In all cases, a business's resources are limited. As such, every company needs to determine how to allocate its available staff and budgets between short-term gains and long-term potential, as well as to identify which mix of the two best suits its objectives. This determination is often achieved by creating and executing an aggregate project plan. The aggregate project plan helps companies to create development goals and objectives and subsequently use those aims to further their productivity and growth in the short and long term.
Aggregate Project Plans
Aggregate project plans collect all of the company’s projects and ensure that they are all working toward the overall strategic objectives and that they are all timed to be completed successfully. This involves sorting projects into categories and assigning priorities based on the overall project mix.
The aggregate project plan gives management direction during upsets when resources may become short and helps them decide when a project may need to be started, delayed or cannibalized for another objective. It also shows management gaps where the workforce may need to be developed in order to meet their strategic goals based on the needs of individual products. All of this is vital information for a large corporation offering multiple products to ensure future success, both short and long term.
Importance of an APP
Why spend time developing an APP? Well, consider the potential problems without an aggregate project plan. Many companies find that projects are initiated internally for a number of reasons that are not aligned with the overall strategy: requests from marketing, sales or production, projects that keyed into an individual investigator’s interests and expectations to produce papers and patents no matter the relevance to the company’s strategy.
Without any decision-making guidance, managers are often expected to accept these project requests. This leads to complete overcommitment of resources — money and people hours — which means all projects suffer delays in commercialization and often cut quality corners to make ends meet. The development of the APP provides strategy and guidelines that make project managers focus on projects that are higher priority. It integrates the departments into a cohesive unit.
APP and Development
The APP can also reveal places in the company where additional development is needed. Looking at the portfolio as a whole can reveal places where the company lacks development projects. For example, a company consisting of short-term, six-month-to-one-year solutions and long-term, 10-year projects needs to diversify with some three- to-five-year projects in order to keep development constant.
Likewise, a large corporation looking no further than five years should plan some longer-term, higher-potential projects. It can also reveal where specific resources are lacking, like employee skill sets, and the plan should also include hiring and employee development as permanent ways to fill those gaps.
Types of Projects
Developing an aggregate project plan requires the categorization of the involved projects into one of five categories.
1. Derivative Projects
These are short-term projects that focus on incremental changes to an existing product — for example, a reduction in cost or a small change in the original offering. These minor, simple changes are such that they require very little with regard to research and development or capital investment.
For an example, consider how many colors in which a car may be offered. Developing the same model with different paint is a simple change that doesn’t affect the overall product (the car) but changes how consumers might view it (preferences in color). Another example might be electronics that come with different-sized hard drives; this is a simple change that requires little research and development.
2. Platform Projects
These are the next step of product development, where existing products are updated to their next generation. The product improvement is meant to keep the current customers interested in the product even as technology and the market landscape change over time. Platform projects represent growth but in the same direction that the product line has been traveling.
They require some resources to predict the changes that will be most valuable and to develop them into the existing model. For example, a car model released in 2019 might be updated and improved so that the same brand name — with the same purpose and target market — releases a new model in 2022. This lets companies keep up with advances in technology without requiring an entirely new branch of product.
3. Breakthrough Projects
These are projects that do create a new branch of product that moves the company forward but in a different direction than previously explored. They’re higher risk but usually offer higher reward.
These types of projects are called breakthrough projects because they have the potential to disrupt the marketplace, which is when a new innovation completely changes the industry. For example, consider the development of touch-screen technology for mobile phones: The entire market for electronic devices of such a nature was disrupted and then settled in its new direction with different companies as leaders.
Likewise, the entrance of hybrid cars in the automotive marketplace offered a brand-new opportunity for consumers to consider. These projects often require capital investment in new equipment or processes and should not be limited to the company’s current state of manufacturing and networking.
4. Research and Development Projects
The R&D team works together to innovate and invent new materials, equipment, technologies and concepts that will eventually lead to commercialization in some state. Without this increased knowledge of how the products work and why, a company won’t be able to make any of the improvements, not even incremental changes. R&D often has a high upfront cost and a very high risk, and companies have different expectations for project failure depending on their industry and risk tolerance.
For example, consider the development of the technology required to make hybrid cars. The new equipment that goes into the 2022 updated model and even the different colors of car paint require some R&D resources. Since the results are so long term, it’s nearly impossible to truly capture the value of R&D, and R&D has to compete for resources like all other types of projects.
5. Partner Projects
Partner projects are projects that can be any of these types but involve a partner, licensee/licensor or other arrangement. These agreements are often previous commitments, and the resources that have been dedicated to them need to be included in the overall project portfolio.
Who Is Involved in Developing the APP?
The development of the APP may involve employees from many parts of the company structure. Without question, the company's finance department should be involved in the development process, as should the accounting, sales and marketing teams. By doing so, these teams can paint a thorough picture of business needs versus the funds available.
The project development and management team must also provide accurate information about all of the projects within the portfolio and the resources that they will require. This may require involvement from the company's engineering, operations, product development or technical service teams.
Also, it’s important that executive management has clearly translated the company’s goals and objectives to these departments to make sure the projects being offered are aligned to actually meet the goals detailed in the strategic plan.
The APP Process
Developing the APP is accomplished with a straightforward process:
- Determine and clarify the company’s goals and objectives and communicate this strategy in a way that will focus on directing current and existing projects.
- Establish the company’s definitions of the project types and categorize existing and new projects as needed. Projects that aren’t defined well enough to be categorized should be eliminated or rejected for further development.
- Estimate the resources needed for each project type based on past experience and current understanding.
- Determine the company’s ideal mix of projects. This may come from executive management.
- Estimate the current resources available today and for the next few years. Determine the number and mix of projects these resources can support.
- Prioritize the projects and allocate resources to those that are chosen.
Making an APP
The introduction to the APP should include a summary of the company’s strategic objectives and the general approach to meeting those objectives. It should then spell out the methodology and criteria that were used to create the desired project mix, including how projects were categorized, prioritized and eventually approved or rejected and how this specific mix is expected to meet the strategic objectives.
This should include a description of the company’s risk tolerance — the point at which a project’s risk is acceptable, and the point where the risk is too great. Most companies develop a framework for risk tolerance at the executive level. It should also include an overall summary of the resources the team has assumed they will have available and any expected needs for additional resources or employee development that are part of the overall plan.
How to Showcase a Project Portfolio
The actual project portfolio is often communicated graphically in a product-process matrix. The axes involved are product change and process change and are measured in order of minor change/least complexity to significant change/high complexity. Each chosen project can then be represented visually within this chart space and can even be distinguished by size to represent the resources allocated to each project. With higher complexity comes higher risk, but those are the projects that will provide breakthroughs with higher reward.
The graphic should include explanations of the individual projects, the expected resources allocated to that project and how each one aligns with the strategic plan. This is the time to condense the purpose of each project into one or two powerful lines that will let executive management understand the work being done without getting lost in detail. Explain the categorization of each and the proportion of resources each has been given.
Some project management software that might be useful towards this end include workflow process options like Monday, Jira, Asana and Wrike. Graphics like the product-process matrix are often easily created and showcased in Excel or even a Word Processing program.
APP and Timing Projects
The APP isn’t just about prioritizing; it’s about the timing of projects as well. Because resources are always limited, even the most ideal project portfolio likely can’t be executed all at once. As such, the APP needs to show which projects start immediately and the timing of other critical projects based on when resources will be available.
These APPs can extend over five years. Some plan up to 10 years but with the caveat that projections into the five-to-10-year range will be modified accordingly as the project plan proceeds since they’re unlikely to be absolutely accurate.
In the conclusion of your product project plan, be sure to come back to the executive strategic plan and the high-level objectives that have been set for the company’s direction. Reiterate how these projects are expected to produce success and highlight any key points that correlate with the company’s vision. Summarize the goals and objectives of the APP in a way that aligns with the strategic plan. With all of this information together, the APP becomes a document that will help employees at all levels to focus their work and also gives power and authority to project and budget managers to better direct their work.