Scrum PPM: Agile principles applied to Project and Portfolio Management

Here's a good video on how to incorporate a Cost/Benefit Analysis (CBA) to an Agile development process:




As I have just recently acquired my ScrumMaster certification from a workshop presented by none other than the co-founder of Scrum, Jeff Sutherland, I am now trying to find a way to realize the full benefits of Agile/Scrum especially as it applies to fields outside of software development that it derived its roots from and is closely associated with.

One area in particular that I am especially interested in applying Scrum to is PPM and portfolio management and optimization in particular. I ran across this article on Scrum Alliance and it outlines the basics of what I have in mind:

Treating your project portfolio like a backlog of stories means you are able to say, “no” to projects earlier, releasing resources to other projects. That’s good; but what’s better is that, instead of a black or white world, where projects are being canceled or not, you have more options. Consider these scenarios.

A portfolio manager realizes after two iterations that Project A will not return the promised marketing forecasts. The project’s priority drops and its resources are freed for other more lucrative projects. The project’s achievements, though, are stored; the project has simply been moved into the agile portfolio—returned to the backlog, so to speak.

The originally proposed features list for Project B is 80 percent complete. The project is far beyond delivery date and the competition has announced an impending release whose features are similar to the ones that have been completed to date. The portfolio manager decides to stop the project

Project C is a proposal that initially sounded very promising and relatively easy. After only one iteration, though, reality has proven the feasibility study wrong. Rather than waste any more time, executive management decides to cancel the project and remove it from the agile portfolio entirely.

Notice how in all of these scenarios, there was no stigma attached to modifying, delaying, or canceling a project. “No” has lost its sting. Because the investment in each project was minimal, the cost of returning it to the backlog or changing its parameters was also minimal. That’s powerful. That’s agile.

Johanna Rothman, famed Agile practitioner and author of Manage It!: Your Guide to Modern, Pragmatic Project Management, states that when organizing an Agile portfolio, she asks these 4 basic questions:

1. How strategically important is this set of work?
2. Do all these things look like they'll fit into one iteration?
3. How does this iteration fit into all the releases we'd like to do?
4. Is there anything preventing us from completing a particular iteration? (Or is there a reason to order features in a particular order?)

When viewed from the lens of a traditional PPM point of view, question 1) asks you to prioritize the projects based on a company's strategic initiative, 2) is really asking whether you have the resource capacity to do the work, 3) is whether it will impact scope/requirements and 4) is whether there are any roadblocks (impediments in Scrum terms) that will effect the performance (or velocity in Scrum terms) of the portfolio.

The following figure from Lee Merkhofer, a well know practitioner in the field of decision analysis techniques for prioritizing portfolios provides a flow diagram that parallels the questions just outlined:


Interestingly, there is really little divergence from the questions and procedures outlined by the Agile and Traditionalist groups, except that the latter has a bit more formalisms in their terminology and process. In my mind, both movements have always adopted the notion that you would have to loop back into your process if scope changes occurred (which they almost always do), and the difference is that the Agile group have been more explicit about it and needed to create a new vernacular to describe their process so as to differentiate themselves from the waterfall movement. PMI in their upcoming 4th edition of the PMBOK seem to be trying to bridge this gap and is a topic I wrote about before.

The diagram below shows how easy it is to reconcile the two movements:


Regardless of where one stands in relation to these two movements, the most important factor is that effective PPM management is more than just the collection of status reporting of a group of projects for a specified date, but also forecasting the delivery time, scope and cost of those projects and how that will impact the overall business initiatives of the company. Without this capability, we are not able to take true portfolio decisions – such as reallocating investment from one project to another, or canceling underperforming projects – to maximize ROI.

But once an organization has realized and achieved such a state, the organization has moved beyond traditional PPM, and is now engaged in Portfolio and Investment Optimization (PIO) and would be looking to utilize such portfolios of investments to capture new markets and/or become a disruptive force in their industries. Traditional project management is typically concerned with what is known as the "triple constraints" of time, cost and scope, but an organization involved with PIO would be elevated to a new triple constraint of priority, capacity and objectives:


The need to balance the constraints of time, quality and scope to maintain the quality of the projects and portfolios would be elevated to the balancing of priority, capacity and objectives to maintain the performance and velocity of the portfolios and investments of the organization.

By adding the descriptive, empirically based framework of Agile/Scrum to the prescriptive, process based framework of the Waterfall/PMBOK we can have the best of both worlds: e.g., time tested and proven methods of traditional project management and the unadulterated transparency that exposes to everybody whether the best decisions relative to the business objectives are being taken given current information at the moment of decision and if not to go back and fix the problem through iteration.

By integrating and utilizing these practices on a consistent basis, would an organization be truly engaged with the kind of forecasting and trend analysis at the enterprise level required of a PPM system allowing it to build an optimized portfolio of projects and investments. At this level it could develop truly meaningful, time dependent models that would allow the organization to determine demand capacity, prioritization of important project investments, and shifting requirements of its total portfolio. This is the foundation of PPM that maximizes the efficiencies to obtain ROI.