Treat Your PMO like a Venture Capital Firm
Companies have a high demand for work and not enough resources. As a result, the Project Management Office (PMO) will go through a portfolio rationalization process. PMOs cull down based upon various factors, not limited to funding amount; the level of authority a person has who asks for the change, market needs, business benefits, and capabilities.
Therefore it is essential to have a process in place. Having a Business Case, Pitch, Due Diligence, and Exit Strategy as process steps can make the job easier. Below are the ways in which you can look at your portfolio like a VC Firm and maximize your success.
Business Case
Having a compelling business case helps explain the idea for the project and deliver it in a precise way. Each project or program should have a summary stakeholders can understand the concept quickly. The business case should include the following two sections: Solid Financials and Market Opportunity.
Solid Financial Projections
The financials should show; a 3-5 year plan on the investment needed, when you anticipate the profit/benefit, and the future year(s) outlook. The plan should describe the needed resources, including labor and materials.
Market Opportunity
The plan should describe the market opportunity for the business opportunity which you are looking to capture. Include the size of the market or the scope of impact. Describe what competitors are doing and the cost of not moving forward with the project.
Pitch
If a project makes it to the next round, there should be a pitch meeting where the project sponsor goes to the PMO and pitches their idea. The meeting will allow PMO members to ask probing questions to help determine whether they would want to invest in the upcoming work.
Due Diligence
Due diligence is the process where a resource reviews the requests in detail.
Review of Management team
Before a project begins, leaders should review the project team executing the delivery. This review will help to determine whether the project has the right team to be successful. In the review, the portfolio team could discover that the team is very task oriented; however, they are missing someone with a big picture view. They will be able to add and move people to ensure they have the right mix.
Review of implementation Strategy
You have to focus on how you are going to implement the idea. This is more than just a milestone plan. You should be able to detail your approach for getting your requirements and how to plan to work through issues and risks. The plan should talk about your strategy for workforce change management and contingencies. Although excruciating detail is not needed at this time, but you should show that you have put some thought into it.
Funding
Funding can be rewarded either in full or for different project stages. The budget will depend on the individual project profile and needs. Once funding is granted, the portfolio should remain a stakeholder and receive periodic updates on the project’s progress.
Round 2 Funding
If a project requires additional capital, the project team should go to the portfolio for an additional round of funding. The money shouldn’t be given automatically. There needs to be a thorough review of the funding, strategy, unanticipated issues, and recovery plan
Exit Strategy
Return on Portfolio Investment
Projects approved from a portfolio perspective should provide a return after the project is implemented. For example, VC firms receive a return once a company is in the harvest period and goes for its IPO. While a portfolio shouldn’t necessarily receive 20% of the company and associated profits, the portfolio should be able to get a portion of its money back so it can be used to fuel the next project investment.
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