Firstly, what is a portfolio and what is portfolio analysis?

Portfolio is a collection of projects, grouped together by a theme, such as sector or country.

Portfolio Analysis is slicing and dicing your company’s data to see what is happening through the lens of a particular theme. How are we doing in the UK? What is our performance like in the Pharmaceutical sector? You get the picture.

But why should you care about this? Let us give you 4 reasons…

Reason #1 - All projects are not created equal

You might think that a lot of the work you do is very similar – maybe you’ve got a particular specialism or a focus sector, and most of your projects may seem alike.

But beneath the surface there is always more to the story, starting with different inputs. These can be different clients, different sectors, different project types, different geographies, different delivery teams and so on.

Combined with that, you can guarantee that there’s variation in project performance, resulting in different outputs. Different fees, different margins, different resource challenges.

Portfolio Analysis helps you to analyse those inputs so you can connect the dots to what they mean for your business-critical outputs like revenue and margin.

One approach would be to analyse and compare performance by Project Manager. Take a look at the portfolio of projects where Rachel is the Project Manager – how is her portfolio performing? How does that stack up vs. Mark’s portfolio of projects?

Similarly, how does the portfolio of projects we’re delivering for Client A compare with that of Client B?

Once you have that visibility, you can spot issues and trends and take well-informed action. Do we need to upskill Mark on having conversations with clients around scope creep? Do we need to address some payment issues before taking on any more work for Client B?

Reason #2 - Bridge the gap between what's going on at the company level, and what's going on at the project level

Almost all companies have a sense of what’s going on at the company level. How much work they’ve won compared to last year, what the overall picture for company profitability looks like etc.

At the other end of the spectrum, most companies have at least some idea of what’s going on at the project level. In a perfect world that’s coming from a project management system that surfaces real-time performance data… but as a worst-case, project managers should have some sense of how their projects are doing (albeit that gut feel isn’t always accurate).

However, the challenge companies often face is bridging the gap between the company level and the project level. How do tens, hundreds, or even thousands of individual projects feed up into company level performance? With so many individual data points, it can be really hard to spot the patterns across the moving parts.

For example, are there certain types of projects that are outperforming others? Are we killing it in some sectors but dying in others? No doubt some areas will be doing well, but some may be performing poorly – but how do you pick these out and identify the common themes?

Adopting a portfolio view of the world enables this by aggregating information across logical groups of projects, but without zooming all the way out to high level company numbers.

Think of portfolios as the bridge between being lost in the weeds of individual projects and the overall 50,000-foot view of company performance.

Reason #3 - Set focused targets, with clear accountability

To drive your company in the direction you want to go, clear targets are essential. However, it’s just as important to ensure that those targets are specific, measurable, and clearly owned.

As an example, you might be in a firm with three partners and have an overarching goal to win 30% more work this year. That’s great, but it’s a bit high-level for really focusing the mind of each of those three partners, day-in and day-out.

A more specific approach with greater accountability could be:

  • Partner James to win 30% more work in the public sector
  • Partner Rosie to win 30% more work in Canada
  • Partner Jude to win 30% more work in Digital Transformation

A portfolio-led approach to reporting helps you cut through your data to identify opportunities and set specific, measurable targets. Just as important, if you can make this view of the world constantly visible, it will help to focus the mind and drive accountability for portfolio owners.

Reason #4 - Double down on where you're winning and make changes where you're losing

If you only look at individual projects (or only look across your entire company), it can be hard to spot the patterns of where you’re winning and losing.

Are there certain areas that are draining your profits and hoovering up all your resources?

With scarce resources, if you want to drive your firm in your chosen direction its crucial to effectively prioritise your best sectors, project types and even clients.

A portfolio-based approach to reporting can instantly shine a light on where you should be focusing your efforts, and where you should be making changes or stepping back.

How to get started

To get going, consider starting with a basic piece of portfolio analysis. To define the analysis, there are three key factors to consider:

  • The period to review (last 12 months, last 3 years etc)
  • The key metrics to analyse (revenue, profitability, YoY growth etc)
  • The themes to focus on (sectors, geographies, project types etc)

Slice and dice your data on this basis, and you’ll likely be staggered at what you find. That ‘great client’ might not be that great after all. The project type which ‘everyone knows’ is really profitable, might actually be breakeven at best. Even if you only do this exercise once a year, it should give you some extremely helpful insights to support your decision making and planning.

Here’s a really simple example that looks at 4 different areas of the business and 3 key metrics, namely Revenue, Profit Margin and Pipeline:

What jumps out is that whilst ‘Operations’ is the smallest area of the business by revenue, it’s actually the most profitable.

It also has a reasonable pipeline of future work. However, it’s clearly a real cash cow for the business so it’s probably worth focusing extra hard on pipeline generation in that area, safe in the knowledge that you’ll be growing the most profitable area of your business.

Now, you just need to decide who will own this initiative, and how to make them accountable for it.

Achieving great results

If you really want to drive success, we’d encourage you to use portfolio reports as part of your monthly management reporting. Set targets for your key portfolios and monitor progress against those targets as a forcing function to drive results.

To achieve best practice that drives accountability, action and attainment we recommend you make portfolio reporting:

  1. Visible in real time
  2. Specifically tailored to each portfolio owner

Whilst you can do this on spreadsheets, it’s time-consuming and unlikely to be in real-time. That’s exactly where CMap’s Portfolios tool comes in. Feel free to take a look at it here.

portfolio-page

Whether you use a real-time solution like CMap or take a more basic, infrequent approach with spreadsheets, we guarantee that if you do regular Portfolio Analysis and use the insights to make decisions and drive action, your efforts will certainly be rewarded.