Project Portfolio Management - Managing and Optimizing Project Portfolios Containing Project Dependencies

When you're trying to select an optimal set of projects with the highest value to your business from a multi-period project portfolio, dependencies between projects should be an important part of your consideration. Project dependencies can add and subtract value from individual projects and the overall project portfolio. Project dependencies can also dramatically increase the complexity and difficulty of optimizing your portfolio if you're not using an optimization tool that manages them.

For example, if you have a project portfolio of 35 projects, but you don't have the money or resources to do all of them, you'll want to find the set that will give you the most value for your money, resources, and time. But because there are over 34 billion possible subsets of projects in a 35-project portfolio, finding an optimal set that meets your constraint criteria can be impossible without using an optimization tool. Adding project dependencies into the mix can make that search even harder.

There are 4 basic types of dependencies:

  • "Then": The "Then" dependency is used when one project depends on another project being included in the portfolio. For example, "Project B Then Project A" means that if Project B is included in the portfolio, then Project A must also be included. The "Then" dependency is often used to insure that a prerequisite project is included in the portfolio.
  • "Then Not": The "Then Not" dependency is the singular exclusive dependency used to exclude one project based on the presence of another project. For example, "Project A Then Not Project B" ensures that Project A and not Project B, or Project B and not Project A, or neither Project A nor Project B are included in the portfolio.
  • "Or": The "Or" dependency is the mutually exclusive dependency used to include one project or another project, but not both. For example, "Project A Or Project B" ensures that Project A or Project B are included in the portfolio.
  • "Both or Neither": The "Both or Neither " dependency is used to include both projects or neither project. For example, "Project A Both or Neither Project B" ensures that Project A and Project B are either both included or both excluded from the portfolio.

You can use these dependencies to create virtually any type of project relationships that you want, including chains of relationships such as:

  • Project C Then Project B Then Project A: This represents that Project A is a precondition for Project B and Project B is a precondition for Project C. Note that you could deliver Project A without Projects B or C, but you could not deliver Projects B or C without delivering Project A first. 
  • Project A Or Project D: Represents that Project A or Project D must be included in the portfolio. Note that this means that if Project D is selected, Project C and Project B are excluded because they are dependent on Project A as a precondition.

You also want to be sure to avoid circular dependencies that can unintentionally force projects in or out of the project portfolio. For example, if we mistakenly added the following dependency to the ones above:

  • Project D Then Project C

This dependency would prevent Project D from ever being selected because Project C has Project A as a precondition and the Project A Or Project D dependency prevents Projects A and D from being included together in the portfolio. 

There are two different ways to consider project dependencies: Intra-project dependencies and Inter-project dependencies.

  • Intra-project dependencies are project dependencies within the frame of a larger project. For example, a drug product development project has three phases of clinical development, and each phase must be completed successfully for the drug to advance to the next phase.
  •  Inter-project dependencies are dependencies between separate discrete projects.

When considering a large multi-phase project that has a series of go and no-go decision points during its execution, you should divide the project into a series of sub-projects with intra-project dependencies at each decision point, particularly if the go or no-go decision will have significant value, cost, resource, or other impacts on your overall project portfolio.

Using the drug product development project mentioned above as an example, if the first clinical phase fails, then the next two phases would not be executed, freeing up money and resources for other projects. Since these two phases were considered as separate projects, you could then re-optimize your portfolio to reallocate those funds and resources to other projects. Managing your project portfolio this way lets you consider both long-term project values and costs while also optimizing shorter-term resource allocation strategies.

In our Project Portfolio Management application Optsee®, you can easily perform project portfolio optimizations against multiple constraints (such as limited money and resources) while maintaining project dependency relationships. This makes planning for the long-term while also quickly reallocating resources in the short term much faster than trying to do it manually using spreadsheets.

If you're looking for a Project Portfolio Management solution with state-of-the-art analytics for robust and defensible project portfolios, then click here to take a look at Optsee®, our project portfolio management tool. We have "cracked the code" of project selection by making it easy for ordinary business people to apply state-of-the art business analytics to project prioritization and portfolio optimization for results that are both understandable and defensible.

Next: Keeping Project Portfolios Optimized Over the Long Term

Click Here To Try Optsee® Today!