International Construction Specialty Conference of the Canadian Society for Civil Engineering (ICSC) (5th : 2015)

State of practice in portfolio management : a comprehensive survey Masoumi, R.; Ashuri, B.; Minchin, R. E.; Shahandashti, M.; Touran, A. Jun 30, 2015

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5th International/11th Construction Specialty Conference 5e International/11e Conférence spécialisée sur la construction    Vancouver, British Columbia June 8 to June 10, 2015 / 8 juin au 10 juin 2015   STATE OF PRACTICE IN PORTFOLIO MANAGEMENT: A COMPREHENSIVE SURVEY R. Masoumi1, 5, B. Ashuri2, R. E. Minchin3, M. Shahandashti4, and A. Touran1 1 Department of Civil and Environmental Engineering, Northeastern University, USA  2 School of Building Construction/School of Civil and Environmental Engineering, Georgia Institute of Technology, USA 3 Department of Civil and Environmental Engineering, University of Florida, USA 4 Department of Civil Engineering, University of Texas at Arlington, USA 5 r.masoumi@neu.edu Abstract: There has been an increase in the practice of managing multiple projects as the number of megaprojects has decreased and firms try to manage a larger number of smaller projects. The use of portfolio management is growing in the industry to allow firms to maximize the use of their limited resources. This paper reports on the outcome of a comprehensive survey, which was supported by the Construction Industry Institute (CII) and a team of 17 experts from various firms. The survey focused on identifying contemporary portfolio management practices by asking 28 questions on five topics: firm information, makeup of a portfolio, current practices, performance metrics, and implementation. The survey was designed to give an insight into what successful owners and contractors have done in implementing portfolio management. It was found that owners approach portfolio management differently from contractors. Owners generally establish strategic business objectives and select projects and form their portfolios using their available resources. On the other hand, contractors try to win projects and follow their clients’ regulations; however, they still need portfolio management to efficiently manage their projects. A major emphasis of this research effort was the list of performance metrics used in portfolio management. Owners who successfully implemented portfolio management within their firms have practiced the use of a formal project prioritization system in a portfolio. All of these firms use dashboards with performance metrics to show the performance of a portfolio. The Main indicators found on current dashboards include cost, schedule, safety, and overall success of the portfolio. 1 INTRODUCTION The objective of the research was to identify recommended practices for project portfolio management. In this research, a portfolio is defined as a group of related or unrelated projects and/or programs managed by a single individual, hereafter referred to as a portfolio manager. This definition was decided by the research team and is different in some respects from the standard definition in the Standard for Portfolio Management (PMI 2013), which considers meeting strategic business objectives of a firm by implementing a portfolio approach. The research team consisted of the authors and a group of 17 industry experts from CII member firms. The research goals were covered in three main stages as shown in Figure 1. The Survey is included in the “Collect Data” stage prior to interviews and case studies. The purpose of the online survey was to 038-1 help in identifying the principle drivers, metrics, tools, processes, and techniques, of successful portfolio management and also, the main barriers to successful implementation of portfolio management in various firms. Another purpose of the survey was to help in screening and identifying the most appropriate firms for in-depth face-to-face interviews. The online survey questions were designed with the help and participation of all team members. The research team finalized the 28 questions following two goals. First, the survey was designed such that respondents could complete it in 30 minutes or less. Second, the questions were organized in a logical way so that the respondents could see the continuity of questions.  Figure 1: Three stages of the research methodology (CII RR303) The research team made a major effort to extend the data collection beyond the CII data liaisons. For this purpose, the members of Construction Management Association of America (CMAA) and Construction Users Round Table (CURT) were contacted to increase the response rate. The research team helped in identifying and introducing individuals who could contribute to this effort. 2 CATEGORIES OF QUESTIONS The survey questions were divided into five categories: 1. Firm information, 2. makeup of a portfolio,  3. current practices, 4. performance metrics, and 5. implementation. Six questions under the “firm information” category were designed to collect information regarding the firm type, industry sectors, and the name and role of respondents. The survey was intended to gather information from all types of firms, public and private, CII and non-CII, and owner and contractor. The “makeup of the portfolio” category included six questions to get a perspective on formation of portfolios in terms of size, duration, and dollar value of projects. Moreover, other questions were asked about the availability of individuals who managed multiple projects and their titles. The next category, “current practices,” included seven questions. These questions attempted to collect information regarding available tools on portfolio management in 13 various areas such as schedule, cost, cash flow, procurement, resource allocation, communication, quality, scope, change management, safety, risk management, issue management, and/or Key Performance Indicators (KPIs). Moreover, some questions were about using standard tools and practices, using CII best practices, prioritizing projects, and giving authorities to portfolio managers at the portfolio level. One of the goals of the research was to identify useful applicable metrics in different areas. Six questions under the “performance metrics” category were designed to understand the available metrics in 15 areas including the 13 aforementioned areas and overall portfolio health and success. One question was about the areas that metrics could be included in a dashboard; moreover, respondents were asked about the importance of including these 15 areas in an ideal dashboard. A five points Likert scale with 1 (least important) and 5 (most important) was used to identify the importance of areas in an ideal dashboard. Three questions were included in the “implementation” category. These questions were designed to measure the level of portfolio management success within firms, to understand the barriers in a successful application of portfolio management, and to understand any related suggestions or comments.  038-2 3 FIRM INFORMATION The online survey was launched using the SelectSurvey™ tool provided by the CII. The survey was sent to 306 individuals in 251 firms. This included 130 CII and 121 non-CII firms. The response rate was 45% of email recipients and 36% of firms. These rates compare favorably with similar data collection efforts using the online survey tools (Nulty 2008; Hamilton 2011; Johnson and Owens 2003). Slightly over half of those interviewed were from CII firms as shown in Table 1.  Table 1: Statistics of respondents in different firm types Firm Type Respondents #* %** CII 49 54.4% Non-CII 41 45.6% Owner 53 58.9% Contractor/Consultant 37 41.1% * Number of Respondents  ** Percentage of Respondents The survey was designed to get a perspective on portfolio management in different industry sectors. Respondents could select as many industry sectors as they were active in. Table 2 shows the percentage of individuals responded to the survey in different firm types. More than three-fifths of those interviewed were in heavy industry sector. Several of the firms interviewed were engaged in more than one sector of the construction industry; hence the sum of percentages goes well over 100.  The firms in “Other” sector were active as consultant, manufacturer, healthcare provider, software developer, and educator. Table 2: Statistics of respondents in different industry sectors  Industry Sector  Infrastructure Building Heavy Industrial Light Industrial Other Number of Firms 31 28 58 25 19 Percentage of Firms 34.4% 31.1% 64.4% 27.8% 21.1% 4 KEY FINDINGS AND STATISTICAL TRENDS The analysis of responses to other four categories of questions, makeup of a portfolio, current practices, performance metrics, and implementation, are explained in this section. 4.1 Makeup of a Portfolio Almost all firms responding to the survey have individuals who managed a group of projects. Portfolio management was practiced in 87 (96.7%) firms, and only three firms did not use portfolio management extensively. The widespread use of portfolio management indicates the necessity and relevance of the research in all industry sectors. The three firms that did not have individuals to manage multiple projects usually have very large projects managed by one person. Two of these firms still have portfolio management for small projects with a total budget of less than $5 million.  Individuals who manage a portfolio of projects have various titles.  The most common title is project manager following by project director, program manager, and portfolio manager. Many firms have several titles for individuals who managed a group of projects at different managerial levels; hence the percentages do not add up to 100 as shown in Table 3. The respondents had 48 other roles in the “other” category such as senior executive, global construction manager, vice president, etc. 038-3 Table 3: Titles of individuals responding to the survey (percentages) Project Manager Program Manager Portfolio Manager Project Director  Other 76.7 38.4 19.8 41.9 24.4 The survey asked about the extent of portfolio manager’s authority in the following four areas: 1. Budget, 2. Work force, 3. Procurement strategy, and 4. Sequence of execution (schedule adjustment). The level of authorities was different depending on the positions of respondents in various managerial levels. Contractors chose “work force” and “sequence of execution” as the top two areas where authority is given to portfolio managers. The authorities varied from portfolio to portfolio, client to client, and site to site for contractors. Owners selected “budget” and “sequence of execution” as the two top areas of authority given to portfolio managers. The topic of formation of portfolios was investigated considering the typical duration, budget, and the number of projects in a portfolio. 54% of firms do not assign more than 10 projects in a portfolio. More than one-third of respondents do not typically allocate more than six projects to a portfolio. CII owners typically have more than 50 projects in their portfolios while the majority of other firms have less than 6 projects as shown in Table 4. CII owners were mostly active in heavy industrial sector with numerous periodic maintenance needs; therefore, the typical number of projects in their portfolios was more than 50. For other firms, less than 6 projects were dominant due to the large size of the projects. In each table, the largest figure on each row is bolded. Table 4: Typical number of projects in a portfolio   Less than 6 6 to 10 11 to 20 21 to 50 More than 50 # % # % # % # % # % CII Owners 8 25.8 2 6.5 8 25.8 2 6.5 11 35.5 CII Contractors 6 35.3 5 29.4 3 17.6 2 11.8 1 11.8 Non-CII Owner 9 47.4 4 21.1 3 15.8 1 5.3 2 10.5 Non-CII Contractor 8 40.0 5 25.0 4 20.0 2 10.0 1 5.0 Table 5 illustrates that the most common portfolio budget range is larger than $100 million among various types of firms. The size of portfolios was mostly in excess of $10 million. Comparing the portfolio budget range with the number of projects in a portfolio, it could be concluded that firms typically form their portfolios either with many small projects or a couple of large projects. Table 5: Typical portfolio budget range  Less than $5 Million (M) $5M to  $10M $10M to  $25M $25M to  $50M $50M to  $100M More than $100M # % # % # % # % # % # % CII Owners 1 3.2 1 3.2 5 16.1 6 19.4 3 9.7 15 48.4 CII Contractors 3 17.6 1 5.9 4 23.5 2 11.8 2 11.8 5 29.4 Non-CII Owner 1 5.3 2 10.5 5 26.3 4 21.1 2 10.5 5 26.3 Non-CII Contractor 2 10.0 4 20.0 2 10.0 4 20.0 3 15.0 5 25.0 The typical duration of projects is longer than one year for over three-quarters of respondents while majority selected 12 to 24 months. On the other hand, about one-third of respondents have projects that were typically longer than two years. Over 42% of non-CII contractors selected more than 24 months as the typical portfolio budget range. 038-4 Firms mostly used customized software in the fields of cost, schedule, change order, and information management. Owners had some common processes and procedures such as outsourcing of software services, standard stage gate process, and balanced scorecard. The Microsoft Project Portfolio Planner was used only in one owner firm. On the other hand, contractors used several tools such as web based Primavera-P6, software on iPad, and the master integrated schedule tool. One of the contractors had his own portfolio management software for managing projects around the world. A comparison between owners and contractors highlighted that the use of Primavera-P6, Portfolio Contract Management, SAP portfolio management, and EVMS were common among owners and contractors. 4.2.3 Tools under Development Several tools are being developed in firms. Two firms were customizing Unifier Portfolio Manager for portfolio management. This software is useful when a financial goal should be set for a group of projects. Other firms are planning to use server-based software such as PMWeb, repository Citrix, eBuilder, Capex, and custom access databases. Collaborated workflow using Microsoft SharePoint was also implemented to transfer information among divisions. Primavera-P6 or other ORACLE software for Portfolio Management (Oracle R12) and SAP were commonly used by both owners and contractors. A comparison between contractors and owners show that both were trying to securely share data among their projects and define the work flows. The use of data sharing software such as eBuilder and Share Point were common among owners and contractors while for this purpose some customized tools were being developed by owners. Owners also used Capex and Citrix for data sharing. They were working to customize software such as Oracle Unifier, Oracle R12, and SAP for managing a group of projects. 4.2.4 Use of CII Best Practices for Portfolio Management Over two-third of respondents, 47 out of 70, had never adapted CII best practices for portfolio management. CII owners used more CII best practices for portfolio management compared to CII contractors. A CII best practice is a “process or method that, when executed effectively, leads to enhanced project performance” (CII Webpage). A few firms used CII tools for portfolio management. For example, BMC (a software company) have developed some tools based on the CII best practices. The use of CII best practices on safety, PDRI, resource allocation, lessons learned, planning for start-up, team building, front end loading (FEL), and front end planning (FEP) were noted by respondents. A comparison between the CII contractors and owners showed that the use of PDRI was common among them. One of the owners used the Independent Project Analysis (IPA) tools and processes that are similar to CII tools. Some contractors considered their clients’ viewpoints and needs to design a customized FEL or FEP process. 4.2.5 Project Prioritization within Portfolios The project prioritization is crucial for the survival of firms to create the highest value using limited resources. 52.9% of firms did not use a formal system of project prioritization within their portfolios. The prioritization system was used by CII and non-CII owners more than contractors. The percentage of owners who used formal prioritization was higher than those who did not. The respondents did not specify any standard prioritization method for the projects in a portfolio. Some firms have established criteria to prioritize projects, but the prioritization method was not stated. Some firms indicated simple methods for prioritization such as project deadlines, open communication with client, weekly project meeting, safety, revenue, operation improvements, turnaround date for installation, and resource requirements. Some systematic processes were also indicated using tools such as Work Load Planner, in-house risk-based system, SaaS, and StrataJazz. Even though multicriteria decision making (MCDM) methods are available and many research reports and case studies have been published especially on Analytical Hierarchy Process (AHP) (Vaidya and Kumar 038-6 Table 9: Suggested KPIs for measuring portfolio performance Areas Suggested KPIs Schedule Number / percent of milestones completed (or missed) vs. planned Total / average days ahead of (or behind) schedule Cost & Cash Flow Cost variation (monthly and cumulative) – at project and portfolio level Number / percent of projects with costs higher (or lower) than benchmarks Change Management & Scope Management Number of requests for information (RFI) Total cost of scope changes/ change orders Safety  & Environment Incident frequency rates 12-month rolling average of incident rates 4.4 Implementation The survey asked about the level of success in implementing portfolio management by the firms. They were also asked about the barriers in implementing portfolio management. Almost half of firms, 42.6%, rated the portfolio management success as “Average” in their firms, while less than two percent rated the implementation of portfolio management in their firms as “Best in Class.” The barriers based on the respondents’ ideas are listed in Table 10. Table 10: Barriers in implementation of portfolio management  Lack of industry standards and best practices and available training Unclear objectives and priorities • There are no comprehensive standards or best practices.  • There are some tools and best practices but they require customization so that they can be applied to each case.  • There are no written objectives and the prioritization changes over time.  • Sometimes the prioritization of criteria are not comprehensive and cause conflicts among departments. Lack of management support or direction Cost of implementation • There are conflicting ideas among managers at different levels.  • The managers’ knowledge is not the same and it causes resistance. • Software is expensive and needs too much customization.  • Data is not centralized and cannot be passed among projects easily.  Lack of awareness of value added Lack of common code structure • It is hard to quantify the value added to the company.  • The knowledge of senior managers is crucial for portfolio management improvement. • There is no consistency between different departments within some firms regarding cost codes.  • There are no standard requirements for owners. Management interference Lack of previous success • The objectives are not clear for managers. • The organizational structure is not appropriate. • Commercial and custom tools have sometimes not been effective. 038-9 5 CONCLUSIONS Portfolio management is used by almost all of the firms that participated in this survey. The majority of firms are utilizing software tools to better manage their portfolios. The survey has identified various areas where these tools are used, with the top three areas being schedule, cost, and procurement. Primavera-P6 and MSP are the two major tools in the area of schedule while SAP and internally developed tools are used for cost. SAP, Smart Plant, and internally developed software are used in the area of procurement for portfolio management. In all of the areas except schedule, firms have tailored existing tools or developed custom-built software to better adjust with their processes. Firms use a combination of KPIs to track and measure the performance of their portfolios. The most common KPIs on dashboards are in the areas of cost and schedule. Change management is important for contractors as the third KPI and safety and cash flow for owners. The ideal dashboard should include at least three KPIs, cost, schedule, and safety. The survey showed that even though portfolio management has been practiced in firms for more than 30 years, it still has some barriers such as standardization of processes, centralization of data bases, prioritization systems, customization of dashboards, and generalization of concepts, justification of benefits to cost of implementation. Removing these barriers, which may be the subject of future research, can assist firms to improve the efficiency of their resources while pursuing their strategies. Acknowledgements We gratefully acknowledge the financial support provided by the Construction Industry Institute (CII). The cooperation of a wonderful team of experts from nine owner and eight contractor firms is also acknowledged. References Behzadian, M., Kazemzadeh, R. B., Albadvi, A., & Aghdasi, M. 2010. PROMETHEE: A comprehensive literature review on methodologies and applications. European Journal of Operational Research, 200(1): 198-215. Construction Industry Institute (CII). 2014. Managing a Portfolio of Projects – A Playbook for Success, IR303-2, The Univ. of Texas at Austin, Austin, TX. Construction Industry Institute (CII). Expected 2015. Managing a Portfolio of Projects – Metrics for Improvement, RR303, The Univ. of Texas at Austin, Austin, TX. Construction Industry Institute (CII) Webpage. 2014. CII Best Practices Definition, https://www.construction-institute.org/Store/CII/Publication_Pages/bp.cfm?section=orders (March 23, 2015) Hamilton, M. B. 2011. Online survey response rates and times: Background and Guidance for Industry. Tercent, Inc., Lake Oswego. Johnson, T. and Owens, L. 2003. Survey response rate reporting in the professional literature. In 58th Annual Meeting of the American Association for Public Opinion Research, Nashville. Nulty, D.D. 2008. The adequacy of response rates to online and paper surveys: what can be done?. Assessment and Evaluation in Higher Education, 33(3): 301-314. Project Management Institute (PMI). 2013. The Standard for Portfolio Management, 3rd Ed., Newton Sq., Penn. Vaidya, O. S. and Kumar, S. 2006. Analytic hierarchy process: An overview of applications. European Journal of operational research, 169(1): 1-29. 038-10  5th International/11th Construction Specialty Conference 5e International/11e Conférence spécialisée sur la construction    Vancouver, British Columbia June 8 to June 10, 2015 / 8 juin au 10 juin 2015   STATE OF PRACTICE IN PORTFOLIO MANAGEMENT: A COMPREHENSIVE SURVEY R. Masoumi1, 5, B. Ashuri2, R. E. Minchin3, M. Shahandashti4, and A. Touran1 1 Department of Civil and Environmental Engineering, Northeastern University, USA  2 School of Building Construction/School of Civil and Environmental Engineering, Georgia Institute of Technology, USA 3 Department of Civil and Environmental Engineering, University of Florida, USA 4 Department of Civil Engineering, University of Texas at Arlington, USA 5 r.masoumi@neu.edu Abstract: There has been an increase in the practice of managing multiple projects as the number of megaprojects has decreased and firms try to manage a larger number of smaller projects. The use of portfolio management is growing in the industry to allow firms to maximize the use of their limited resources. This paper reports on the outcome of a comprehensive survey, which was supported by the Construction Industry Institute (CII) and a team of 17 experts from various firms. The survey focused on identifying contemporary portfolio management practices by asking 28 questions on five topics: firm information, makeup of a portfolio, current practices, performance metrics, and implementation. The survey was designed to give an insight into what successful owners and contractors have done in implementing portfolio management. It was found that owners approach portfolio management differently from contractors. Owners generally establish strategic business objectives and select projects and form their portfolios using their available resources. On the other hand, contractors try to win projects and follow their clients’ regulations; however, they still need portfolio management to efficiently manage their projects. A major emphasis of this research effort was the list of performance metrics used in portfolio management. Owners who successfully implemented portfolio management within their firms have practiced the use of a formal project prioritization system in a portfolio. All of these firms use dashboards with performance metrics to show the performance of a portfolio. The Main indicators found on current dashboards include cost, schedule, safety, and overall success of the portfolio. 1 INTRODUCTION The objective of the research was to identify recommended practices for project portfolio management. In this research, a portfolio is defined as a group of related or unrelated projects and/or programs managed by a single individual, hereafter referred to as a portfolio manager. This definition was decided by the research team and is different in some respects from the standard definition in the Standard for Portfolio Management (PMI 2013), which considers meeting strategic business objectives of a firm by implementing a portfolio approach. The research team consisted of the authors and a group of 17 industry experts from CII member firms. The research goals were covered in three main stages as shown in Figure 1. The Survey is included in the “Collect Data” stage prior to interviews and case studies. The purpose of the online survey was to 038-1 help in identifying the principle drivers, metrics, tools, processes, and techniques, of successful portfolio management and also, the main barriers to successful implementation of portfolio management in various firms. Another purpose of the survey was to help in screening and identifying the most appropriate firms for in-depth face-to-face interviews. The online survey questions were designed with the help and participation of all team members. The research team finalized the 28 questions following two goals. First, the survey was designed such that respondents could complete it in 30 minutes or less. Second, the questions were organized in a logical way so that the respondents could see the continuity of questions.  Figure 1: Three stages of the research methodology (CII RR303) The research team made a major effort to extend the data collection beyond the CII data liaisons. For this purpose, the members of Construction Management Association of America (CMAA) and Construction Users Round Table (CURT) were contacted to increase the response rate. The research team helped in identifying and introducing individuals who could contribute to this effort. 2 CATEGORIES OF QUESTIONS The survey questions were divided into five categories: 1. Firm information, 2. makeup of a portfolio,  3. current practices, 4. performance metrics, and 5. implementation. Six questions under the “firm information” category were designed to collect information regarding the firm type, industry sectors, and the name and role of respondents. The survey was intended to gather information from all types of firms, public and private, CII and non-CII, and owner and contractor. The “makeup of the portfolio” category included six questions to get a perspective on formation of portfolios in terms of size, duration, and dollar value of projects. Moreover, other questions were asked about the availability of individuals who managed multiple projects and their titles. The next category, “current practices,” included seven questions. These questions attempted to collect information regarding available tools on portfolio management in 13 various areas such as schedule, cost, cash flow, procurement, resource allocation, communication, quality, scope, change management, safety, risk management, issue management, and/or Key Performance Indicators (KPIs). Moreover, some questions were about using standard tools and practices, using CII best practices, prioritizing projects, and giving authorities to portfolio managers at the portfolio level. One of the goals of the research was to identify useful applicable metrics in different areas. Six questions under the “performance metrics” category were designed to understand the available metrics in 15 areas including the 13 aforementioned areas and overall portfolio health and success. One question was about the areas that metrics could be included in a dashboard; moreover, respondents were asked about the importance of including these 15 areas in an ideal dashboard. A five points Likert scale with 1 (least important) and 5 (most important) was used to identify the importance of areas in an ideal dashboard. Three questions were included in the “implementation” category. These questions were designed to measure the level of portfolio management success within firms, to understand the barriers in a successful application of portfolio management, and to understand any related suggestions or comments.  038-2 3 FIRM INFORMATION The online survey was launched using the SelectSurvey™ tool provided by the CII. The survey was sent to 306 individuals in 251 firms. This included 130 CII and 121 non-CII firms. The response rate was 45% of email recipients and 36% of firms. These rates compare favorably with similar data collection efforts using the online survey tools (Nulty 2008; Hamilton 2011; Johnson and Owens 2003). Slightly over half of those interviewed were from CII firms as shown in Table 1.  Table 1: Statistics of respondents in different firm types Firm Type Respondents #* %** CII 49 54.4% Non-CII 41 45.6% Owner 53 58.9% Contractor/Consultant 37 41.1% * Number of Respondents  ** Percentage of Respondents The survey was designed to get a perspective on portfolio management in different industry sectors. Respondents could select as many industry sectors as they were active in. Table 2 shows the percentage of individuals responded to the survey in different firm types. More than three-fifths of those interviewed were in heavy industry sector. Several of the firms interviewed were engaged in more than one sector of the construction industry; hence the sum of percentages goes well over 100.  The firms in “Other” sector were active as consultant, manufacturer, healthcare provider, software developer, and educator. Table 2: Statistics of respondents in different industry sectors  Industry Sector  Infrastructure Building Heavy Industrial Light Industrial Other Number of Firms 31 28 58 25 19 Percentage of Firms 34.4% 31.1% 64.4% 27.8% 21.1% 4 KEY FINDINGS AND STATISTICAL TRENDS The analysis of responses to other four categories of questions, makeup of a portfolio, current practices, performance metrics, and implementation, are explained in this section. 4.1 Makeup of a Portfolio Almost all firms responding to the survey have individuals who managed a group of projects. Portfolio management was practiced in 87 (96.7%) firms, and only three firms did not use portfolio management extensively. The widespread use of portfolio management indicates the necessity and relevance of the research in all industry sectors. The three firms that did not have individuals to manage multiple projects usually have very large projects managed by one person. Two of these firms still have portfolio management for small projects with a total budget of less than $5 million.  Individuals who manage a portfolio of projects have various titles.  The most common title is project manager following by project director, program manager, and portfolio manager. Many firms have several titles for individuals who managed a group of projects at different managerial levels; hence the percentages do not add up to 100 as shown in Table 3. The respondents had 48 other roles in the “other” category such as senior executive, global construction manager, vice president, etc. 038-3 Table 3: Titles of individuals responding to the survey (percentages) Project Manager Program Manager Portfolio Manager Project Director  Other 76.7 38.4 19.8 41.9 24.4 The survey asked about the extent of portfolio manager’s authority in the following four areas: 1. Budget, 2. Work force, 3. Procurement strategy, and 4. Sequence of execution (schedule adjustment). The level of authorities was different depending on the positions of respondents in various managerial levels. Contractors chose “work force” and “sequence of execution” as the top two areas where authority is given to portfolio managers. The authorities varied from portfolio to portfolio, client to client, and site to site for contractors. Owners selected “budget” and “sequence of execution” as the two top areas of authority given to portfolio managers. The topic of formation of portfolios was investigated considering the typical duration, budget, and the number of projects in a portfolio. 54% of firms do not assign more than 10 projects in a portfolio. More than one-third of respondents do not typically allocate more than six projects to a portfolio. CII owners typically have more than 50 projects in their portfolios while the majority of other firms have less than 6 projects as shown in Table 4. CII owners were mostly active in heavy industrial sector with numerous periodic maintenance needs; therefore, the typical number of projects in their portfolios was more than 50. For other firms, less than 6 projects were dominant due to the large size of the projects. In each table, the largest figure on each row is bolded. Table 4: Typical number of projects in a portfolio   Less than 6 6 to 10 11 to 20 21 to 50 More than 50 # % # % # % # % # % CII Owners 8 25.8 2 6.5 8 25.8 2 6.5 11 35.5 CII Contractors 6 35.3 5 29.4 3 17.6 2 11.8 1 11.8 Non-CII Owner 9 47.4 4 21.1 3 15.8 1 5.3 2 10.5 Non-CII Contractor 8 40.0 5 25.0 4 20.0 2 10.0 1 5.0 Table 5 illustrates that the most common portfolio budget range is larger than $100 million among various types of firms. The size of portfolios was mostly in excess of $10 million. Comparing the portfolio budget range with the number of projects in a portfolio, it could be concluded that firms typically form their portfolios either with many small projects or a couple of large projects. Table 5: Typical portfolio budget range  Less than $5 Million (M) $5M to  $10M $10M to  $25M $25M to  $50M $50M to  $100M More than $100M # % # % # % # % # % # % CII Owners 1 3.2 1 3.2 5 16.1 6 19.4 3 9.7 15 48.4 CII Contractors 3 17.6 1 5.9 4 23.5 2 11.8 2 11.8 5 29.4 Non-CII Owner 1 5.3 2 10.5 5 26.3 4 21.1 2 10.5 5 26.3 Non-CII Contractor 2 10.0 4 20.0 2 10.0 4 20.0 3 15.0 5 25.0 The typical duration of projects is longer than one year for over three-quarters of respondents while majority selected 12 to 24 months. On the other hand, about one-third of respondents have projects that were typically longer than two years. Over 42% of non-CII contractors selected more than 24 months as the typical portfolio budget range. 038-4 Firms mostly used customized software in the fields of cost, schedule, change order, and information management. Owners had some common processes and procedures such as outsourcing of software services, standard stage gate process, and balanced scorecard. The Microsoft Project Portfolio Planner was used only in one owner firm. On the other hand, contractors used several tools such as web based Primavera-P6, software on iPad, and the master integrated schedule tool. One of the contractors had his own portfolio management software for managing projects around the world. A comparison between owners and contractors highlighted that the use of Primavera-P6, Portfolio Contract Management, SAP portfolio management, and EVMS were common among owners and contractors. 4.2.3 Tools under Development Several tools are being developed in firms. Two firms were customizing Unifier Portfolio Manager for portfolio management. This software is useful when a financial goal should be set for a group of projects. Other firms are planning to use server-based software such as PMWeb, repository Citrix, eBuilder, Capex, and custom access databases. Collaborated workflow using Microsoft SharePoint was also implemented to transfer information among divisions. Primavera-P6 or other ORACLE software for Portfolio Management (Oracle R12) and SAP were commonly used by both owners and contractors. A comparison between contractors and owners show that both were trying to securely share data among their projects and define the work flows. The use of data sharing software such as eBuilder and Share Point were common among owners and contractors while for this purpose some customized tools were being developed by owners. Owners also used Capex and Citrix for data sharing. They were working to customize software such as Oracle Unifier, Oracle R12, and SAP for managing a group of projects. 4.2.4 Use of CII Best Practices for Portfolio Management Over two-third of respondents, 47 out of 70, had never adapted CII best practices for portfolio management. CII owners used more CII best practices for portfolio management compared to CII contractors. A CII best practice is a “process or method that, when executed effectively, leads to enhanced project performance” (CII Webpage). A few firms used CII tools for portfolio management. For example, BMC (a software company) have developed some tools based on the CII best practices. The use of CII best practices on safety, PDRI, resource allocation, lessons learned, planning for start-up, team building, front end loading (FEL), and front end planning (FEP) were noted by respondents. A comparison between the CII contractors and owners showed that the use of PDRI was common among them. One of the owners used the Independent Project Analysis (IPA) tools and processes that are similar to CII tools. Some contractors considered their clients’ viewpoints and needs to design a customized FEL or FEP process. 4.2.5 Project Prioritization within Portfolios The project prioritization is crucial for the survival of firms to create the highest value using limited resources. 52.9% of firms did not use a formal system of project prioritization within their portfolios. The prioritization system was used by CII and non-CII owners more than contractors. The percentage of owners who used formal prioritization was higher than those who did not. The respondents did not specify any standard prioritization method for the projects in a portfolio. Some firms have established criteria to prioritize projects, but the prioritization method was not stated. Some firms indicated simple methods for prioritization such as project deadlines, open communication with client, weekly project meeting, safety, revenue, operation improvements, turnaround date for installation, and resource requirements. Some systematic processes were also indicated using tools such as Work Load Planner, in-house risk-based system, SaaS, and StrataJazz. Even though multicriteria decision making (MCDM) methods are available and many research reports and case studies have been published especially on Analytical Hierarchy Process (AHP) (Vaidya and Kumar 038-6 Table 9: Suggested KPIs for measuring portfolio performance Areas Suggested KPIs Schedule Number / percent of milestones completed (or missed) vs. planned Total / average days ahead of (or behind) schedule Cost & Cash Flow Cost variation (monthly and cumulative) – at project and portfolio level Number / percent of projects with costs higher (or lower) than benchmarks Change Management & Scope Management Number of requests for information (RFI) Total cost of scope changes/ change orders Safety  & Environment Incident frequency rates 12-month rolling average of incident rates 4.4 Implementation The survey asked about the level of success in implementing portfolio management by the firms. They were also asked about the barriers in implementing portfolio management. Almost half of firms, 42.6%, rated the portfolio management success as “Average” in their firms, while less than two percent rated the implementation of portfolio management in their firms as “Best in Class.” The barriers based on the respondents’ ideas are listed in Table 10. Table 10: Barriers in implementation of portfolio management  Lack of industry standards and best practices and available training Unclear objectives and priorities • There are no comprehensive standards or best practices.  • There are some tools and best practices but they require customization so that they can be applied to each case.  • There are no written objectives and the prioritization changes over time.  • Sometimes the prioritization of criteria are not comprehensive and cause conflicts among departments. Lack of management support or direction Cost of implementation • There are conflicting ideas among managers at different levels.  • The managers’ knowledge is not the same and it causes resistance. • Software is expensive and needs too much customization.  • Data is not centralized and cannot be passed among projects easily.  Lack of awareness of value added Lack of common code structure • It is hard to quantify the value added to the company.  • The knowledge of senior managers is crucial for portfolio management improvement. • There is no consistency between different departments within some firms regarding cost codes.  • There are no standard requirements for owners. Management interference Lack of previous success • The objectives are not clear for managers. • The organizational structure is not appropriate. • Commercial and custom tools have sometimes not been effective. 038-9 5 CONCLUSIONS Portfolio management is used by almost all of the firms that participated in this survey. The majority of firms are utilizing software tools to better manage their portfolios. The survey has identified various areas where these tools are used, with the top three areas being schedule, cost, and procurement. Primavera-P6 and MSP are the two major tools in the area of schedule while SAP and internally developed tools are used for cost. SAP, Smart Plant, and internally developed software are used in the area of procurement for portfolio management. In all of the areas except schedule, firms have tailored existing tools or developed custom-built software to better adjust with their processes. Firms use a combination of KPIs to track and measure the performance of their portfolios. The most common KPIs on dashboards are in the areas of cost and schedule. Change management is important for contractors as the third KPI and safety and cash flow for owners. The ideal dashboard should include at least three KPIs, cost, schedule, and safety. The survey showed that even though portfolio management has been practiced in firms for more than 30 years, it still has some barriers such as standardization of processes, centralization of data bases, prioritization systems, customization of dashboards, and generalization of concepts, justification of benefits to cost of implementation. Removing these barriers, which may be the subject of future research, can assist firms to improve the efficiency of their resources while pursuing their strategies. Acknowledgements We gratefully acknowledge the financial support provided by the Construction Industry Institute (CII). The cooperation of a wonderful team of experts from nine owner and eight contractor firms is also acknowledged. References Behzadian, M., Kazemzadeh, R. B., Albadvi, A., & Aghdasi, M. 2010. PROMETHEE: A comprehensive literature review on methodologies and applications. European Journal of Operational Research, 200(1): 198-215. Construction Industry Institute (CII). 2014. Managing a Portfolio of Projects – A Playbook for Success, IR303-2, The Univ. of Texas at Austin, Austin, TX. Construction Industry Institute (CII). Expected 2015. Managing a Portfolio of Projects – Metrics for Improvement, RR303, The Univ. of Texas at Austin, Austin, TX. Construction Industry Institute (CII) Webpage. 2014. CII Best Practices Definition, https://www.construction-institute.org/Store/CII/Publication_Pages/bp.cfm?section=orders (March 23, 2015) Hamilton, M. B. 2011. Online survey response rates and times: Background and Guidance for Industry. Tercent, Inc., Lake Oswego. Johnson, T. and Owens, L. 2003. Survey response rate reporting in the professional literature. In 58th Annual Meeting of the American Association for Public Opinion Research, Nashville. Nulty, D.D. 2008. The adequacy of response rates to online and paper surveys: what can be done?. Assessment and Evaluation in Higher Education, 33(3): 301-314. Project Management Institute (PMI). 2013. The Standard for Portfolio Management, 3rd Ed., Newton Sq., Penn. Vaidya, O. S. and Kumar, S. 2006. Analytic hierarchy process: An overview of applications. European Journal of operational research, 169(1): 1-29. 038-10  Reza Masoumi, Baabak Ashuri, Ed Minchin, Mohsen Shahandashti, & Ali Touran5th International Construction Specialty Conference 2015June 8 - 10, 2015, University of British Columbia, Vancouver, CanadaBaabak AshuriSchool of Building Construction/School of Civil & Environmental Engineering, Georgia Institute of TechnologyOwners:1. Architect of the Capitol2. Georgia-Pacific LLC3. ConocoPhillips4. BP Alternative Energy5. SABIC 6. Irving Oil Limited7. Southern Company8. Anheuser-Busch InBev9. BP Project PerformanceContractors:1. Jacobs2. Hargrove Engineers 3. WorleyParsons4. Faithful+Gould5. Fluor Corporation6. Parsons7. URS Corporation8. Coreworx, Inc.Academics: Problem Statement Literature Review Research Objectives Research Methodology Survey Results◦ Firms Information◦ Makeup of a portfolio◦ Current practices◦ Performance metrics◦ Implementation Conclusions Industry Trend:◦ Large-scale general contractors face substantial change from managing mega projects to managing portfolios of small- and mid-sized construction projects.  Problem:◦ Current best practices, techniques, technology, and processes are tailored more towards individual projects and not for a portfolio of projects.  Research Need:◦ There is a need to identify applicable techniques, processes, and metrics to improve, manage, measure, and analyze the delivery of the portfolio.  State of Knowledge:◦ Resource Management (e.g., Shehu and Akintoye 2010; Shehu and Akintoye 2009; Shehu and Akintoye 2008; Chen and Shahandashti 2009; Cheng et al 2006)◦ Financial and Risk Management (e.g., Kangari and Riggs 1988; El-Adaway and Kandil 2009; Kim and Liu 2007; Stumpf et al 1996; Kishore, et al 2011; Touran 2009; Kaka and Lewis 2003; Elazouni 2009; Abido and Elazouni 2009; Elazouni and Abido 2011; El-Abbasy et al 2012)◦ Metrics (e.g., Suk et al 2012; Lamptey and Fayek 2012; Furneaux et al 2010; Pantea and Pelin2010; Alvarado et al 2004) Gaps in Knowledge: ◦ There is not a comprehensive study to determine the state of practice in portfolio management. Identify major gaps in current best practices Identify tools and processes for portfolio management Understand major implementation barriers Recommend best practices to improve portfolio management Recommend areas of future researchA group of related or unrelated projects and/or programs managed by a single individual –the portfolio managerCollect Data• Industry Survey• Interviews• Case StudiesAnalyze Data• Identify Business Drivers• Identify Recommended PracticesDevelop Tool• Portfolio Management Playbook1. Firm information2. Makeup of a portfolio3. Current practices4. Performance metrics5. ImplementationBreakdown of Portfolio Sizes Breakdown of Portfolio Budget RangesBreakdown of Portfolio Project DurationsPercentage of firms using tailored tools and processes in different areas 35.4% of firms use the CII best practices CII Best Practices for Portfolio Management◦ CII best practices on safety◦ PDRI◦ Resource allocation◦ Lessons learned◦ Team building◦ Front end loading (FEL) Identical top five areas for owners and contractors1. Cost2. Schedule3. Cash flow4. Procurement5. Resource AllocationNo. Owners Contractors1 Resource Allocation Schedule2 Schedule Resource Allocation3 Cash flow KPIsNo. Owners Contractors1 Cost (88%) Schedule (87%)2 Schedule (88%) Cost (80%)3 Safety (48%) Change Management (60%)Top three areas on a dashboardNo. Owners Contractors1 Cost Safety2 Safety Cost3 Schedule ScheduleTop three areas on an ideal dashboardKey Result Areas(KRAs) Suggested KPIsSchedule• Number / percent of milestones completed (or missed) vs. planned• Total / average days ahead of (or behind) scheduleCost &Cash Flow• Cost variation (monthly and cumulative) – at project and portfolio level• Number / percent of projects with costs higher (or lower) than benchmarksChange &Scope Management• Number of requests for information (RFI)• Total cost of scope changes/ change ordersSafety &Environment• Incident frequency rates• 12-month rolling average of incident rates Barriers◦ Lack of industry standards and best practices and available training (78%)◦ Unclear objectives and priorities (78%)◦ Lack of management support or direction (74%)◦ Cost of implementation (74%)◦ Lack of awareness of value added (59%)◦ Lack of common code structure (48%) The comprehensive survey of the portfolio management best practices resulted in several findings, such as◦ Tools are used mostly in three areas: Schedule, cost, and procurement◦ A combination of proper KPIs is required for managing portfolios◦ Most important KRAs are: Cost, schedule, change management, safety, and cash flow This research resulted in ◦ Key elements necessary for portfolio performance management◦ Recommended process for portfolio performance management◦ Identification of the role of portfolio manager◦ Recommended KPIs for various KRAs at the portfolio level Construction Industry Institute (CII). (2014). Managing a Portfolio of Projects – A Playbook for Success, IR303-2, The Univ. of Texas at Austin, Austin, TX. Killen, C.P., Jugdev, K., Drouin, N., and Petit, Y. (2011), Advancing project and portfolio management research: Applying strategic management theories, International Journal of Project Management Lamptey, W.N.L., and Fayek, A.R. (2012), Developing a Project Status Dashboard for Construction Project Progress Reporting, International Journal of Architecture, Engineering and Construction, 1(2), 112-120. Olsson, R. (2008). "Risk management in a multi-project environment: An approach to manage portfolio risks." International Journal of Quality & Reliability Management, 25(1), 60-71. Project Management Institute. (2013a). The Standard for Portfolio Management, 3rd Ed., Pennsylvania, USA Shehu, Z., and Akintoye, A. (2010), Major challenges to the successful implementation and practice of programme management in the construction environment: A critical analysis, International Journal of Project Management, 28 (2010), 26-39. Suk, S.J., Hwang, B.G., Dai, J., Caldas, C.H., and Mulva, S.P. (2012), Performance Dashboard for a Pharmaceutical Project Benchmarking Program, Journal of Construction Engineering and Management, ASCE, 138(7), 864-876.

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