What is project portfolio management and what are its components? As organizations grow, aligning projects with high-level business goals often becomes a challenge. Executive management strives to prioritize projects, allocate resources and achieve optimal efficiency. This is where Project Portfolio Management (PPM) comes in handy.
What is project portfolio management (portfolio management)?
Project portfolio management (PPM) is a strategy that evaluates the potential success and risks of potential projects, then allocates staff, resources, and timelines to maximize organizational performance.
Project portfolio management is like managing a financial portfolio, which is done in order to generate enough funds to pay the child’s university tuition in 10 years. A portfolio may consist of several accounts and each account may have different investment characteristics; Some of them are inclined toward equity and others toward short-term and long-term profits. The portfolio manager’s job is to choose the right mix of investments and manage them to achieve this 10-year goal.
Similarly, your organization’s portfolio may consist of subcategories, programs, or projects.
Why is project portfolio management important?
Regardless of the type, project portfolio management is critical because it helps you and your team keep track of big goals.
Focusing on individual projects increases overhead risk and leads to lower returns on investment. However, by focusing on project portfolio management, you can focus efforts on the right projects at the right time.
Additionally, a focused approach provides managers with a solid foundation to deliver successful projects; And it all starts with a project portfolio management process.
Project portfolio management steps
The project portfolio management process consists of five steps that ensure a high level of alignment is maintained both within the portfolio and throughout its management lifecycle.
Set business goals. In order to manage your organization’s projects, teams must know their roles. One of the most popular ways to create this alignment is to create a strategic map that outlines business goals and how team members should prioritize them.
Gather information about potential projects. Make a list of ideas for potential projects and research those ideas. Some sources of inspiration may include ideas from team members, customer feedback, or specific regulatory requirements. Then gather some high-level details about these ideas, such as potential resource requirements.
Narrow down your list and choose the best projects. The high-level data in the previous step gives you the tools to select projects that match your career goals. Use this data to differentiate projects and try a portfolio that is likely to maximize your return while minimizing risk.
Approve portfolios and start projects. Next, you need to validate the portfolio in terms of feasibility and available resources. Expand on the high-level data already collected and create a more realistic picture of the resources required to complete a project and potential obstacles. If the project still seems feasible, you can continue.
Manage and monitor the portfolio. Once projects are started, you and your team need to manage them, monitor performance and re-evaluate as necessary. This may mean addressing issues such as re-scoping, reallocation of resources, and regular portfolio reviews.
The main elements of portfolio management
Although the above steps seem simple, getting started and maintaining the portfolio management lifecycle is difficult. To do this, think carefully about what questions to ask and what kind of tools to use to proceed.
Although the relationship between corporate strategy and projects is often considered at the beginning of the portfolio planning process, it should not be considered only once. This process of evaluation and review should be continuous.
Asking the right questions will help steer any decision in the right direction:
- Is the project in line with the organizational strategy?
- Is this the right time to move forward with the project?
- What value does the project give to the organization?
- Is the pressure for the project internal or external (customer-oriented)?
- What is the rank of the project on the priority list? Is it urgent?
- Does the project have overtime? Are there other internal projects to achieve similar things? If yes, how can we combine or complement them?
- Can one project be a model for another?
- Are resources such as time, budget, and manpower available for implementation?
- Does the allocation of resources to one project affect another project (eg, rescheduling one project to replace another)?
- Are the stakeholders’ expectations realistic?
- How can you ensure that everyone knows their role?
- What are the key performance indicators (KPI) that demonstrate the success of the project and its corresponding impact on the portfolio?
These questions will help you and your business have a more realistic view of projects.
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