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Your business can build synergies between projects and make the most of limited resources through project portfolio management. With exceptional portfolio management, it is possible to align projects with your organization’s strategic direction, thereby increasing your business value.
When your business has more project work in the pipeline than the funding and human resources to handle these tasks, your management team may find it hard to turn down these projects. The result is cutting corners between projects or stuffing more work into the previously well-worn project crews’ calendars.
Even with your heavy investment of money and people in your projects, you may be getting poor results since your team is working on too many projects or wrong projects. Then, you have to deal with low quality, cost overruns, and delays because you’re trying to do too much.
However, project portfolio management will enable you to decline projects that are not good enough and focus your limited resources on the best ones. And with it, you can make and implement any tough project selection decisions. Since portfolio management is like a funnel, you can blend project execution with strategic planning, resulting in executable strategic objectives.
What is Project Portfolio Management?
As integrated management of the technologies, methods, and processes, project management offices and project managers use project portfolio management, PPM, to manage and analyze proposed or current projects using several crucial characteristics. PPM’s objective is to honor constraints imposed by external real-world factors, strategic objectives, and customers on an organization. These objectives also extend to scheduling activities to accomplish a business’s financial and operational goals and determine the maximum resource mix for delivery.
Your business can use PPM to bridge the gap between implementation and strategy. With that, your company can leverage the project execution and selection successfully.
Project Portfolio Management Use Cases
If your organization is looking to execute better and manage its projects and keep the business producing value, you will find a useful solution with project portfolio management. If you have been using complex spreadsheets or a task management solution to manage your projects, you will discover that it becomes entirely unproductive to transit to a PPL solution. However, it is relatively necessary. Here are some of PPM’s use cases.
Every project you embark on depends on resource management. Thus, you can use project portfolio management to proactively ensure balanced capabilities and manage constraints through the ability to manage resource workloads, identify required skillsets and resource demand. As such, you will be able to provide predictive leadership capabilities.
It is vital to have clear visibility into portfolio and project activity for value illustration and the project’s impact on your business. Your company can essentially use project management software to keep a complete historical record of all actions while efficiently communicating or posting concerns and comments with external stakeholders.
Your business can use the entire portfolio context to evaluate the individual project’s risks and benefits. You can virtually increase your company’s portfolio success by using the platform to enable portfolio level reporting, identify portfolio health, and enhance portfolio visibility.
Project Tracking and Inventory
Get visibility of your company’s overall project workload through project inventory. With that, you can manage robust project reporting, tracking, and inventory.
Resource Time Tracking
When your organization uses feedback from skilled resources, you can estimate your resource hours. Using PPM, you can eliminate the most prominent project management challenge of capturing costs/time against projects cited by several organizations.
What Are the Objectives of Project Portfolio Management?
Project portfolio management is a discipline that involves tools, methods, technologies, and processes to align projects and programs with a business’s strategy and maximize the benefits and value related to programs and projects. Your business must have two things with PPM to be successful:
- Choose the appropriate projects that are aligned with your company’s goals and objectives.
- Execute those projects right so that your company gets back its ROI.
When you want to choose the right project, you have to:
- Institute the applicable governance processes for the project.
- Ensure that the project selected is in line with your company’s objectives and goals. However, you may need to continuously scrutinize the project’s viability to be confident that it is still useful for your business if you want a successful alignment in the project’s later phase. You can do this ongoing evaluation using controlled processes like stage-gate reviews.
- Ensure that a capacity management framework exists where you can manage and view the resource allocation. With this, you can get the needed help for project prioritization or resource allocation decisions.
- Figure out each initiative’s and project’s proper business case before you can evaluate them for possible selection.
Also, when you want to do the project right, the following factors are critical:
- The PMO can handle all project types’ deliveries adequately, including the project’s modes.
- You have mature PM practices to ensure project deliverability within the schedule, cost, and quality constraints.
Depending on your business size and the organization’s project portfolio management and PM maturity, it can take a PPM initiative months and even years to completely implement before your business can begin to reap the fruits of its efforts. Therefore, your company must evaluate its objectives and goals before embarking on a PPM. It would be best if you also charted out a practical implementation roadmap. Some of the project portfolio management objectives can be the following:
Project’s End-To-End Visibility From Intake to Delivery
You can get a holistic view of all the projects within your company through the PPM process. As such, you can make better decisions and control the PPM process completely. Some of the decisions you can make include resource assignment, project selection, and so on.
Resource and Demand Management
Your company will need to prioritize the project to ensure the assignment of available resources after evaluating and selecting the projects. It would help if you had this since your business can have more projects that have passed the selection and evaluation criteria than available resources to work on them. So project portfolio management is crucial to ensure you are focussing your available resources on the projects yielding the best results for your business.
Looking for Projects and Portfolio ROI Increment
You will see that a PPM initiative becomes quite critical since you want to measure your funded initiatives and project’s ROI efficiently. When your company groups projects into various portfolios, such as maintenance projects, new development projects, IT infrastructural projects, it can get more visibility into its performance as you monitor or fund those initiatives.
Aligning Business Objectives with Projects
When it comes to your organization’s initiatives and projects’ several requests, you will get multiple purposes with this factor. With a project portfolio management process, your company can evaluate projects in your business’s overall objectives and goals. Thus, the company will need to stream all the functions, from funding, project selection, and intake, to achieve this. Ultimately, there is a link between the PPM process with the capital allocation process, strategic priorities, and imperatives.
It is useless when you don’t have a well-organized execution framework with a good strategy. And since your business utilizes programs and projects to execute its strategy, the overall framework for execution that addresses benefits realization and project alignments is a project portfolio management process. Any organization can measure strategy value since the PPM offers this general framework.
Project Portfolio Management vs. Program Management vs. Project Management
Since there is always room for improvement, businesses will indeed continuously look for ways to enhance the process and optimize resource deployment. That is why it may be quite challenging for your organization to utilize its resource better when it performs all projects separately as it juggles several projects simultaneously as a big company. Using resources efficiently means managing projects in groups.
Your organization will need to deal with projects under a portfolio or program if you have more than one project. The project type and nature also determine the project distribution under a portfolio or program. As such, businesses manage portfolios using project portfolio management and control programs through program management.
Essentially, you need to understand the concept of managing a project under any of the above. So, let’s get into the details of portfolios, programs, and projects and their management. People commonly refer to these terms as the 3Ps of project management.
Portfolio, Program, and Project Management
Let’s describe the relationship between portfolio, program, and project management like this:
- A portfolio is a collection of different projects or programs within the same company, which you can link or unlink to one another
- A program is a collection of related or similar projects, which organizations coordinate or manage as a group instead of individually
- A project what an organization or company undertakes as a temporary endeavor, including a new result development, service, or product.
In other words, projects align within more extensive programs, which also correspond within portfolios.
What is a Portfolio in Project Management?
As a group of programs and projects, organizations and companies manage a portfolio as a group to accomplish their strategic objectives. Your company can have one portfolio consisting of all programs, projects, and operational work within the organization. The portfolio can also form many portfolios for ongoing investment and project selection decisions.
It is vital to have a clear grasp of which projects are the right ones for your business to focus on. Based on your company’s capacity, you may be limited by how many projects you can do.
What Does a Portfolio Manager Do?
Your company can achieve its strategic objectives through the centralized management of one or more portfolios using project portfolio management. In reality, your business may have limited resources, whether equipment, space, people, or funds. It can do several programs and projects based on its strategy; it is all about deciding what order your organization needs to complete these projects and the right ones.
An organization must have a holistic approach to how projects and programs align with its overarching goals and not look at them individually. At the same time, your company must consider the portfolio’s level of balance. While it is critical to developing new opportunities, you can’t forget about keeping on the business light. A portfolio should not be too risky that you lose everything within a short period, even when you need to take some risks.
Project portfolio management is balancing the portfolio so that your company can select and implement the right programs and projects beyond selecting and prioritizing programs and projects. Quite vital to the process is controlling and monitoring because you won’t find portfolio structure as a one-time decision. You must conduct evaluations in some consistent cadence. A project may lose its priority to others, or you may move a project out of the portfolio.
You are doing this to ensure that projects match your business’s objectives, goals, and strategies. There could also be a case that a project doesn’t align as your team gets into performing it. As such, it could lead to programs and projects’ reprioritization in the portfolio.
What is a Program in Project Management?
For any organization to achieve value, it needs to manage a group of projects in a coordinated way in some cases. When it comes to project management terms, you will need a program with this collection of projects. A project is similar to a program as it is a temporary organization, and you will have a complete program when you complete related projects.
What Does a Program Manager Do?
You may discover that program management is a bit more strategic than merely managing some projects. The program manager helps the company to ensure that the right work is moving at the right time between the suited projects. Starting from the program inception and throughout it, the program manager’s focus is on the business benefits, examining how to realize the benefits, and making these benefits happen.
A project manager completes the work of each project described above. Program managers must validate the correct project’s inclusion and ensure that the projects meet the intended benefits. They can then remove or realign any project that is not offering value to the program. When it comes to overseeing the dependencies between projects, the program manager must create program-level plans to achieve this.
An ideal instance is managing the dependencies between projects by creating a master schedule. And to manage program-level risks, the organization needs to create a program risk management plan. Thus, the program information flow is determined by a program communication plan. As such, the program manager provides the oversight the company needs to ensure that it completes pieces of each project efficiently and effectively to satisfy the needs of the other projects, apart from managing the projects.
The program manager’s focus is benefits realization, aiming at how to achieve these groups of projects when he knows how to accomplish them. Working to ensure the transition of benefits to operations and that processes are in place to sustain these benefits, the program manager manages organizational change. The program manager’s role extends to communicating with the teams to ensure the team is abreast of the changes and what they can do about them, apart from ensuring that they align projects to the company strategy, even with the changes in strategy.
What is a Project in Project Management?
As a temporary endeavor, a project has a determinate start and end focusing on developing a unique result, service, or product. In virtually every industry, there are projects of every size imaginable. As such, project managers supervise these projects irrespective of these details.
What Does a Project Manager Do?
Balancing the work scope, otherwise known as deliverables, to meet the project objectives’ resources within the allotted budget and schedule is a vital part of the project manager’s job. The manager’s responsibility extends to meeting the project’s quality guidelines required by clients.
Applying the appropriate processes, techniques, and tools is part of project management to complete the project successfully in a value-added way. The project management knowledge body is massive. Thus, project managers can get the support of several techniques, tools, and skills available to deliver these initiatives. Understanding the project, its challenges, objectives, and goals, choosing and utilizing them are part of the project manager’s responsibilities.
Project Portfolio Management Benefits
One critical benefit of project portfolio management is its ability to drive better business decisions. Your company needs useful data to make the right decisions. Therefore, it makes visibility vital for a tactical bottoms-up perspective and top-down, strategic perspective. Essentially, it tends to be much easier to predict future factors such as resource utilization when your business has a firm handle on previous project metrics. Moreover, your company can discover which projects make a significant contribution to corporate objectives when it understands what is happening in the current project portfolio.
Project portfolio management can also increase project delivery success. There can be project failure when you have unsuccessful project delivery. The cause for this failure may be factors like technical limitations, unresolved issues, lack of strategy alignment, mismanaged resources, poorly defined requirements, schedule delays, overruns, or cost. With PPM, your business can minimize these factors within project delivery. Your company will have the required functionality to plan its projects based on enhanced estimate project costs, strategic alignment through score projects, and plan its resources based on resource capacity using project portfolio management tools. Ultimately, you will be able to increase project execution success leading to the business’s overall increased value.
Other benefits include:
- Increase collaboration and streamline data
- Faster project turn times
- Risk management
- Increased ROI
- More informed decision making
- Decreased organizational risk
- More accurate project performance data
- More efficient resource use
- Collaboration over competition
- Focus on objective business goals
Project Portfolio Management Roles and Responsibility
Your business can decide and compare investments from several potential projects through the frameworks provided by project portfolio management. Through it, you can discover your company’s market prospects and competitive position in a grid or matrix, with demands from several parts for the business’s marketing strategies.
Over time, portfolio management proved to add value to organizations by guiding selection decisions and resource management in project development and research. Companies utilize portfolio management to execute the right projects and do these projects right using project management methods. Therefore, the use of portfolios for resource-interrelated project management has increased with the increasing use of a portfolio to deliver products and services. Through portfolio management techniques, organizations’ resource assignments prioritize and manage decisions across projects, like maximizing a project’s long-term ROI, troubled firefighting projects, and maximizing economic value. What determines your business’s market or future growth over time is the right set of projects in your project portfolio.
The Project Portfolio Management Process
As your organization decides to have faster decision-making cycles, the executives have to make decisions and balance trade-offs regarding capital investments, cash-flow, debt, and dividends. Therefore, your organization resolves that you need to institute a portfolio management process. So, how do you go about it?
Following consistent steps that will guide your company’s thinking is the most efficient way to go through a project portfolio management process. If your company wishes to organize its portfolio management process, it is recommended to set these 4 steps as a framework. With them, your portfolio initiative will provide value for your business.
The consistent first step is the executive framing. Your portfolio management can focus on your company’s specific needs as influenced by the executives by clarifying major strategic concerns, priorities, and interest metrics. There is a difference between an academic exercise, effective decision tool building, and framing. You can also have streaming data collection through executive framing.
Collecting data is the next step. Note that you can build your initial portfolio model without having perfect data. Go ahead with the information you already have, as your company has to make any informed decisions with it. And you will be surprised by the quality of insight you will get from this reasonably high-level data. Over time, you can spend your energy where it matters most as you improve on your data.
Analysis and Modeling
Get someone in your organization who is business and modeling savvy to handle the analysis and modeling. Sadly, it is not hard to miss the point even as it tends to be relatively easy to create an accurate model. It is recommended to generate a series of analysis regularly to understand the model dynamics. Then, compare them to a current plan to validate them. Lastly, use the appropriate financial and business experts in the organization to review them.
Communication and Synthesis
When you are through with the analysis and models, you need to make it easy for the executives to access by synthesizing the information. More informed decisions, improved strategic conversation, and greater insight and understanding are vital regarding the analysis. Since decision-makers can formulate more profound and new questions using the latest insights, your business can start a new round of analysis with this step.
If your company is new to project portfolio management, you can use the four steps above as a guide. It is recommended to have a professional who can advise you if you are new at developing a portfolio model.
Project portfolio management is more than individual project alignment and prioritization; it is typical to have an accurate and systematic way to capture and share data connected to projects across different departments for timely decision making. Your business can improve its overall strategy through effective portfolio management. And to operationalize strategy, a tangible way to achieve that is through portfolio management. Through it, your organization will understand each of your investment’s benefits and make the most efficient use of resources. Apart from enhancing the ability to make strategic and timely cuts when needed, portfolio management also helps ensure increased accountability and credibility.