Chris Lovelock
Portfolio Optimisation Service Line Lead
Keeping a portfolio of projects under control can be frustrating. Assets are aging, but the sustaining capital budget is often capped. Stakeholders often expect to see financial returns from the same portfolio, and every dollar needs to deliver the most value possible.
Within a portfolio, each and every project should demonstrate its ability to deliver measurable value, aligned to the organisation’s strategic aims, with a balance of risk reduction and financial return. We call this a ‘balanced portfolio’.
It’s not enough to pick the projects that just deliver the most strategic value; the selection needs to be optimised to maximise the use of a limited budget. Cue in the ‘Efficient Frontier’ theory.
The ‘Efficient Frontier’ of a particular group of projects shows the maximum value that can be extracted for any given capital spend. Once we're able to collate the contribution of each project, we can optimise the strategic return for the given budget.
The ‘Efficient Frontier’ of a particular group of projects shows the maximum value that can be extracted for any given capital spend.
When an organisation knows that the portfolio is completely aligned to its strategic objectives, the best set of projects for the business becomes the delivery of value. Project Managers feel pull for their projects from the business. Stakeholders become active supporters providing input, access and approvals. The organisation shifts from ticking off a list of projects to realising value by completing one project after another.
Setting up a Portfolio Management Office (PMO) helps to steward the delivery of value, and benefits realisation becomes a leading portfolio delivery metric. A PMO helps achieve excellent project and business results through:
The organisation can then demonstrate to stakeholders an improving risk profile of the business and attract more capital.
The Arrium case study
“Our Alliance allows us to manage a portfolio of projects across a number of geographical sites without a significant increase in overall labour hours, even though the workload can change as much as 120% on a year-to-year basis. The resource management processes have helped us reduce our Alliance group resources from 90 to 40 during downturns without redundancy costs. According to IPA audit results, our labour productivity is among the best in Australia.” Robert Finlay, General Manager, OneSteel Engineering and Reliability
Delivering an optimum portfolio in a dynamic environment is challenging. We’ve supported a wide range of clients and portfolio types, and can recommend ‘golden rules’ to stay on track. We also help to customise the overall process so that value is locked-in while meeting the changing asset and business needs.
We realise everyone is on a ‘portfolio management journey’ towards the delivery of more and more value from their capital portfolio.
We can review your level of portfolio management maturity. We can then work with you to plan to improve portfolio outcomes. We have the know-how and tools to help you to achieve more value, faster. We focus our help on your success on the portfolio management journey.
Portfolio Optimisation Service Line Lead