The Scope of Project Management

The scope of project management is extremely vast (Blichfeldt & Eskerod, 2008). Companies implement project management tools and framework for the purpose of arriving at decisions related to projects. Project management is implemented for the purpose of arriving at specific conclusions regarding targeted projects. A project encompasses unique and not routine operation in specific areas of operations defined. The scope of the current study deals with project management endeavors as undertaken by Rolls Royce Company.

The Company along with manufacturing of cars is also into manufacturing of aerospace automobiles. The Company’s primary focus is on engineering and quality delivered (Ertekin, 2009). It focuses projects on basis of project selection criteria ascertained by the Company. Bentley Motor Company is another British automobile manufacturer and makers of luxury vehicles. The Company undertakes projects on particular selection criteria and then implements project planning as per cost and time schedules. Project management models are available of different types. A company on the basis of its project criteria might select and implement a project management model. The PMO provides a methodological framework for guiding the conduct of any type of project.

A Company might select a particular model on the basis of some criteria’s and reject some on the basis of others. Once a project management model has been selected a portfolio for the values that can be generated from a project is ascertained in order to draw a conclusion regarding the same (Huemann, 2016). Portfolios are developed using various valuation techniques such that Value Maximization and Balanced Portfolio can be ascertained in an appropriate manner. The current analysis includes a description of PMO models and forming the basis for their selection and using of portfolio evaluation techniques.       

Organisational Portfolio Program Project Management (P3M)

1.1 Main Portfolio structure of the company including programs

Organisations implement varied types of portfolio programs for project management. While an organization accepts a project on the basis of its acceptability such as budgetary and deadline schedules, it develops several portfolios for the same. Project management for Rolls Royce and Bentley has become tools for implementation of their strategies (Geraldi, Maylor & Williams, 2011). While project management is vast and includes various areas and fields, it has become an integral concept towards implementation of the value chain of the Companies. Programs are a collection of projects that are considered by the companies for implementation.

However, the program generally has a common strategic objective or it can be said that similar projects are grouped together to form programs. Portfolio management has its basis on financial theories. In the case of project portfolio management, a project has to be balanced against its assets with risks, returns, ROI, long-term growths, NPV, strategic alignment and pay-back period. Portfolio structure allows the company to decide upon whether various projects need to be undertaken or they possess substantial risks (Turner, 2014).        

While evaluating both the companies in their portfolio management structure, it has been noticed that both companies are luxury automobile manufacturers. Rolls Royce has a component of investment in aerospace engineering but that might include substantial risks. The portfolios on which the company can be considered to be working in the current scenarios are 2 varied luxury SUVs models of automobiles. Both the companies are competitors against one another hence, there has been realized a space in SUV vehicles that the desired models of the companies can fulfill. The luxury automobiles that Rolls Royce is working on are electrical vehicles for its Phantom Coupe and another innovative model that the company has not yet named.

Project Management for Rolls Royce and Bentley

The portfolio structure consists of high return and high-risk portfolio for the Company. Though market acceptance for electrical vehicles is high, there is a tremendous high investment in R & D required. Moreover, this is the first time the company is planning to launch its electric vehicle, so market acceptance for the new product remains totally unknown. The company is undertaking a facelift for 103EX and improvisation for Hyperion. Bentley, on the other hand, has programs of manufacturing Continental GT Convertible electrical vehicles. The programs for the company include several vehicles that it is manufacturing so as to increase its market share. Electrical vehicles have been a new product that has gained substantial market share in Europe and England and Wales.

Rising price for fuels and rise in environmental consciousness has led the companies to design electrical vehicles. The company has also developed a portfolio for Zagato GTZ and improvisation of Bentayga. However, the company is also improvising upon its other automobile models for the purpose of retaining its market share. Hence, the portfolio structure of the company is better balanced in comparison to its competitor. The following is a portfolio structure for the companies developed.

Table 1: Portfolio Structure

1.2 Alternative portfolio structures of the company

Organisations develop a series of projects and portfolios for management. As the companies mature, they are able to undertake not only one project at a time but several projects. Several projects are undertaken for evaluation, which is grouped under programs and then several programs are integrated into portfolios (Beringer, Jonas & Kock, 2013). Working on a single project cannot be viewed as a process of managing the business. Big businesses such as Rolls Royce and Bentley might have a portfolio structure and then have several alternate portfolio structures one which they might consider investing.

As in the previous discussion, a project portfolio structure for the company has been stated, there was noticed to be alternate portfolios for both the companies as well. Rolls Royce alternative project encompasses investment in aerospace engineering which has not been included in previous discussions. The alternate portfolio for Rolls Royce undertakes a considerable amount of investment and involves a high-risk portfolio. Bentley’s alternative projects that it might consider investing into which will provide the company with the opportunity to balance off its risk-return matrix (Jonas, 2010). Therefore, alternative risk-return portfolio can enable the company to retain its multiple projects and stay profitable.    

1.3 Function of Portfolio Management and Benefits

Programs allow project-based organizations to effectively manage their projects. Portfolio management allows an integrated technique to manage several projects. The goal of portfolio management is valued maximization, balancing between portfolios, strategic direction and selecting a right number of projects (LaBrosse, 2010). The administration plays an important role in the strategic planning and successful implementation. Sometimes the strategy fails because the strategy and implementation are excellent. Some companies have common errors about interference, discipline, and tracking. A good management process for the project portfolio enables companies to manage all of these problems. The project portfolio is managed by a project manager who is looking for different ways to reinvest.

Portfolio Management

The project manager must be an expert in the field and should monitor and evaluate the portfolio over time to ensure that the portfolio achieves high yields with a low margin (Meskendahl, 2010). Each organization must have a project manager responsible for portfolio management. The Portfolio Manager performs analyses and results of common portfolios in terms of risk and profitability. Portfolio management is a centralized and focused task that involves risks associated with portfolio care. The main responsibility of the portfolio management is to measure the objectives, risks, and results associated with investment activities, adjust investment decisions and policies, and allocate assets to individuals and institutions (Koh, 2011).

Roles or project portfolio management includes discovering a set of viable projects that meet business goals. Ensuring a combination of projects involving various factors, such as in R & D, short-or long-term risks, rewards, and so on. Design and implementation of selected projects in an optimal way. Performance and portfolio assessment and ways to improve for projects. The latest Real-visibility analysis compared to the current portfolio, comparing the performance of the organization’s project (Müller, Martinsuo & Blomquist, 2008). Making recommendations to decision makers at all levels of process management. The knowledge of improving the management process of the project portfolio increases with increased efficiency.

In many companies, the improvement of the project portfolio is now part of the organization’s learning process. Collect and report interim portfolio data by defining portfolio targets, development of resource and asset types. Project objectives, resources and asset portfolios and making the first assessment by defining the strategic source for multiple projects in your organization. Prioritize the project portfolio according to accepted criteria and available data. Assessment of portfolio balance and develop recommendations to increase ROI. Facilitation of meeting of the Board objectives. Provide the necessary information to the various departments. The good management of the project portfolio serves the organization’s growth and development.

Choosing the right methods is a major challenge and portfolio management enables the company to take proactive measures to take all necessary steps to achieve a high risk of a certain risk (Koh, 2011). The companies will have these varied benefits arising from integrating into portfolio management, therefore overall it would allow handling projects of the company in a better manner. 

Project Portfolio Design 

2.1 Project classification process/ procedure

Each project is different within a company is different. Projects can be divided into types. The content of the project is based on a number of factors such as complexity, resource source, content, purpose, and purpose (Killen, Hunt & Kleinschmidt, 2008). Projects can be classified as on the basis of complexity. A simple project is easy to classify when the relationship between tasks is the foundation and not necessary. In this case, a small working group and several external actors and partners have a common role. Complex project network is wide and complex. There are many tasks of interdependence.

These projects simplify everything as much as possible. Projects can be classified also from their Capital source. The public source includes financing comes from state institutions. Private capital sources include finances coming from companies or private incentives. Variable capital sources of finances come from a mixed source of public and private funds (Martinsuo, 2013). Depending on the content of the project, it might be classified. The scope of the projects as undertaken by Rolls Royce and that of Bentley can be described as private capital funding project. The projects have been categorized as such because they will be progressed using private funds available form the company. Construction projects have something to do with the construction of civil or architectural workplaces.

Main Portfolio Structure of the Company including Programs

Proactive methods are used in combination with flexible technology. In IT projects with software development, information systems, and so on are classified under this category. The different types of information management systems vary, but in today’s world, it is very common (Nguyen & Mohamed, 2018). Company projects have commercial development, equipment management, cost management, and so on. Such projects usually follow a commercial strategy. Service or product design is innovative projects for product or service development, product design, and so on. The projects for Rolls Royce and Bentley will include extensive research and design endeavors.

2.2 Project selection criteria

A project designed by a company can be subject to selection or rejection. Each company has their project selection criteria. For Rolls Royce and Bentley the project selection criteria will be based on the following aspects;

• The probability of Success: Some projects might succeed and some might not. Therefore, for the selection of projects, most of the managers of the project take into consideration the current situation that may arise and use them in the choice of projects. The organization sends these criteria and selects the previously unsuccessful projects or low probability of a successful project. Meaning Rolls Royce and Bentley will adopt those projects only which has a considerable probability of success.
• Access to data: Information about the project is available. Although the majority of project managers and sponsors rarely vet due to all the information that is required for the project, expected to be taken into account. However, you must use the accessibility criteria for selection of projects because they can avoid the excessive costs, resources and efforts.
• Amount of savings: All projects are aimed at some of the other types of tangible or monetary benefits. The risk of focusing too much on saving does not yield much value but is considered as integral when considering a project.
• Appropriate time-frame: It is always good to have an apt starting point for any project. The right time to start to the next level and deciding on closure plan is an integral factor for the project.
• Access to resources: Organizations publish complete lists of all resources for all projects as proposed by the employer or client. The idea of parking the right resources being available to the projects can help develop an ideal plan.
• Customer impact: Client perspective difference in quality or service has to be responded to. Projects with the highest possible customer impact will be able to generate maximum possible returns.
• Priorities in business: The choice depends on the project or enterprise needs. Project Manager must understand that he could not undertake a project that does not have a much organizational impact. As Rolls Royce and Bentley devise projects purely based upon priorities in their business.

All the above criteria’s will be considered for evaluation of the project by the Company.

2.3 Project selection methods

While implementing a project, there are various selection methods that the organization’s project manager has to integrate. Management generally integrates measurement methods, to estimate the potential projects under some model and compare progress among the applicants El-(Ja’bary & Ashour, 2015). Some models that are used for selection criteria for projects include;

• Cost-Benefit Ratio: Cost is a simple way to communicate the potential value of the project in one easy-to-understand how the simplest method of allocation. Investment costs of the project in relation to the value that is returned by the end of the measure.
• EVA model: Economic model, also called the economic value (EVA), similar to the cost-benefit analysis. It describes the difference between the cost of that is invested and higher benefits.
• Payback period: Time to return investments made into the project can be calculated from this measure.
• Discounted Cash Flows (DCF): Cash flow analysis focuses the issue to compute values of the current dollars earned in the future. This is one of the best ways to compute the return value, which can be used for a long time and not immediately afterward.
• Net Present Value (NPV): Although the model the depreciation period is easy to calculate and easy to understand, includes models DCF model interest rates lower, the monetary value of the projects. For example, in general, on the risk of profitability, stakeholder support is also difficult in the project.
• Scoring Models: Scoring model compares projects with one scale against another measurement scale. The total amount for the project, taking into account the trend of the project, allows you to easily compare the models.
• Internal Rate of Return: It is the calculation of NPV by setting it to zero. This, in practice, that all the cash flow of the project (from positive to negative) is even with each other.
• Opportunity Cost: The term cost of the offer is useful for certified project managers. In fact, the cost of living that was lost at the bottom, this task on others.

Both the companies whose projects are being evaluated will make use of a number of valuation criteria for their projects. There are a number of project evaluation techniques amongst which for Rolls Royce and Bentley Expected Commercial Value (ECV) which will maximize the commercial worth of the portfolio linked to certain budget constraints will be used.

2.4 Applying a selection model

The selected model based on project selection criteria Expected Commercial Value (ECV) model has been considered to be appropriate. The formula for ECV is known as;

ECV- [ ( NPV X Pcs X SI – C)    X Pts – D]

Once the probability of commercial and technical success is known along with development cost and commercial costs, ECV can easily be computed. The rank and stats for each project are obtained by dividing ECV by Development cost.

Table 2: ECV Model Calculation

Analysing the rank status for each project, it has been obtained that 3 projects can be gone forward with, whereas one project has to be kept on hold.

Sources and Solicitation of Project Proposal

An organization might have several projects in its hand. It is not possible to apply all the projects, therefore, a selection criterion for projects has to be accommodated. Those projects should be communicated and should be undertaken only which has been able to generate positive cash flows in the future. Projects that receive go rank can be gone forward with, whereas those projects in which Development Cost and ECV are dissimilar needs to be kept on hold, till further considerations can be made.

Ranking Proposal and Selection of Projects Process

Projects receiving a ranking on the basis of their ability. As in the above instance four different cases for each automobile company, several cases are on hold, one has to be rejected while others can be executed. The ranking is determined by dividing Cash flows generated by the project in the future time period and dividing it by ECV.

Alternative Portfolio Structures of the Company

Balancing the Portfolio for risks and Types of Projects 

5.1 Project portfolio matrix

The project portfolio matrix can enable the plotting of different projects portfolios within a single chart place. There are four quadrants in which each of the projects can be plotted; they are white elephants, oysters, bread and butter and pearls. Pearls can be referred to the three projects of Bentley and one of Rolls Royce. They are potentially star products and have the capability to provide a very high yield in the future time period.

Oysters are two projects off Rolls Royce which are long-term in nature with a higher payoff. The electrical products might be regarded as technical breakthrough products of the Company. Bread and butter are the small projects of Rolls Royce that is simple yet with chances of success. White elephant is the one with negative ECV from Bentley which can be rejected. It has low probability with low chances of success.     

Tools & techniques of Program Management

Several tools have been developed for the purpose of program management. They are developed to allow undertaking decision relative to a particular project or making a choice. Some of the tools include Strength, weakness, opportunity, threat analysis. Stakeholder analysis, risk mapping, cause-effect diagram, decision tree, radar chart, 4D bubble diagram and so on. These tools are integrated into programs so that visual representation can be made and decision relative to a project can be undertaken. 

Enterprise Portfolio Management Office (EPMO)

In order that challenges faced by PMO could be overcome, Enterprise Project Management Office was built. An EPMO is a centralized business function that is able to operate at levels strategic along with enterprise executives for aiding in enterprise-wide support in project portfolio management, governance, monitoring, and standardized process development. The varied types of EPMO those focused on Governance, those focused on Best Practices and those which are focused on Portfolio Management and Application of Portfolio management.    

7.2 Models for PMOs

The models for project management are based on four basic frameworks of governance, methodology, capability, execution, and sustainability. The model develops complex management practices and principles through varied processes by application of the concepts of project management. It undertakes business strategy initiatives for the implementation of business objective development.   

8.1 Expected Commercial Value Method (ECVM)

The method aims at generating maximum possible value from a selection of a particular project. It can be calculated by means of a specific formula as has been discussed above. It is reflected through the arriving at the value for projects for both the companies as has been compared above.

8.2 Balanced Portfolio/ Risk-Reward Bubble Diagram

In order to arrive at a balance between risks and return from a particular portfolio, its risk-return has to be measured and subsequently plotted. The risk-return for the above portfolios for both the companies has been plotted in the bubble diagram and their strategic choices have also been indicated below.

Strategically aligned portfolio

Strategically aligned portfolios are those which can portfolios which are pearls or bread and butter for the company. As indicated in the figure above it can be clearly understood which projects should be selected and which ones have to be rejected.

P3M standards

The P3M standards include guidance and best practices in regards to portfolio, projects, and programs. It allows in the optimization of portfolios by defining various integral concepts related to it. The P3M model is a management maturity model implemented across organizations related to ways in which it can deliver projects, portfolios, and programs. Developing and applying such standards would allow the creation of current capabilities and ascertain of KPAs related to specific projects, programs, and portfolios.  

Conclusion

Project management is a tool that is required by organizations for the purpose of evaluation of various projects. When organizations work with multiple projects, then they need to construct a portfolio which is suitable for evaluating various projects or programs. Programs constitute similar projects, as in this case programs or projects of both the companies are related to automobile manufacturing.

Not considering alternative projects and focusing on the main projects. Consecutive analysis of the portfolio values reveals that while some projects need consideration by the companies others can easily be rejected. When accepting a project for implementation some of the recommendations that have to be followed include;

• A project management model has to be diligently followed that allows a suitable framework for the accomplishment of critical objectives defined within the project.
• Adapting to a P3M standard will allow integrating a management maturity model through which both the organizations will be able to deliver steady projects, portfolios, and programs. Prioritizing on KPAs will allow accomplishment of tools that can help in extending capability.
• A continuous monitoring and evaluation of projects have to be accommodated such that the projects are able to be completed according to their destined schedules and time frames along with budgetary conditions.

Reference Lists

Beringer, C., Jonas, D., & Kock, A. (2013). Behavior of internal stakeholders in project portfolio management and its impact on success. International Journal of Project Management, 31(6), 830-846. 

Blichfeldt, B. S., & Eskerod, P. (2008). Project portfolio management–There’s more to it than what management enacts. International Journal of Project Management, 26(4), 357-365. 

El-Ja’bary, S. M., & Ashour, Y. H. (2015). Status of Using Quantitative Methods in Project Risk Management.

Ertekin, Ö. (2009). Shared Understanding Management. Project Management Institute. 

Geraldi, J., Maylor, H., & Williams, T. (2011). Now, let’s make it really complex (complicated) A systematic review of the complexities of projects. International Journal of Operations & Production Management, 31(9), 966-990. 

Huemann, M. (2016). Managing the project-oriented organization. In Gower Handbook of Project Management (pp. 493-506). Routledge. 

Jonas, D. (2010). Empowering project portfolio managers: How management involvement impacts project portfolio management performance. International Journal of Project Management, 28(8), 818-831. 

Killen, C. P., Hunt, R. A., & Kleinschmidt, E. J. (2008). Project portfolio management for product innovation. International Journal of Quality & Reliability Management, 25(1), 24-38.

Koh, A. (2011). Portfolio management: Roles, responsibilities and practices: A qualitative study, 12.

LaBrosse, M. (2010). Project?portfolio management. Employment relations today, 37(2), 75-79. 

Martinsuo, M. (2013). Project portfolio management in practice and in context. International Journal of Project Management, 31(6), 794-803. 

Meskendahl, S. (2010). The influence of business strategy on project portfolio management and its success—A conceptual framework. International Journal of Project Management, 28(8), 807-817. 

Müller, R., Martinsuo, M., & Blomquist, T. (2008). Project portfolio control and portfolio management performance in different contexts. Project management journal, 39(3), 28-42.

Nguyen, T. S., & Mohamed, S. (2018). STAKEHOLDER MANAGEMENT IN COMPLEX PROJECTS. 

Turner, J. R. (2014). Handbook of project-based management(Vol. 92). New York, NY: McGraw-hill.