Strategic measure first. It is easy to spend too much time
Objectives and how they will be managed. To everything measuring benefits that have less importance
make this a success, collaborative working with than others.
key stakeholders – particularly performance,
Use simple and creative Benefits Modelling
Strategic Planning and representatives from the
techniques to show the contribution to the
business – is critical, as this will ensure that
Be creative strategy. Do not send the Management Board
benefits are aligned to performance11 and linked
a benefits flow diagram containing 300 boxes
to the Strategic Objectives and the PSA Targets
on one side of A3 paper.
where required.
Ensure that Benefits Realisation Management
Benefits are well documented so it is possible to Ongoing
is viewed as a constant throughout the
understand the flow from each Change and their management
Business Change Lifecycle and not just a
contribution to Strategic Objectives. This of benefits
one-off occurrence at the end.
information is maintained continuously, to reduce
When Changes slip, consider also the impact
the risk of double counting, and is published
Link to on the Benefits Plan, performance and
regularly so that people can maintain an
reporting Strategic Objectives when reporting to the
understanding of progress.
Management Board.
Benefits information is included in the
Every Change in the Portfolio must have a
Management Dashboard and assists with
Business Business Case with clearly defined benefits
decision making, particularly where slippage Cases that can be linked to Strategic Objectives.
occurs as Senior Management will be interested There are no exceptions to this rule.
in the impact on the high-level Benefits Plan and
targets.
Appendix 1a contains a useful model used within
Criminal Justice Information Technology (CJIT) to
represent the relationship between the Portfolio,
benefits and performance.
Important Note: If a Change does not benefit a Strategic Objective, or enable another Change to benefit Strategic
Objectives, it should not be started. Equally, if any existing Change does not align to the Strategic Objectives, it
should be challenged and more than likely stopped. The only exceptions to this rule are ‘must do’ Changes, such as
regulatory and statutory requirements. They may or may not directly add value to the Strategic Objectives, but a
Business Case should still exist and should be included in the prioritisation of the corporate Portfolio.
11
Gartner Report: UK Criminal Justice System Makes
Portfolio Management Key to IT Success.
57
7.4 PfM Practice 8: Financial Management Irrespective of these structures, any organisation
can still align PfM with existing financial processes
and integrate, as a minimum, the following rules.
• A Business Change Lifecycle is used
To ensure that the PfM processes and decisions are proactively for all Change.
aligned to the Financial Planning Cycles and that • A Financial Plan must be incorporated within
financial considerations form a key element in all every Business Case.
decisions regarding the commencement and • All new (and proposed) Changes must start
ongoing viability of every Change. via the agreed Business Change Lifecycle.
• Only the Portfolio Direction Group can agree
Important Note: Aligning PfM to financial structures to the inclusion of a new Change in the
can be extremely challenging. It is critical that the Portfolio.
Finance Department are fully consulted on this
alignment. Not only are they experts in the financial
planning process, but they will also have the best Aligning PfM and the organisation’s financial
understanding on decisions currently being made. structures is particularly useful because, if there is
slippage in the Portfolio, the impact of over/under-
spends can be recognised early and managed
7.4.2 What is involved? accordingly.
During the early days of PfM implementation, one of
the key elements is to understand the relationship of
existing processes, governance and decision-
making bodies. A key governance structure that Financial Management: Keys to
will undoubtedly already exist is a Board that Success
makes decisions regarding financial investments
in either Business as Usual and/or individual
Ensure that the Portfolio Office and
Changes.
Involve Finance Department work
The level of difficulty when trying to align PfM to financial collaboratively. Seconding a strategic
the existing structure is completely dependent on experts finance expert into the Portfolio Office
your organisation and where the budgets for can be a significant advantage.
Changes sit. This can vary significantly within
Align Cycles Align Strategic Planning, PfM and
different organisations. Some organisations have
Financial Cycles for optimum value.
a Directorate of Change, which controls the
Business The Business Change Lifecycle
budgets for all strategic Changes, whereas others
Cases ensures that a Business Case and
choose not to differentiate between Business as
Financial Plan exist for every Change.
Usual and Change and each directorate will This is non-negotiable.
receive a lump sum allocation.
Incrementally releasing funds in line
Incremental
In contrast, it could be that the Portfolio is divided with the Business Change Lifecycle
funds release
based on categorisation, and investment criteria can improve financial and Change
may be added to each category, so that for a Planning.
Change to be accepted into a categorised Financial Ensure that a Financial Plan exists for
Portfolio it must provide x amount of return on planning the Portfolio.
investment. Some organisations sit in the middle, Ensure that top-level finance
allocating a budget to the Portfolio Direction information is incorporated into the
Group and releasing the funding based on Financial Management Dashboard. This will
priority, and perhaps in stages based on reporting require financial reporting information
successful progression through the stages of the from all the Changes within the
Business Change Lifecycle. Portfolio.
58
7.5 PfM Practice 9: Risk Management Risk Management works at all levels within the
Portfolio and the Portfolio Office will ensure that
Risk Management is embedded into the Business
7.5.1 What is the purpose? Change Lifecycle, enabling risks to be managed by
the correct people at the right level within the
Effective management of the Portfolio’s exposure to
Portfolio.
risk is crucial to the successful delivery of the
Changes and ultimately to achievement of the A robust Risk Management environment will ensure
Strategic Objectives. Risk Management at the the identification and effective management of
Portfolio level implements standards that are used strategic, delivery and operational risks and
by all Changes and which align to the Corporate opportunities. This requires an effective risk
Risk Management Policy. Risks across the Portfolio escalation process and consistent analysis of risk in
are continually reviewed and an effective escalation terms of probability, impact and timing. Where
process ensures that the relevant risks are reported required, the production and funding of contingency
to Senior Management. plans should exist, with an ongoing review by
knowledgeable experts, risk owners and Senior
Management.
A Risk Management strategy has been agreed at
7.5.3 Maintaining focus on risks
the Portfolio level and clearly defines the amount of
risk that is to be accepted across the Portfolio, how Risk Management is usually the first PfM Practice to
the Risk Management process will work within the suffer in business environments, where things that
Portfolio and how it links to Organisational Risk are happening ‘now’ are viewed as the most
Management. Collaborative working with the important. Table 7.1 provides an overview of how to
Organisational Risk Management Department ensure that Risk Management remains in focus.
ensures compliance with organisational policies and
aligns with Strategic Planning.
How to Maintain Focus
Portfolio reporting Ensure that the status of the top Portfolio level risks are incorporated into
the Management Dashboard and that risk actions are regularly updated.
Embed updates into the Portfolio Risk Register in line with reporting
mechanisms. Be creative with graphical representations of overall
Portfolio risk.
Prioritisation process During prioritisation ensure that risk is included as a factor in the
prioritisation criteria. Use of a matrix highlighting risk and benefit is useful
for assessments of new Changes and during reviews.
Organisational Risk Ensure continued alignment with any existing Organisational Risk
Management Management Policy. It is useful for a Portfolio Office member to attend
Organisational Risk Management Board meetings.
Stage Gates in the End-of-stage assessments check that Risk Management products are up
Business Change to date and are being effectively managed.
Lifecycle
59
Risk Management software If the organisation is using an enterprise Project Management software
tool, an automated centralised Risk Management mechanism that informs
owners of their risks can be extremely useful. This will only work in an
environment that proactively values the management of risk.
Risk exposure A key purpose of PfM Risk Management is to oversee the overall level of
exposure. It is rarely a single risk that will cause major problems, but the
combination of a number of risks being realised that requires the attention
of the PfM team.
Table 7.1. Maintaining focus on Risk Management.
Risk Management: Keys to Success
Standard roles and processes for Risk Management should be incorporated

Risk Management
into the Portfolio Delivery Strategy, although a more detailed Risk
Strategy
Management Strategy will usually exist, defining detailed processes and
standards.
Ensure close working relationships with a Organisational Risk Management
Involve experts Team (if one exists).
If a Corporate Risk Management Board exists, it is a good idea for a
Links to existing Boards representative of the Portfolio Office to attend meetings.
Incorporate risk into the The management of risk must be a PfM Practice within the Business Change
Business Change Lifecycle. Risks must be owned at the appropriate level and incorporated into
Lifecycle the Portfolio reporting, reviews and prioritisation.
60
7.6 PfM Practice 10: Stakeholder Engagement understanding of the progress and successes.
Communication and engagement is not one-way
traffic from the Portfolio; it is important to ensure that
processes facilitate a feedback loop from
The provision of a centralised and co-ordinated stakeholders to the Portfolio. This needs to be
approach to Stakeholder Engagement and managed in such a way that stakeholders can see
Communication ensures that the needs of the what has been implemented based on their
organisation’s customers (internal and external feedback.
stakeholders) are identified and managed
appropriately. Stakeholder support for the Portfolio Stakeholder Engagement: Keys
is achieved by effective consultation and to Success
involvement in relevant decision-making processes
relating to delivery of the Portfolio and achievement Ensure that Organisational
of the Strategic Objectives. Work Communication Teams are
collaboratively involved with the creation of
with Corporate Stakeholder and Communication
7.6.2 What is involved? Communication Plans at Portfolio level.
Team Regional/local support should also
A centrally managed and consistent approach to be provided if possible.
Stakeholder Engagement and Communications Make sure that stakeholder needs
exists at all levels in the Portfolio. The Corporate are understood and that they are
Involve
Communication Team work closely with the involved appropriately in decision-
stakeholders
Portfolio Office during the creation of the making and communication
Stakeholder Engagement and Communication Plan. processes.
They also provide ongoing advice and support at Align the individual Stakeholder
Align Plans
central and regional/local levels where required. Engagement and Communication
from Changes
Plans for each Change with the
The Portfolio Communication Plan, together with to overall
central Portfolio Communication
the Business Change Lifecycle, ensure that Portfolio Plan
Plan.
stakeholders’ needs are identified, which is Stakeholder Engagement and
achieved by proactively involving stakeholders in Communications is a broad and
the development and decision-making process complex PfM Practice and requires
where required. The Portfolio Communication Plan Sophistication more than simply ‘broadcasting’
identifies all stakeholders, how key messages will of approach information to the wider
be communicated and, while each Change will community. It requires skills and
create and manage its own Communication Plan, it resources to be truly effective.
will need to be aligned with the Portfolio
Communication Plan. Processes must exist that ensure
that stakeholders can visibly see
There is a budget for communications that is Feedback loop how their comments/feedback
agreed as part of the Portfolio Delivery Strategy and have been accepted, reviewed and
is managed by the Portfolio Office. There are implemented.
processes for different types of messages. Communication skills and
However, one of the keys to success is that resources are not often viewed as
Management Board members are visibly involved a priority at the start of
and proactively support various communications to implementing PfM. This is a grave
Value
the Portfolio and the wider organisation. This has mistake, as without effective
communication
proved critical in terms of continually focusing on communication processes and
collaborative working, emphasising the need to be skills, there is a serious risk of mis-
one team and ensuring that people have a common communicating to stakeholders.
61
7.7 PfM Practice 11: Organisational Governance

Organisational Governance:
Keys to Success
Vision of Management Board should
PfM processes and decisions are aligned with the
Business agree a vision for PfM in your
Organisational Governance processes of the
Change organisation.
organisation. The standards for PfM are agreed
and the Management Board are committed to Business Ensure that decision-making
overseeing and making decisions regarding the Cases are processes regarding the
Portfolio as part of their existing governance continually continuation of Changes take
responsibilities. reviewed place at the right position
within the Business Change
Lifecycle.
Organisational The hierarchy and decision-
A vision for PfM is agreed and is actively hierarchy making processes within the
communicated to the organisation by the Portfolio must be clearly set
Management Board. This enables people to out. Standard sets of
understand, at top level, what the Portfolio is doing. responsibilities and
At a more detailed level, the Portfolio is defined so competencies for the key roles
that people can understand what is involved and should be set out and
how Changes will add value to the Strategic monitored for effectiveness.
Objectives.
The Business Change Lifecycle is used to ensure
that Changes are evaluated, prioritised and
approved based on Strategic Objectives, and
Business Cases are continually reviewed for validity
and viability. People are confident that tough
decisions will need to be made in some cases.
The Portfolio Office ensures that the Organisational
Governance structures and PfM Governance are
aligned and add value to stakeholders, legislative
and regulatory requirements are incorporated into
the decision making processes and that
performance information is represented in such a
way as to reflect the impact that Changes are
having on the organisation.
62
7.8 PfM Practice 12: Resource Management Resource Management: Keys

to Success
Use Business Cases clearly define
There is a finite amount of resources available, so Business the high-level resource
putting in place mechanisms to understand and Cases and requirements and the Plan
manage the amount of resources available and the Project enables the resources to be
amount needed will enable informed decisions to be Plans schedule and agreed. It is
made concerning the initiation and scheduling of highlighted that at the start of
Changes. the Change it is not realistic to
plan the total resource
requirements, particularly for
7.8.2 What is involved? large Changes that might span a
During the early days of PfM, the ability to number of years.
understand resources is solely dependent on the Incremental Some organisations release
maturity of the organisation to deliver Change. If funds funding for Changes at
Changes are not planned professionally, if Business release incremental stages based on the
Cases are not agreed, if planning standards are not achievement of planned
used, PPM skills are limited and planning software milestones. Aligning this to the
is not used, effective Resource Management Business Change Lifecycle
decisions will be extremely difficult, if not impossible, enables clearly defined decision
to make. points, thus reducing resourcing
The use of the Business Change Lifecycle enables risks.
the resource requirement to be identified early on Legislative Changes that have to be
and the use of the Stage Gates thereafter ensures and implemented are included in the
that the required resources are agreed at regulatory prioritisation process. Although
appropriate points, based on prioritisation. changes they are ‘must do’ Changes, the
The Procurement Department are involved in the involved resource requirements and
planning of Changes and ensure that procurement delivery timescales could have
processes are followed, including relevant implications for the rest of the
frameworks for recruitment of skills where required. Portfolio.
The key resources pools (IT, Training and Business

as Usual Teams, etc.) understand the prioritised
Changes and assign resources in line with those
priorities. Those teams are involved in planning and,
as such, resources are assigned and included in the
Plans, giving an overall view at Portfolio level.
63
Appendix 1: Example Business Change Lifecycle

The following example of a Business Change Lifecycle has been
successfully rolled out within the Highways Agency. The
Highways Agency named it the Project Control Framework. While
the Highways Agency uses this for every Project, many
organisations have a similar approach (some significantly more
complex) that can be used for all Programmes and Projects.
64
Appendix 1a: Criminal Justice Information Technology (CJIT) Model
CJIT use this model to represent the relationship between the Portfolio, benefits and performance.
65
Appendix 2: Governance and Role Descriptions
Role Name Portfolio Direction Group

Role Purpose
The Portfolio Direction Group consists of the Management Board members who are collectively responsible
for ensuring that the Portfolio delivers the Changes and benefits identified within Portfolio Delivery Strategy.
The Portfolio Direction Group should be prepared to make proactive decisions and provide leadership that
energises the teams and the organisation throughout the life of the Portfolio.
Meetings may be attended by a number of additional members where required, including the Portfolio
Management, Senior Business Change or Programme Management Roles.
Responsibilities
• Overall ownership and direction of the Portfolio Delivery Strategy.
• Accountable for ensuring that the Portfolio remains on course to deliver the desired strategic benefits
and outcomes.
• Review the status of the Portfolio regularly via a Management Dashboard.
• Review recommendations from Portfolio Progress Group and make decisions accordingly.
• Ensure that resources are allocated appropriately.
• Ensure that any conflicts between the Portfolio delivery and Business As Usual that cannot be
resolved by the Progress Group are addressed.
• Proactively communicate collaborative working throughout respective departments/units.
• Ensure that Business as Usual and the Portfolio are aligned effectively to deliver the Strategic
Objectives.
66
Role Name Portfolio Progress Group

Role Purpose
The Portfolio Progress Group is chaired by the Director of Change Role (and closely supported by the
Portfolio Management and/or Portfolio Office Management Roles).
Meetings attended by various Senior Management from across the organisation, including representatives
from Training, HR, IT, Finance, Commercial, for example. In addition, Business Change Management also
attend to ensure that Business as Usual representation is included in the decision-making process.
Progress Group members are collectively responsible for ensuring that the day-to-day delivery of Changes
remains on track as per the agreed Portfolio Delivery Strategy.
Ensuring that Best Practice processes are achieved in order to understand progress and effectively address
the key Portfolio risks and issues.
Review all proposed new Programmes and Projects and make recommendations to the Portfolio Definition.
Responsibilities
• Own the day-to-day delivery of the Portfolio Delivery Strategy.
• Ensure that all Programmes and Projects comply with agreed delivery standards, e.g. use of the
Business Change Lifecycle.
• Review progress and resolve key Portfolio-level issues.
• Ensure that Portfolio-level risks are identified and managed appropriately.
• Ensure that agreed resources are maintained within the Portfolio.
• Ensure that implementations into Business as Usual are co-ordinated so as not to cause operational
disruption.
• Proactively support the communication of the Portfolio and the Portfolio Delivery Strategy within
relevant departments.
• Make recommendations to Portfolio Direction Group regarding key decisions required. Specifically
including (but not limited to) the start-up or cessation of Programmes or Projects, management of
key risk and issues, and Portfolio communications.
• Review proposals for Changes to the scope of the Portfolio (including Change Control process for
existing Programmes and Projects where required) and make recommendations to Portfolio
Direction Group where required.
67
Role Name Business Change Director

Role Purpose
The Business Change Director is the Management Board member who owns the vision for the Portfolio,
providing clear leadership and direction through its life.
The role requires strong leadership and management skills coupled with authority to champion the delivery
of complex implementations, some of which may be owned in various other departments by various SROs.
The individual will need to develop and maintain robust relationships with all parts of the business as well as
with the Programmes and Projects, to ensure that the Management Board members and their teams are
supportive of PfM.
The individual will need to understand the organisation’s Strategic Objectives, the business and the Portfolio.
They must have credibility within the organisation and be able to influence others. They must be able to
develop and maintain effective working relationships with Senior Management, the Programme and Project
Teams and any third party service providers.
Responsibilities
• Provide overall direction and leadership for the delivery and implementation of the Portfolio, with
personal responsibility for its success.
• Ensure the creation of an energised working culture that is focused on collaborative working and
teamwork.
• To ensure that Best Practices are utilised within the Portfolio.
• To ensure sound financial management of the Portfolio.
• Secure the investment to implement PfM (including a Portfolio Office).
• Provide strategic challenge, overview and scrutiny, ensuring alignment with wider policy and strategic
initiatives.
• Ensure that evolving business needs and issues are addressed effectively.
68
Role Name Portfolio Manager

Role Purpose
The Portfolio Manager co-ordinates the successful delivery of the Portfolio Delivery Strategy on a day-to-day
basis. The Portfolio Manager will lead on implementing all key practices, ensuring that the Portfolio Progress
Group and Portfolio Direction Group receive the right information to make informed decisions.
While the role may or may not be directly responsible for all or some of the Changes within the Portfolio, they
will lead with the definition and delivery of the Portfolio and be the first point of call for ‘new Changes’. The
role will also focus on Stakeholder Engagement and will support the Business Change Director with briefings
to Senior Management, which requires heightened communication and Stakeholder Engagement skills.
The individual must have solid experience with strategic, Programme and Project Management, specifically
including Business Cases, planning and use of Best Practice processes. The individual should also have a
good understanding of performance, organisational change, the organisation and the Strategic Objectives.
Responsibilities
• Co-ordinate the day-to-day successful delivery of the Portfolio Delivery Strategy.
• Ensure that Business Case data is consistent across the organisation.
• Analyse proposed and current Change Portfolio and identify alignment with Strategic Objectives.
• Prepare Portfolio reporting information for the Portfolio Progress and Direction Groups (and any other
key stakeholder groups).
• Conduct ‘What if?’ analysis on the Portfolio in discussion with senior colleagues and provide this
information to the Board as reports.
• Understand the core business drivers, environment and organisation.
• Act as an advocate for PfM across the organisation.
• Influence colleagues and Senior Management to work collaboratively with key PfM Practices.
• Identify constraints within the Portfolio and work to overcome them – e.g. resource constraints, funding
constraints, etc.
• Ensure that all compliance-related Changes are identified as such within the Portfolio.
69
Appendix 3: Example Management Dashboard
70
Appendix 4: Programme and Project Information 9. Risk level (use of OGC Risk Profile Analysis
Template
(RPA)).
10. Budget estimates/resource commitments

Purpose
per year.
The purpose of the Programme and Project
11. Business Changes required.
Information Template is to capture key information
regarding current and proposed Changes within the 12. Business Case reference.
organisation. Completion of this document forms 13. Key deliverable(s).
part of the ‘Understand’ PfM Practice within the
Portfolio Definition Cycle. Using a standard 14. Key dependencies.
document for all Changes will enable the same 15. Business as Usual area impacted.
information to be captured, which will provide a
16. Resource commitments.
platform to carry out subsequent Portfolio Definition
activities. 17. Initial priority suggestion.
18. Current status/progress so far.
Fitness for purpose checklist 19. Any other information you feel is useful.
Is the information accurate?
Have Senior Management been consulted and have Source information

they agreed the information? Information can be sourced from consultations with
Senior Management and their respective teams and
from existing Programme or Project documentation.
Suggested contents
The Programme and Project Information Template

should contain the following.
1. ID (completed by the Portfolio Office).
2. SRO/Sponsor name.
3. Objectives.
4. Strategic Objective contribution.
5. Outcomes or Blueprint contribution.
6. Initial start/finish dates and current lifecycle

stage.
7. Key quantitative benefits.
8. Key qualitative benefits.
71
Appendix 5: Portfolio Delivery Strategy: the

value
Key questions Key information The value to decision makers
within Portfolio
Delivery Strategy
What is our Portfolio? Portfolio Executive High-level, easy-to-read short overview

Summary. contextualising the current position and key
points from the main Portfolio Definition,
highlighting how the Strategic Objectives will
be realised.
What Changes are we Portfolio Delivery Ideally, a graphical top-level view of the
going to make to the Schedule. Portfolio that categorises and prioritises the
organisation and when? Changes. Usually over a period of three to ten
What are the most years.
important Changes?
This enables Senior Management and all
stakeholders to understand the scope,
schedule, key dependencies and the priority
of Changes within the Portfolio.
How will the Changes Categorised Changes, Defines the planned realisation of benefits at
deliver the Strategic Portfolio Benefits and the Portfolio level and the links to
Objectives? Performance Plan performance. Benefits will be grouped and
aligned where possible to prove that the
Strategic Objectives can be achieved.
Which Changes are not Identification of existing Provides clarity to senior decision makers
helping us to realise our or planned Changes regarding the potential opportunity to stop
Strategic Objectives? that do not align with Changes and redirect resources to more
the strategic important Changes that will contribute to the
objectives. Strategic Objectives.
Do we have enough Resource and financial High-level definition of resource requirements

resources to do this? strategy. identifying any problem areas within the
organisation regarding capacity, capability
and funding.
How much risk do we Risk assessment and Clear understanding of the overall risk
take, where are the key management strategy. exposure, the amount of risk that the
areas of risk and what Management Board will accept (risk appetite).
are we doing about Relevant owners assigned to individual risks
them? and management actions agreed and defined.
72
How will the Changes Portfolio Performance Clear links from Business as Usual
impact on performance Strategy. enhancements/Benefits Management
in the short, medium and Strategies to the performance indicators and
long term? Strategic Objectives, enabling Senior
Management to understand performance. In
some cases performance may dip in the short
term during the Changes and therefore Senior
Managers must be aware of and prepared for
this.
Who are the key Stakeholder Clearly defined communication and

stakeholders and how do Communications and engagement approach based on key
we communicate to and Engagement. stakeholders defining how the entire
engage with them? organisation will be communicated to and
motivated regarding the Portfolio and its
future delivery.
What is the organisation Organisational A top-level definition of the future state of the
going to look and feel Blueprint. organisation enabling people to understand
like once we have what the new organisation will look like and
achieved our strategy? the way it will work based on the strategic
objectives and Portfolio of Changes. This is
usually owned by the Organisational Design
or Strategy Department (it has similarities with
an MSP Programme Blueprint but from an
organisation-wide perspective).
How is the Portfolio Portfolio Governance. Clearly defined management structure and
going to be managed as Business Change Lifecycle that aligns
we move forward? existing Organisational Governance meetings
and decision making to PfM and the delivery
of Changes via Programmes and Projects.
What processes are Portfolio Office Vision The Portfolio Office Vision and Blueprint will
going to be put in place? Blueprint. enable stakeholders to understand at a high
level and a process level exactly what to
expect from the Portfolio Office.
73
Appendix 6: Senior Managers Portfolio and that they will enable realisation of the Strategic
Management Briefing Objectives and PSA Targets.
Although business planning and Performance

Management have been around for many years, You understand which Programmes and
PfM is relatively new. Not only can it be difficult to Projects impact you. You will be given the
understand the key benefits, but it is also opportunity to identify how other Programmes and
challenging to understand how PfM will make your Projects will impact on your departments’ Business
world better. as Usual in terms of resources and process
Changes.
This section of the PfM guidance provides an

overview of the key benefits that you will notice as a You understand overall resources requirements.
Senior Manager when implementing PfM. Also listed There will be more visibility of the resource
are some of the Changes that can incorrectly be requirements. This means you will be able to identify
interpreted as dis-benefit to you. clearly whether you need additional resources to
enable your Programmes and Projects to be
delivered.
Finally, several key questions have been listed.
These are questions that you should be asking
during the implementation of PfM, although if it is You know which Programmes and Projects are
being implemented correctly you should not need to most important. You will be involved in discussions
ask them. and decisions regarding Programme and Project
prioritisation. This allows to you focus your
resources from an organisational perspective. It is
Key benefits of PfM
important that you bear in mind that Programme and
Project prioritisation is a team-based activity that
You have a clear picture of Programmes and focuses on realising Strategic Objectives. ‘Pet’ and
Projects. You will get to see and understand the ‘rogue’ projects do not exist in PfM and you may
overall landscape of Change in the organisation due need to be prepared for your Project or Programme
to cross-functional and collaborative working within to be categorised as less important than someone
departments. You can expect to see a high-level else’s.
picture that shows all the Programmes and Projects,
the timeline, dependencies and how they link to the
Strategic Objectives and key risks and issues. If you You understand dependencies. You will be able to
do not see this, make sure you ask for it! see where dependencies are within the Portfolio,
which will help you plan better and understand the
risks to your department and team.
You are involved in decision making. You will be
fully involved in decisions regarding the start-up and Incorrectly perceived dis-benefits
ongoing delivery of Programmes and Projects, even
if you are not involved with or directly impacted by
each one. People’s perception is their reality. Therefore, if you
feel that the introduction of PfM is causing any of the
following feelings, the chances are that it not being
You have confidence in delivery. Your implemented properly or not being described
involvement in the start-up decision-making process accurately to you.
will increase your confidence and belief that the right
Programmes and Projects are being implemented
74
The following list gives a snapshot of the often Actual benefit: In fact, it is the opposite. Going
perceived dis-benefits and provides reasons as to through a process to start a Project enables you to
why they are actually important positive benefits to make sure you have the commitment from the rest
you. of the team and that the Project is prioritised with
the benefits of the organisation in mind.
‘This is just bureaucracy and hoops to jump

through.’ Even though you may have started ‘I have to report the status of my Changes to the
Projects in an ad hoc way before, you will now need Management Board – it’s like Big Brother.’ The
to go through a process of creating a Business Case Portfolio Office will at some point provide the
and getting it agreed by the Senior Management Management Board with a regular status report of
team. the Changes owned by you as a Senior Manager.
This is usually monthly but it could be quarterly.
Whatever the timescale, it may be that some of your
Actual benefit: Business Case production is a Changes are flagged as ‘red’. This could be
given these days and should be seen as an because they are slipping, there are serious risks or
opportunity for you to prove that the Change should the Plan and Business Case need reviewing and
be undertaken. Not only is this your chance to get updating.
the right resources but the Change will be prioritised
accordingly – all of which increase the chances of
success. Actual benefit: Reporting to the Management
Board should be viewed as a benefit because you
get to highlight the key issues and have them
‘It takes much longer to start our Changes.’ resolved at that level. This will help you obtain the
Historically you may have just started a Programme resources you need and ensure that your Change is
or Project with no Plan, no Business Case and no delivered effectively. Bear in mind that ‘red’ does not
Senior Management support. With the introduction mean you are not a good manager; it is effectively
of PfM comes a formal start-up process. Not only the same as putting your hand up and saying ‘Okay
will this guide you through an effective planning guys, we need to look at this’. Also bear in mind that
process, but it will also ensure the creation of a if a Change is ‘red’ it proves that it is being planned
Business Case which, if agreed, will be fully and tracked properly. Be wary of Programmes and
supported and prioritised in the context of all the Projects that continually have a ‘green’ status.
other Changes. Always remember that investment in
time at the start-up pays huge dividends during the
implementation of the Change.
Actual benefit: Once this stage is complete, the

implementation has a much greater chance of
success because you will have the resources and
Senior Management commitment and delivery will
be planned.
‘I don’t have control over my own Programmes

and Projects now.’ You may feel that because you
have to go through a start-up process you have lost
control of your own Programmes and Projects.
75
Key probing questions for Senior Management

to ask
These are the key questions that should be asked if

you sense things are not quite right with the
implementation of PfM in your organisation.
1. What are all the Programmes and Projects
we are delivering, what are their
dependencies on one another and how do
their benefits contribute to our Strategic
Objectives?
2. Where is the start-up process and who
decides which Programmes and Projects
are authorised to start?
3. Where are the resourcing risks if we are
going to deliver these Programmes and
Projects?
4. How can we tell which Programmes and
Projects are going to add most value to our
Strategic Objectives?
5. Shouldn’t we be receiving some form of
Management Dashboard that summarises
the progress, key risks and issues for the
overall Portfolio?
6. We cannot do all of this at once; how are we
going to prioritise all of these Programmes
and Projects?
7. How much are all of these Programmes and
Projects going to cost us?
8. Do we have enough Programme and Project
Management skills to deliver this Portfolio?
76
scope of a P3O or may be the only function of a

Appendix 7: Glossary P3O. This function provides a focal point for driving
the implementation of improvements to increase the
organisation’s capability and capacity in Programme
Aggregated risk and Project delivery.
The overall level of risk to the Programme when all
the risks are viewed as a totality rather than
individually. This could include the outputs of Dashboard
particular scenarios or risk combinations. See Management Dashboard
Assurance Design Authority

All the systematic actions necessary to provide A role or function (permanent, temporary or virtual)
confidence that the target (system, process, that provides expert specialist advice or owns some
organisation, Programme, Project, outcome, benefit, organisational function, service, standard or strategy
capability, product output, deliverable) is that will be affected, or a major Programme outcome
appropriate. Appropriateness might be defined or Change that needs to be controlled. This could be
subjectively or objectively in different circumstances. an IT or property infrastructure design, or a major
The implication is that assurance will have a level of service contract; it could also be a business process
independence from that which is being assured. model or the Programme or Organisational
Blueprint. The Design Authority provides expertise
and guidance on a specific area to ensure that there
Benefit is appropriate alignment and control when Changes
The measurable improvement resulting from an are being planned and implemented. At a
outcome perceived as an advantage by one or more Programme level this role may advise or own the
stakeholders. business Blueprint Management on behalf of the
Programme Manager. At the enterprise level, this
role may manage the enterprise architecture of the
Business Change Lifecycle organisation.
A generic name used to represent any
organisational process or framework which helps to Dis-benefit
guide the delivery of Programmes and Projects
using a collection of repeatable processes and An outcome perceived as negative by one or more
decision points. stakeholders. Dis-benefits are actual consequences
of an activity, whereas a risk has some uncertainty
about whether it will materialise.
Centre of Excellence (COE) End Project Report

A co-ordinating function for all or part of P3RM (see A report given by the Project Manager to the Project
below) ensuring that Change is delivered Board that confirms the handover of all products and
consistently and well, through standard processes provides an updated Business Case and an
and competent staff. It may provide standards, assessment of how well the Project has performed
consistency of methods and processes, Knowledge against its Project Initiation Document.
Management, assurance and training. It may also
provide strategic oversight, scrutiny and challenge
across an organisation’s Portfolio of Programmes
and Projects. It may be a function within the wider
77
Enterprise Project (or P3RM) Management Hub and Spoke

(EPM)
A term to describe a system of organisational design
A term usually referred to by software vendors in for P3O where there is a centralised office (the hub)
relation to software (i.e. EPM tools) that assists an connected to a number of smaller decentralised
organisation to manage across multiple Projects and offices (the spokes) with a sub-set of the centralised
Programme delivery using a common resource pool offices’ business objectives, functions and services.
through to strategic analysis of investment through All information and processes (connections) are
Portfolio Management. This term does not reflect arranged so that they move along spokes to the hub
the actual offerings of the tools in that they generally at the centre. A Hub and Spoke model provides the
can support at Portfolio, Programme and Project benefit of scalability for large organisations and
(P3RM) level. supports business ownership by maintaining a level
of decentralisation.
Gated Review
Structured reviews of a Project, Programme or Information Hub
Portfolio as part of formal governance arrangements Refers to the centralised element of the Hub and
that are carried out at key decision points in the Spoke model for P3O in terms of information flows
lifecycle to ensure that the decision to invest as per (see Hub and Spoke, above). Supports highlight and
agreed Business Cases and Plans remains valid. exception based reporting for Projects, Programmes
and/or Portfolios by amalgamating information with
the process and information owned by the central
Governance (Business Change) office as the Information Hub.
Encompasses the structures, accountabilities and
policies, standards and process for decision making
Information Technology Infrastructure Library
within an organisation in order for Business Change
(ITIL®)
to answer the key strategic questions: ‘Are we doing
the right things?’; ‘Are we doing them the right A set of guides on the management and provision of
way?’; ‘Are we getting them done well?’; and ‘Are operational IT services.
we getting the benefits?’
Management Board
Health Check
Generic term used to describe Project Management
A health check is a quality tool that provides a Boards, Programme Management Boards, Portfolio
snapshot of the status of a Project, Programme or Management Boards or any combination of these
Portfolio. The purpose of a health check is to gain based on the P3O context.
an objective assessment of how well the Project,
Programme or Portfolio is performing relative to its
objectives and any relevant processes or standards. Management Dashboard
A health check differs from a Gated Review in that it
A technique to represent vast amounts of decision
is a tool used for assurance purposes by the P3O to
support information at an amalgamated level using
inform specific actions or capability maturity
tabular and graphical representation such as graphs
development plans, whereas a Gated Review is part
and traffic lights.
of formal governance arrangements.
78
Managing Successful Programmes (MSP) Pet Project

An OGC publication/method representing proven A Project that is championed by an executive in an
Programme Management good practice in organisation that may be aligned to an individual
successfully delivering transformational Change, goal or goals for a specific part of the business, but
drawn from the experiences of both public and not aligned to the strategic imperatives of the
private sector organisations. organisation as a whole.
Organisational Energy Portfolio, Programme and Project Office (P3O®)

Defined by the NHS Institute for Innovation and Describes the decision-enabling and support
Improvement as ‘the extent to which an organisation business model for all Business Change within an
has mobilised the full available effort of its people in organisation. This will be a single or multiple
pursuit of its goals’. structures – i.e. offices (permanent and/or
temporary), whether physical or virtual – providing a
mix of central and localised functions and services
Organisation Portfolio Office and integration with governance arrangements and
the wider business, such as other organisational
A type of P3O Model which is designed to centrally
support functions.
manage the investment process, strategic
alignment, prioritisation and selection, progress
tracking and monitoring, optimisation and benefits
Portfolio Definition Cycle
achieved by an organisation’s Projects and
Programmes on behalf of its Senior Management. One of two continuous Cycles within the PfM Model
containing PfM Practices related to defining a
Portfolio.
P3M3™
OGC’s Portfolio, Programme and Project
Portfolio Delivery Cycle
Management Maturity Model.
One of two continuous Cycles within the PfM Model
containing PfM Practices related to delivering a
P3O Sponsor Portfolio.
A Senior Manager with appropriate authority who
champions the establishment and evolving
Portfolio Management (PfM) Model
operation of the P3O. They will ideally be a member
of the main Board. A logical diagram describing the relationship
between the PfM Principles, PfM Cycles and PfM
Practices.
PESTLE Analysis
Acronym for ‘Political, Economic, Social,
P3RM
Technological, Legal and Environmental’. A
technique used generally in organisational Change An acronym to describe Portfolio, Programme,
Management to undertake an environmental scan at Project and Risk Management together.
a strategic level.
79
PRINCE2 Senior Responsible Owner (SRO)

A method that supports some selected aspects of The single individual with overall responsibility for
Project Management. The acronym stands for ensuring that a Project or Programme meets its
Projects IN Controlled Environments. objectives and delivers the Projected benefits.
Resource SWOT Analysis

An organisation’s physical or virtual entities (human Acronym for ‘Strengths, Weaknesses, Opportunities
or otherwise) that are of limited availability and can and Threats’. A technique to determine favourable
be used to undertake operations or Business and unfavourable factors in relation to Business
Change. Change or current state.
80
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What is the purpose of the document?

What is the purpose of the document?

What is portfolio management and why is it important?

What is portfolio management and why is it important?

Programmes & Projects

Portfolio Management Guide

Author Primary Review Group

Sean Redmond, for copy-editing and proofreading.

Portfolio Management Cycles What Portfolio Management is not

Portfolio Definition Portfolio Delivery

• A process that the Management Board How do Changes link to strategy?

• A bureaucratic process that prevents or

Portfolio Management links Business as Usual

In Figure S2.0 this relationship is represented in a

1.0 Introduction to Portfolio Management

1.1 Purpose of the guidance financial benefits and contribution to

Chapter Name Summary

Table 1.1. Chapter summary.

Throughout the guidance you will notice the use of

Important Notes are sometimes needed to emphasise a point or to ensure understanding of a

Figure 1.2. Examples of Important Notes and Keys to

1.4 Target audience Programme, Project and Business Change

Board Members, Senior An overall understanding of Portfolio Management and how it

Programme Managers, Programme Understand the relationships between Portfolio Management

1.5 Key terminology Business Change Lifecycle: Many organisations

PPM: This refers to the use of Programme and

2.0 What is Portfolio Management?

2.1 Purpose of this chapter guidance is specifically written to focus on

Whilst these examples are similar in terms of the 3

P3O: This provides a decision-enabling/delivery-

Portfolio Programme Project

Table 2.1. Key difference between Portfolios,

2.4 The PfM Model: Principles, Cycles and

Figure 2.2. The Portfolio Management (PfM) Model.

2.4.2 PfM Cycles and Practices managed in effectively.

Portfolio Definition Portfolio Delivery

Figure 2.3. PfM Cycles

Important Note: Programmes and Projects are

• A rigid, bureaucratic or individual • A bureaucratic process that prevents or

3.0 The Strategic Context

Important Note: A prerequisite of effective PfM is

Why? PfM focuses on delivering the right

Figure 3.2. Alignment of benefits to Strategic Objectives.

3.4 Links to other key teams

Table 3.3. Description of collaborative working between

4.0 PfM Principles

4.1 Purpose of this chapter

With this in mind, rather than creating an

From each Target Situation it is possible to extract

The PfM Model is shown again in Figure 4.1 to

Figure 4.1. PfM Model.

Senior Management Commitment: Keys to Success

A Management Board member must own the implementation of PfM.

Management Board receive regular Portfolio Level Management Dashboards

Collaborative working between Management Board members, Portfolio Office,

During this agenda item, the Management Board

Example Governance Structure 4.5 Other important considerations

Organisational Governance Alignment: Keys to Success

Ownership A Management Board member must own Portfolio Management.

4.6 Organisational Strategy Alignment Important Note: If an organisation does not