Standard operating procedure for organizations is to review and approve budgets every year. If they are organized, they also review strategy and associated value propositions even more frequently, especially for those in the digital service space serving customers who are constantly seeking customized, new, and unique products. Annual budget review is certainly standard in the private sector -- imagine a Fortune 500 company heading into a new year with a budget that hasn't been reviewed or, even worse, is operating from the same strategic focus for the past decade.
Unfortunately, as this audience knows all too well, the traditional norm of completing 13 appropriations bills through normal legislative process has been replaced in recent years by the new baseline of eleventh-hour omnibuses and continuing resolutions. (This year the Consolidated Appropriations Act, totaling $1.15 trillion in discretionary spending, was passed on December 18.) While funding priorities are always paramount, the lack of a cohesive link between agency strategy and budget support is common for federal agencies. Why is this so important and why is the "project/program guy" rehashing the authorization and appropriations cycle?
The answer is simple: the one thing the federal government has 100 percent in common with the private sector is that the only way to deliver goods and services is via projects and programs. Project and program management is the mechanism for both defining and updating strategy while also being the path to executing it. Whether public or private sector, projects and programs must be aligned to the strategy of the organization if the strategy is to be truly realized as envisioned. In government, strategy equates to the agency's policy objectives. The risk of uncoupling appropriations from authorizations is that the funded projects are ad hoc and reactionary with no cohesive strategy or long-term perspective.
But agencies should not be blamed for projects that seem out of date or off target. Only two areas – defense and intelligence – are required to be reauthorized annually. Others, including priorities such as Homeland Security and Foreign Policy, are stuck playing the cards they are dealt. But while waiting for that elusive overarching reauthorization, agencies can and should take their own steps to review that they are working on the right things and for the right reasons, regardless of the politics standing in the way of reauthorizations.
Based on recent thought leadership research sponsored by the Project Management Institute, there are good-practice approaches from successful organizations that can be useful for federal agencies seeking alignment between strategy and their portfolios of projects and programs.
Keep It simple
At PMI's PMO Symposium, Deloitte presented research on the critical success factors for mature program management. The #1 factor is simplicity: The less complicated the approach to portfolio management, the more likely an organization is to sustain it. First and foremost, agencies need to revisit and reprioritize authorization priorities that may be excessively dated. Once the alignment of those priorities with policy objectives is achieved, agencies should simplify their portfolio reviews to measure only the key indicators, not every piece of data available.
Focus on the right outcomes
Know what's working and what isn't. Leaving aside political considerations, how do leaders know that it's ok to cut a program? More doesn't always mean better, sometimes more is necessary. If a program or project doesn't align with agency objectives or is underperforming in ways that cannot be fixed, it needs to be corrected or even discontinued. Don't be afraid to pull the plug and redirect resources to more effective ways of delivering on the policy objectives.
For a whole host of reasons, it can be difficult to decide which programs are "right." Organizations that have shown to be mature at program and project management can provide a useful example here. According to joint PMI / BCG research from the PMO Symposium, it is pretty clear that mature portfolio managers approach alignment and defining the right outcomes differently than those with less experience.
These are the portfolio decision-making criteria ranked more often by organizations demonstrating high portfolio management maturity vs. low-maturity organizations:
- Fit with overall strategy
- Financial and non-financial impacts
- Feasibility
- Implementation performance to date
On the other hand, these are the criteria ranked more frequently by low-maturity organizations:
- Can provide a quick win
- Gut feel of senior decision makers
- Low financial risk
Clearly, the more strategic outcomes are the ones more likely to support the organization’s overall roadmap; portfolio management is not a good place for "gut feels" as a routine staple of the management process.
There is no doubt that government agencies face issues that companies in the private sector managing the same size portfolios do not. But even with that fact in mind, it is still a worthy goal to view authorizations as a handy compelling event, rather than a frustrating process with a constantly moving completion date.
Imagine a scenario where agency authorizations were used to update the strategy and priorities for all key federal agencies, and then all 13 appropriations bills to resource those initiatives were passed on time each year. The government would operate better as a result of the right projects and programs ultimately advancing, and that elusive ideal of a win-win situation might just be attainable. 2016 is young – let’s think big.
Jordon Sims is director of organization relations and programs for the Project Management Institute. Previously he was an officer in the U.S. Navy.
