Unveiling the Impact Part 2: Program and Portfolio Level Requirements Analysis Process

Dr. Sriram Rajagopalan, Inflectra

In our earlier article authored by Orca Intelligence, we discussed the pivotal need for impact assessment at the project level for the requirements analysis process. Regardless of the nature of the project in any industry, the word “impact” drives risk-management discipline at the heart of the requirements management lifecycle. At the project level, this impact analysis involves identifying the specific requirements or changes that need to be analyzed for its impact on goals and objectives and then evaluate their potential impact to come up with preventive and corrective controls. 

As we scale the impact assessment at the program and portfolio level, the complexity also exponentially increases. Programs composed of related projects are focused on benefits and contain many projects, subprograms, and program-related activities mapped to the program lifecycle. The portfolios are focused on the operational state to sustain value and contain programs, projects, and operations. Therefore, the project level impact assessment requires different sets of techniques and tools because the number of stakeholders, the nature of risks, and the scope of activities are complex. As implementing these techniques and interpreting the results require comprehensive understanding beyond the scope of our blog, let us focus on a brief overview of the techniques. Readers can benefit from the earlier webinar on the top portfolio and program management (PPM) techniques. 

Program Level Impact Analysis

Programs typically involve many projects. The capabilities from each project are integrated for the program deliverable. While the fundamental stakeholder engagement techniques, like the stakeholder engagement assessment matrix, power-interest grid and RACI, are reasonably adequate at the project level, the related and interdependent nature of the projects in the program require assessing stakeholders furthermore. One such technique is the salience model using power, legitimacy, and urgency to assess the nature of the stakeholder’s impact on the project, and subsequently, the level of impact assessment needed for their needs, expectations, and wants. By categorizing the stakeholders into one of the seven areas, program managers can focus on the requirements raised by critical stakeholders relevant to the program components. 

Benefits Register is an important program impact assessment artifact that captures program deliverables. This register should catalog expected benefits across all projects categorizing them (e.g., financial, operational, strategic) and linking them to program objectives. It further identifies various stakeholders along with the benefit owner and measurement details along with earned value indicators projected over a financial period. In larger programs, the benefits can be mapped visually using the benefit dependency map (BDM) for impact assessment, prioritization, and resource optimization. These techniques are prevalent in the Scaled Agile Frameworks like SAFe and Disciplined Agile. This benefits register is part of the benefits management plan serving as the program’s baseline for evaluating benefits delivery, risks to delivery, lagging indicators, and leading indicators, allowing the steering committee to make proper decisions.

One of the major challenges with programs is the impact of the interdependencies among the projects. While the benefit dependency map visually presents the higher level impacts, sometimes the programs may have to delve deeper into the individual program components and their dependencies on other projects. When such detailed analysis is warranted, the impact assessments frequently involve one of two approaches: Design Structure Matrix (DSM) or Social Network Analysis (SNA). While the DSM analyzes the structure and representation of each inter-project dependency throughout the program benefit map, the SNA focuses on the extent to which these dependencies are close to each other or impact other projects. As programs get more complex, additional simulation studies may be called for more granular impact assessment of every contributing variable. All these methods are elevated forms of risk management to evaluate what areas of the inter-project dependencies should be prioritized to maximize the return on investment (ROI) and efforts spent towards benefit delivery.

Portfolio Level Impact Analysis

Since portfolios are larger initiatives, one of the first impact assessments that they engage in is the optimal utilization of resources. Traditional organizations use the ROI to determine which portfolio of projects and programs should be invested in. Some of these initiatives may be governed by the risks of regulations and must be selected to stay competitive. Other selection criteria may evaluate which combination of initiatives will provide the optimal balance between the expected returns and risks. 

Organizations use more than one impact assessment tool to evaluate this balance. Below are some of these impact assessment techniques at the portfolio level for problem-solving and decision-making:

1. Efficient Frontier: A graphical representation of the optimal combinations of risky and risk-free assets that provide the highest expected return for a given level of risk tolerance. It is a curve that shows the optimal trade-off between risk and return, often used by investors to construct diversified portfolios that meet their individual risk and return objectives.

1. Scenario Planning with Real Options Analysis: Enhances traditional scenario planning by incorporating Real Options Analysis. This technique, borrowed from financial theory, helps quantify the value of flexibility in project and program execution. It uses decision tree analysis in conjunction with Real Options to model different strategic pathways and their potential outcomes.
2. Strategic Impact Assessment using Balanced Scorecard and Strategy Maps: Implements a modified Balanced Scorecard approach, tailored for portfolio management. It develops Strategy Maps to visually represent how different initiatives contribute to strategic objectives across multiple perspectives (financial, customer, internal processes, learning, and growth). These Strategy Maps integrate with a dynamic Performance Measurement System to track leading and lagging indicators of portfolio performance.

Regardless of the combination of techniques used in impact assessment done on the initiatives to be implemented within the organization, these impact assessments proactively help with the level of capability (skills and competencies needed for the future state of the organization) and capacity (type of people and partnerships needed to address the competition). Organizations opting to play in the process based governance may pursue the Capability Maturing Model Integration (CMMI) or Six Sigma. Consulting organizations may use the Organizational Project Management Maturity Model (OPM3) or combine it with other approaches including but not limited to Lean Portfolio Value Mapping. 

As we wrap up these series that Inflectra and Orca Intelligence have been providing this entire 2024, it is important to understand the requirements in a larger context and also look at the impact of risks on the requirements. As I learned from my experience in managing projects, programs, and portfolios, “If you don’t manage risks, risks will manage you.” So, it is best to get ahead in understanding the impact assessment needs for your initiatives. 

Associated readings

1. Part 1: Enhancing Agile Scrum Through Effective Requirements Management and Prioritization
2. Part 2: Effective Generation and Prioritization of Requirements
3. Part 3: Unveiling the Impact Part 1: Project Level Requirements Analysis Process

References

Rajagopalan, S. (2020). Organized Common Sense: Why do Project Management Skills apply to everyone. Denver, CO: Outskirts Press. 

Rajagopalan, S. (2020, Feb 7). Top 5 Techniques in managing Programs and Portfolios.