Project Portfolio Management in Higher Education – It’s not all about the Money

Higher education is already a competitive business and becoming more competitive every day. The entrance of for-profit, publicly held companies, and even venture capitalists highlight that it’s a growing multibillion dollar business.  One for-profit publicly held institution of higher- learning collects roughly $2 billion annually in taxpayer-funded federal financial aid on behalf of its students while crediting students for tuition paid (http://www.lieffcabraser.com/consumer/university-phoenix.htm).  For academic purists, this sounds like blasphemy. Tradition and gut-reactions aside, it’s hard to argue with the numbers. If this level of for-profit competition isn’t enough, there are also pressures cascading through the U.S. economy. Dramatically rising fuel prices, the falling dollar, and the mortgage crisis are some recent examples.

So, we’ve got a competitive, fast-paced, and chaotic business evolving within higher education.  How are you, as a PMO at a not-for-profit university, going to make a positive impact? It’s clear:  you help the university fulfill its mission of providing a quality education to all those it can while still remaining nimble, efficient and as solvent as possible. 

One way the PMO can further the institution’s mission is to apply outstanding and consistent Governance, Alignment, and Communication techniques to a university Project Portfolio.

I have worked in higher education for nearly seven years now. Prior to that, I worked in the corporate setting and as an entrepreneur. During my time in higher education, I have come to understand some key differences between corporations and universities with regard to the how and why of projects. In the corporate setting, the golden rule typically applies -

 “He, who has the gold, makes the rules.”

In other words, if I have the budget and resources for a project, and can also show that the project increases revenues, increases efficiency or reduces risk, I do the project. However, In the higher education space, bottom-line dollars are frequently not the determining go-no-go factor for many of the projects in the portfolio. This makes sense when we keep in mind the fact that most traditional universities operate at a monetary deficit. The annual revenue generated by credit hours is less than the cost of annual operations and is supplemented by an endowment, alumni giving, grants, and capital campaign dollars. At the same time, a project to add a new academic major may well not result in a profit for the institution but it’s “on-mission” and enriches the surrounding community in some manner.

What do we need to understand about this difference?  Increased speed to market, ever-changing technologies, the pace of societal change and the necessary parallel change in academic offerings means that doing the right projects has never been so important and doing the wrong projects so detrimental to the health of the institution. 

Creating a Well Governed, Well Aligned Portfolio

Creating a well-governed and well-aligned portfolio requires a broad understanding of higher education’s landscape and an in-depth understanding of one’s own institutional culture and characteristics. 

In higher education, mission alignment and strategic objectives often outweigh ROI in dollars. Many projects will not have the traditional financial measures like IRR, NPV, and payback period. Take for example the time I applied a discounted cash flow analysis that measured return over five years to a university project. The project goal was to implement a new dynamic inquiry and application system for prospective students. The project was desperately needed and in the last stages of approval, but the university culture was not used to putting firm numbers to its expected returns.  That level of explicit accountability made people uncomfortable. Consequently, a project with widely agreed-upon qualitative benefits (to provide a quality and engaging experience to potential students) has not yet moved forward because of a negative reaction to a quantitative lens.

I quickly found that if this was the only measure applied to projects across the university, we wouldn’t do any of them.  As a result of this experience, I decided we had to develop a more robust process to review and approve projects within the university. 

Here are some key steps we used in creating a valid and sustainable portfolio process:

Step 1 – Identify Key University Leadership to serve on the Governance Committee – you need engaged decision makers at the table:

• Anyone can have a great idea, but you also need the ones who can say yes and no
• Executive sponsorship for the process is paramount
• Define the differences between operational work and project work for the organization
• Define a workflow request process for new project requests
• Meet regularly to discuss new projects, progress, and status  

Step 2 – Make a List – have key leadership identify all the projects desired across the university and compile the requests as a single document

• Use an interview questionnaire template to generate consistent data for requests
• Categorize the information received in a meaningful way for your audience
• Get the draft document into the hands of leadership – this gives Executive Leadership up-front insight into whether or not there are more project requests than time and money
• Have each executive leader prioritize their requests Independently and then as a group

Step 3 – Check it twice with an Alignment Document – this should reflect the university mission, strategic objectives, and goals. Make sure everyone involved in the process has a copy

• Use this document as a reference during the prioritization process to encourage  consistent application of decision standards

Step 4 - Create an Objective Project Scorecard – this should include weighted ranking criteria sections such as mandatory/compliance, alignment, process improvement, risk, benefit (there are a lot of ways to do this…the important part is for all projects to be compared against the same criteria).

• Use this tool to help prioritize the project requests
• Educate in advance there is a good chance not every idea will make the cut – there are limited resources and dollars, folks.  Also, just because we can doesn’t mean we should (having budget and resources available is not a compelling enough reason to do a project).

Step 5 – Elicit and Document Capacity and Utilization of Human Resources - we have to know who we have, the skill sets available, the hours available for innovation (not operations work-time), and the potential costs of outfitting the organization with skill sets needed to succeed

• This could be as simple as using an Excel spreadsheet to capture and document human resource availability
• At some point, you’ve got to track effort hours to be able to benchmark

Step 6 – Communicate the Process and the Results – if no one knows there’s a process, then there isn’t one

• Once you have buy-in from Leadership and have demonstrated the value of this process, start the communications road show. The organization has to be informed and educated about the process and the WIIFM (what’s in it for me)
• Create reports that have actionable information for the Leadership team and project stakeholders

Step 7 – Find a Usable PPM/PMIS Integrated Tool – you eventually must have a place where all portfolio/project data can be stored, processed, and viewed.  

• Once you have been through this process and you have had some measurable success and buy in, find an integrated portfolio/PMIS where you can really begin to provide transparency in the process while gathering and persisting valuable project data