1
Strategic Alignment
Study Hints
The Strategic Alignment management questions on the PfMP
®
certication exam,
which constitute 25% of the exam or 43 questions.
These questions are part of the Portfolio Strategic Management Knowledge
area as well as in the Dening and Aligning Process Groups in The Standard
for Portfolio Management—Third Edition (2013), referred to as The Standard
throughout this book. There are four processes in Portfolio Strategic Alignment:
1. Develop Portfolio Strategic Plan
2. Develop Portfolio Charter
3. Dene Portfolio Roadmap
4. Manage Strategic Change
The rst three processes are from the Dening Process Group, while Manage
Strategic Change Process is from the Aligning Process Group.
All benet from the existing organizational process assets, portfolio process
assets, portfolio reports, and enterprise environmental factors, which are com-
mon inputs and outputs to most processes. They are often updated as the pro-
cesses are performed, and you should recognize how they are used in each
process, as well as how the process leads to specic updates to them
Since this area contains three major deliverables in portfolio management, it is
essential to know their contents and the best practices to follow to develop them
and to ensure these deliverables are aligned to the strategy of the organization.
Further as the organization’s strategy changes, these documents plus other orga-
nizational and portfolio process assets require change and updates.
As the Portfolio Strategic Plan is developed, an inventory of existing portfolio
components is used along with portfolio strategic alignment. Review Figure4-4
from The Standard for an integrated view of the strategy based on a high- level
timeline. Also as the plan is developed, prioritization analysis is used as it pro-
vides an approach as to whether new components (programs, projects, or opera-
tional work) should be added to the portfolio, existing components continued, or
existing components terminated, as priorities and goals may have changed, and
the resources from them can be allocated more efciently on other components.
2 ◾ PfMP® Exam Practice Tests and Study Guide
Various prioritization models can be used ranging from ones that are simple to ones
that are sophisticated. The objective is to use the model to determine a score for
each component. Establishing this model is more difcult than it seems as everyone
in the organization basically is a stakeholder and must follow the criteria that are
established for scoring. The strategic plan then ensures the vision and objectives of
the portfolio are aligned with that of the organization.
The Portfolio Charter also is developed in this process, and it is comparable
to that of a charter for a program or project manager as it authorizes the port-
folio manager to assign resources to components and execute the various
portfolio processes. It builds on the portfolio strategic plan, and in develop-
ing it, scenario analysis may be helpful as it can show different combinations
of components to help determine the most useful structure of the portfolio.
Capability and capacity analysis cannot be overlooked as in most organizations
there are more components, or potential components, than resources that are
available to execute them. Such analyses enable the organization to determine
constraints and how best to handle them. As the charter is developed, it may
cause a need to revisit the portfolio strategic plan to see if it requires updates.
Additionally, the portfolio roadmap is developed. It is an expansion of a road-
map at the program level as it shows all the components in the portfolio needed
to achieve the organization’s overall strategy in a chronological way. As it serves
as a high- level plan, it also focuses on dependencies and shows component
alignment with strategies, maps milestones, and shows challenges and risks. It is
an excellent communications tool that changes frequently. In developing it, the
portfolio strategic plan, the charter, and the portfolio are used. Analyses focus on
interdependencies between components, cost- benet, and prioritization. Review
Figure4-8 in The Standard to see an example of a roadmap.
Managing strategic change is critical as portfolio management responds to
these changes to ensure the portfolio’s components remain in alignment or
to determine if new components need to be added, or others removed. It is a
dynamic process as the portfolio is not static. It is part of the Aligning Process
Group with an emphasis on the portfolio manager working to manage changes
in strategy at the organizational level that affect the portfolio and to accept
or act on any changes that then effect portfolio planning. These changes are
expected, and to assist the portfolio manager, he or she uses the portfolio strate-
gic plan, charter, roadmap, and the portfolio management plan [developed in the
governance process to document the intended approach to manage the portfolio].
Tools and techniques include stakeholder analysis to meet stakeholder expec-
tations as the portfolio changes, gap analysis to assess the current state with
the vision or ‘to be’ state at the organizational level, and readiness analysis to
determine what must be done to bridge any gaps that exist. This process results
in updates to documents and portfolio process assets.
Following is a list of the major topics in the Strategic Alignment domain. Use
this list to focus your study efforts on the areas that are most likely to appear on
the exam.
Strategic Alignment ◾ 3
Major Topics
Portfolio denition
Portfolio management denition
Relationships between—
◾ Portfolios, programs, projects, and operations
◾ Portfolio management and organizational strategy
◾ Portfolio management and organizational project management
◾ Portfolio management and the PMO (project, program, or portfolio manage-
ment ofce)
Impact of portfolio management on organizational strategy and objectives
◾ Maintaining portfolio alignment
◾ Allocating nancial, human, material, and equipment resources
◾ Measuring component performance
◾ Managing risks
◾ Adding, deferring, or deleting components
◾ Dening the portfolio vision and plan
Business Value
Role of the portfolio manager and key areas of expertise and skills
◾ Organizational strategy
◾ Organizational criteria for portfolio management
◾ Recognizing all the portfolio components
◾ Following agreed- upon processes
Assessing the current portfolio management process
◾ Assessment activities
◾ Assessment results
Dening Process Group
Aligning Process Group
Common inputs and outputs
◾ Portfolio process assets
◾ Portfolio reports
◾ Organizational process assets
◾ Enterprise environmental factors
Purpose of portfolio strategic management
4 ◾ PfMP® Exam Practice Tests and Study Guide
Develop Portfolio Strategic Plan process
◾ Purpose
◾ Inputs
− Organizational strategy and objectives
• Long- term direction
• Vision
• Goals
• Objectives
− Inventory of work
− Portfolio process assets
• Plans
• Policies
• Procedures
• Guidelines
− Organizational process assets
• Strategy and objectives
• Mission and vision
• Prioritization
• Resources
− Enterprise environmental factors
• Organizational structure
• Stakeholder risk tolerances
• Market conditions
• Human resources
◾ Tools and Techniques
− Portfolio component inventory
• Initial portfolio
− Strategic alignment analysis
• New or changing organizational strategy
• Gaps in focus, investment, or alignment
• High- level timeline
− Prioritization analysis
• Model to guide decisions regarding components
• Simple scoring model to complex model
◾ Outputs
− Portfolio strategic plan
• Purpose
• Vision and objectives
• Organizational structure
• Measurable goals and guidelines
• Allocation of funds
• Benets, performance results, value expected
• Needed communications
Strategic Alignment ◾ 5
• Assumptions, constraints, dependencies, risks
• Type and quantity of resources
• Prioritization model
− Portfolio
• List of components
Develop Portfolio Charter
◾ Purpose
◾ Inputs
− Portfolio strategic plan
• Vision and objectives
• Expected benets
• Key risks, dependencies, constraints
− Portfolio process assets
• Plans, policies, procedures, guidelines
• Stakeholder relationships
• Scope, benets, portfolio goals
− Enterprise environmental factors
• Corporate accounting structure
• Functional structure
◾ Tools and techniques
− Scenario analysis
• Evaluate outcomes based on alternatives
− Capability and capacity analysis
• Resource availability—internal and external
• Skill set limitations
• Financial constraints
• Asset constraints
◾ Outputs
− Updates
• Portfolio strategic plan
• Portfolio process assets
− Portfolio charter
• Purpose
• Authority of the portfolio manager
• Portfolio structure
• Delivering value
• Objectives, justication, sponsors, roles and responsibilities
• Stakeholders and their expectations and requirements
• Communication requirements
• High- level scope, benets, critical success criteria, resources
• High- level time frame
• Assumptions, constraints, dependencies, risks
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