Formerly known as UMS Group Europe

Consultancy

Portfolio Optimization

Strategically, Prudently, and Optimal Planning and Execution of Your Expenditure Portfolio

In an industry undergoing rapid transformation, particularly within energy and utility companies, Portfolio Optimization is a focal point for continuous improvement and scrutiny. Demonstrating strategic, prudent, and optimal planning and execution of spend is crucial. Short-term budgets must align seamlessly with long-term strategic goals. They should accommodate realistic constraints such as budgetary limitations, resource availability, and other pertinent factors. Additionally, the ability to swiftly reallocate spend in response to changing business environments is essential. Whether seeking strategic/process support or software solutions, OHROS Consulting Group is poised to assist in either or both areas.

The OHROS Approach

OHROS Consulting Group employs a centralized approach to Portfolio Optimization, managing a group of projects from initial selection through close-out to support the achievement of our clients’ strategic objectives. By addressing crucial aspects of governance related to Project Management, Engineering, Finance, and Operations, we assist clients. We apply core tenets of Asset Management in capital investment and O&M spending portfolios, aiding in developing a Performance Management framework. Our approach aims to accomplish the following key objectives:

Enhance efficiencies and eliminate waste in the project/program management process by consolidating activities and implementing increased automation.



Ensure the timely execution of projects/programs that align most effectively with corporate strategy, simultaneously addressing risks deemed unacceptable by Executive Management.



Eliminate “surprises” related to underspending of capital budget allocations and the failure to realize anticipated benefits.

 

 

 

Establish a unified platform and framework for project/program initiation, evaluation, and selection, irrespective of whether proposed projects/programs originate from Asset Management, Planning, Engineering, Operations, or any other entity.

 

 

Enhance decision-making and governance by fostering collaboration across groups, improving transparency, and ensuring alignment with corporate objectives.

 

 

Promote continuous improvement in Project Management functions by analyzing performance issues that span across projects, reviewing lessons learned, monitoring inter-project trends, facilitating issue resolution, and eliminating systemic roadblocks.

 

Enhance the monitoring, handling, and resolution of schedule and budget contingencies in collaboration with Finance. The Portfolio Management methodology aims to produce smaller contingencies and pre-identified “contingent” projects, increasing the likelihood of achieving a more favorable benefit-to-cost ratio when adjusting for schedule slippages or budget underruns.

 

Improve resource planning through the more strategic orientation of portfolio management, as opposed to the tactical orientation of project management.

 

 

 

Our Services

Our services cover a comprehensive spectrum of Portfolio Optimization, encompassing initial assessments, industry comparative reviews, and full-scale organizational transformations. We align with relevant sections of the Project Management Book of Knowledge (PMBOK), ISO 55000 (Asset Management), and ISO 31000 (Risk Management). Utilizing pre-established frameworks, computational models, and software applications, we address three key domains of Portfolio Optimization:

Develop a portfolio of projects and programs that optimizes the trade-off  between value and risk subject to pre-defined financial constraints.

  • Portfolio Development and Finalization, aims to create a well-structured investment portfolio, build up of specific assets and programs. This endeavor prioritizes careful planning and prudence in optimizing the balance between value and risk. It also adheres to predefined budgetary and other constraints. Additionally, the emphasis is on the importance of feasibility, ensuring a well-supported portfolio by a viable resource plan.

Execute the key activities of the Portfolio Management process

  • Portfolio Execution involves ensuring several key aspects: (1) Establishing a robust communication and coordination infrastructure with defined protocols that remain effective throughout the fiscal year. This includes maintaining a communication cadence that aligns with project needs across the entire project life cycle. (2) Vigilantly tracking contingencies across the entire portfolio to anticipate and address potential issues. (3) Identifying and preparing “contingent” projects and programs that can be activated to fill gaps in case of schedule slippage in specific projects or programs. (4) Mitigating the impact of barriers such as pre-construction licensing and permitting to minimize delays. (5) Highlighting and considering investment/program performance trends and patterns in future planning efforts.

Establish key metrics to measure the overall effectiveness of the Portfolio Management process

  • Performance Management necessitates adopting a comprehensive and strategic approach to assess project performance. This approach facilitates informed resource allocation decisions, particularly in situations where conflicting priorities among projects are present. It also bolsters governance measures related to project and program delivery, with a specific focus on overall capital expenditures. Additionally, it ensures alignment with annual budgetary targets. Moreover, it entails the prudent management of project contingencies to safeguard against unforeseen challenges.

The figure below illustrates our approach to Portfolio Optimization, highlighting the connection between strategy and actions. It guides investment and spending decisions based on strategy, managing the resulting portfolio’s performance in alignment with its contribution to that strategy.

Specific Processes and Related Models / Applications Augment our Offerings

CAPITAL INVESTMENT AND O&M SPENDING PORTFOLIO OPTIMIZATION

OHROS Consulting Group collaborates with utilities to enhance their portfolio development process, ensuring an objective, consistent, and rigorously evaluated approach to all proposed investments and programs. This partnership offers transparency and delivers defensible outcomes.

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CAPTURE OF PORTFOLIO BENEFITS

OHROS Consulting Group has devised a unique approach and accompanying framework that computes and consolidates anticipated benefits across the entire portfolio. Customized to the specific business and operational contexts of our clients, key benefit categories encompass cost reduction and avoidance…
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PORTFOLIO PERFORMANCE MANAGEMENT SCORECARD

OHROS Consulting Group will lead workshops to define essential metrics for evaluating a utility’s proficiency in overseeing its portfolio of investments and programs. Frequently employed domains encompass the portfolio level: (1) Budget Compliance, (2) Schedule Adherence, (3) Estimating Accuracy, (4) Resource Planning Allocation, (5) Quality, (6) Contingency Management, and (6) Benefit / Risk Reduction Capture.
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OHROS Consulting Group will work with the utility to implement / improve upon a portfolio development process that assures an objective, consistent, and equally rigorous evaluation of all proposed investments and programs, offering total transparency, is robust in presenting defensible outcomes, clarifies priority spending, facilitates equitable project comparisons, defines risk and value criteria, and supports / simplifies decision making. The following figure summarizes the approach we advocate for our clients:

More information on the OHROS Consulting Group Spend Optimization Suite (SOS), a decision support application designed to facilitate (through use of predeveloped tutorials and inferential logic) and automate this portfolio optimization process.
OHROS Consulting Group has developed an approach and supporting framework that calculates and aggregates projected benefits of an entire portfolio. Tailored to the business and operating environments of our clients, major categories of benefits such as cost reduction and avoidance, improved reliability / availability, incremental / incidental improvement in safety, and environmental improvements can be monetized at the investment / program level and similarly at the portfolio level, can value be attributed to economic development, overall mitigation of risk, and business continuity. Our approach acknowledges the fundamental challenge in calculating these tangible benefits: Transposing the effect of any technical improvements to the system into meaningful and measurable benefits that customers and stakeholders can recognize. As illustrated below, this involves four separate and distinct steps.
 
In implementing the four steps outlined above, we assist our clients in (1) translating technical actions into non-technical benefits to be realized by stakeholders, (2) capturing the numerous “many-to-many” relationships between investments (actions) and benefits, (3) ensuring and validating that all the benefits of any action have been systematically captured, (4) designing a parameter-driven approach that provides transparency to the calculation of benefits, and (5) ensuring that any subsequent changes in scope, sequencing of actions or underlying assumptions can be incorporated into a revised plan. The analytical frameworks / models and resulting information is captured in a computational model, thus assisting in the aggregation and presentation of investment and program portfolio benefits, and management of stakeholder expectations regarding benefits, should mid-course adjustments be necessary.
OHROS Consulting Group will conduct workshops to collaboratively define a set of key metrics for evaluating a utility’s efficacy in managing its portfolio of investments and programs. Commonly addressed domains at the portfolio level include: (1) Budget Compliance, (2) Schedule Adherence, (3) Estimating Accuracy, (4) Resource Planning Allocation, (5) Quality, (6) Contingency Management, and (6) Benefit / Risk Reduction Capture.