Low-performance projects in project portfolio management
Low performer projects in IT project portfolio management: Recognize, question and act
In the dynamic environment of project portfolio management (PPM), it's decisive not only to initiate new projects, but also to critically question existing ones. This becomes especially important when unexpected requirements emerge and resources have to be redistributed. This blog article illuminates our observations and approaches for how one identifies, evaluates and, if necessary, stops low performer projects in order to use resources optimally.
Identification of low performer projects
In order to recognize low performer projects, portfolio managers need clear criteria and meaningful data. Decisive is the ratio between deployed resources and achieved value contribution. Studies show that up to 30% of projects in companies can be classified as low performers [1].
Important indicators for poor project performance are:
- Budget overruns
- Time delays
- Quality deficiencies in deliveries
- Low stakeholder satisfaction
- Lacking alignment with strategic goals
Ultimately it's about the ratio of deployed resources to measurable project results (value progress). An effective PPM tool should capture, evaluate and visualize exactly this data centrally as reports from the projects. According to a survey, however, only 22% of companies use specialized PPM software, which makes the identification of problem projects more difficult [2].
The decision process: From the insight to the action
As soon as a project has been identified as a potential low performer, a multi-stage decision process begins:
- Analysis at the department level:
First the affected company area (e.g. sales) should examine its sub-portfolio. This enables a first assessment and potential solutions within the area. - Committee discussion:
Subsequently the topic is discussed in an overarching committee from the business department and IT. Here cross-area solutions are discussed. Decision-making:
The committee decides about stop, adjustment or continuation of the project based on the available data, strategic considerations and the discussion held.
Dealing with conflicts and resistance
We observe that this process harbors conflict potential. Project leaders or stakeholders could feel attacked when their projects are called into question. In order to counteract this, the following approaches are helpful:
- Transparent communication: Clear, comprehensible presentation of the evaluation criteria and the process.
- Involvement of all stakeholders: Early participation of all affected in the decision process described above.
Independent moderation: A neutral moderator can help to objectify discussions.
The portfolio manager in interplay with the strategy department can act effectively as a mediator here and make clear the necessity of the review in the context of the overall strategy.
Technical requirements for PPM tools
A powerful PPM tool is indispensable for effective management of low performer projects. With, for example, Gartner we find extensive selection aids for a PPM tool [5][6]. For our context, it should offer the following functions:
- Real-time data capture: Automatic updating of project data on the basis of the status reports of the project managers
- Visualization: Clear depiction of resource deployment and project progress KPIs
- Forecast models: AI-supported predictions on the project development
- Scenario analyses: Simulation of various options for action, like for example additional management support, focused change management, short-term, additional deployment of experienced experts.
Studies show that companies with advanced PPM tools have a 28% higher project success rate [3].
Cultural change as the key to success
The biggest challenge often lies in the corporate culture. Many organizations shy away from critically questioning ongoing projects. In order to foster the cultural change that's fundamental for this, the following steps are important:
- Leadership by good example: Top management has to model the necessity of regular project reviews
- Trainings and workshops: Employees have to be trained in dealing with project criticism and adjustments
- Adapt incentive systems: Reward of transparency and proactive handling of project problems instead of concealment
Conclusion: Continuous optimization as the path to success
By establishing a structured approach for evaluating and adjusting their project portfolios, organizations create the conditions to react flexibly and promptly to new requirements and to deploy their resources optimally. The path may be challenging, but the results – increased efficiency, better strategy implementation and ultimately greater business success – make it a worthwhile investment.
The ability to identify low performer projects and act accordingly is decisive for the long-term success in project portfolio management. Be bold. It requires not only the right tools and processes, but also a cultural change toward more transparency and flexibility. Companies that master this can demonstrably increase their project success rate by up to 40% [4].
grandega is an expert in this environment and walks this path with you, in which it's not only about process and tool knowledge, but also about profound experience in the accompanying change management.
Source list:
[1] https://www.brightwork.com/guide-project-portfolio-management
[2] https://www.itonics-innovation.com/blog/quickly-identify-low-performing-innovation-projects
[3] https://brainsensei.com/spotting-poor-project-management-techniques/
[4] https://www.sciforma.com/blog/the-4-main-challenges-and-solutions-of-project-portfolio-management/
[5] „Magic Quadrant for Strategic Portfolio Management”, 25 April 2023 – ID G00770793
[6] „Toolkit: RFP Template for Selecting Strategic Portfolio Management Software“, 19 January 2022 – ID G00739165
