Fiscal Crisis and Capital Program Management (CPM)
Part 1: Capital Program Management Portfolio Optimization
The national fiscal crisis we are experiencing has affected many of us on a personal level, as well as at a community level. Municipalities are experiencing reductions in their revenue base coupled with the rising costs associated with the maintenance of their infrastructure. And this is inhibiting their ability to provide a high level of services to their communities.
Regardless of the constrained budgets that many municipalities now have to work with, the citizens in their communities still require and expect their local government to continue to provide the level of services to which they have become accustomed. This is forcing municipal leaders to find a way to do "more with less" and to be more creative in generating additional dollars to help meet the needs of their citizens.
Capital Program Management Portfolio Optimization is at its most fundamental level the prioritization and selection of those capital project candidates to be "promoted" for inclusion in the capital improvement plan (CIP). However, to effectively accomplish CPM Portfolio Optimization requires three elements that should be enabled and executed against.
- A Prioritization mechanism that defines, enables, and manages Capital Project prioritization within the overall Capital Program, including
- The criteria for prioritization
- The model for applying the criteria... ie, weighting factors, the ability to allow multiple criteria models to be used across various departments and then subsequently "rolled up"
- The ability to apply multiple prioritization methodologies consistent with existing and or future business practices
- The review and approval process
- The retention / documentation of the justification for either promoting or deferring a candidate project
- Strategic and Tactical Planning that considers and includes
- Coordination of multiple projects based on geographical, schedule, and cost implications.
- Resiliency Planning as part of the strategic and CIP plans.
- Convergence of Strategic Planning, Comprehensive Planning, and CIP Planning.
- Performance Measures that monitor the effectiveness of the planning process with respect to achieving the optimization objectives and which can then be applied as a means of continually improving the process and resultant optimization.
The Prioritization Mechanism
The Prioritization Mechanism or tool for executing CPM Portfolio Optimization like any process driven tool needs to be clearly defined in the context of the "end objectives" to be met; deployed to all stakeholders; and monitored for utilization and compliance in its application. Moving forward outside of these three conditions will likely doom the prioritization process and its mechanism/tool to failure.
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