Project Portfolio Management: 5 Benefits and 5 Common Mistakes
In case you aren’t familiar with the term, project portfolio management (PPM) is distinct from project management; rather than taking on a single project and seeing it through to completion, PPM involves the collective management of an entire portfolio of projects.
PPM managers are responsible for determining what projects to take on, when to take them on, the profitability and priority of those projects (including how they change over time), and how to allocate resources in the most efficient way to complete those projects.
Here are some of the benefits of project portfolio management and some of the most common mistakes to avoid when practicing the discipline.
5 Benefits of Project Portfolio Management
1. Better Decision Making
Our first branch of PPM benefits concerns its ability to drive better business decisions. To make good decisions, you need good data, making visibility crucial from both a strategic, top-down perspective and from a tactical bottoms-up perspective.
When you have a firm handle on past project metrics, it makes it much easier to predict future factors like resource utilization.
Moreover, when you know what is happening in your current project portfolio, you can find out which projects are not contributing to corporate objectives. As part of project portfolio management, it is better for you to discover this than hear about it from the line of business managers or even worse, from senior executives.
2. Risk Management
It is extremely necessary for companies to create portfolios that lessen any risks, but at the same time, balance the deeds necessary to produce just enough risk to make the profits good. You must set a happy medium between playing is so safe that you never reach your full potential and taking too much risk and losing everything.
Even successful projects can reflect overspending. Overspending can be caused by numerous factors such as poor project estimating, inaccurate scheduling, improper resource allocation, and no visibility into project data.
Forrester reported that organizations can expect a decrease in overspending by 10% on average, sometimes more, if utilizing a PPM toolset. PPM tools provide the estimation capabilities needed to ensure that projects are estimated more accurately and the right resources are put on the right work at the right time.
3. Faster project turn times
There are many reasons why PPM can reduce project turn-times by an average of 10%. Governance, workflow, and standardization tend to reflect repeatable processes that are proven. The defined processes aligned with PPM technology allow team members to keep the work flowing and will typically increase productivity because it answers the question – “what do I do next?”
As we all know, strategically aligned projects should always result in business value. With a shorter time to market, this value can be realized sooner and in many cases can give businesses a head start on their competition.
4. Increase project delivery success
Unsuccessful project delivery leads to project failure. Project failure can be caused by many factors such as cost overruns, schedule delays, poorly defined requirements, mismanaged resources, lack of strategy alignment, unresolved issues, or technical limitations. PPM allows organizations to ensure these factors are minimized within project delivery.
In recent years, the Project Management Institute (PMI) surveyed organizations and showed that successful PPM tools enable organizations to execute on approximately 30% more projects and reduce project failure rates by up to 60%.
PPM tools provide organizations with the functionality they need to more accurately plan their projects based on resource capacity, score projects to ensure strategic alignment, better estimate project costs, and increase the success of project execution resulting in overall increased value to the business.
5. Streamline data and increase collaboration
Many businesses today still rely on manual tools for project planning and reporting. Many are still using excel worksheets. These tools are typically located on a client’s computer and are not intended for enterprise use. Data that is transferred and updated through email or other means is not considered to be real-time information and can become out of date quickly leading to project conflicts and inconsistencies.
Project transparency is critical for proper decision making and improved project performance. With PPM, users can access real-time data, giving them the insight they need to get work done. Team members no longer have to rely on hallway conversations or meetings to give project status.
Reduction of resource time can also be significant when leveraging an enterprise PPM system. Centralized data leads to insight and effective real-time collaboration leads to increased productivity.
Managers can potentially decrease their administrative tasks by 25% with an effective PPM tool in place.
5 Common Project Portfolio Management Mistakes
1. No tangible investment strategies
It is a common practice in many companies, whether start-ups or larger corporations, to directly start with budgeting and funding. The projects scoring higher on the priority list are picked off based on the budget until the funds have been completely exhausted. The remaining projects are simply postponed or backlogged.
When prioritizing projects, it is important to understand the individual needs of different business units and then create strategies that are helpful in achieving broader business goals.
2. Not breaking down large projects into smaller pieces
Breaking a large project into small, manageable pieces will make the team feel more comfortable and confident that they can successfully tackle what may seem like an impossible project and accomplish each task.
To avoid leaving your team feeling overwhelmed, take the time to understand each facet of the project. Then break the project into small pieces, and break those small pieces into smaller pieces if you can. And assign each task to the team members who are best suited to accomplish them.
3. Not prioritizing projects and/or tasks
Many departments have multiple, concurrent projects running, for both internal and external customers. And too many times, we see staff keeping their head down on a project that is a lower priority while a higher visibility project starts to slip.
That’s why it’s important for — and the job of — the project manager to let team members know what tasks should take priority and when priorities have changed. Clearly communicating project priorities can help save a lot of hassle and headache.
4. Letting changes get out of hand
Scope creep is pervasive in project management and difficult to manage because, as the name suggests, it creeps up on you. Additional requests and added features strain resources and can affect the focus of the product vision. And without the proper control, they can severely affect project success. However, scope creep can be curtailed by strong project management and product ownership.
When adding features or considering changes, you need to ask yourself a few questions, he says. Do new feature requests align with the product vision? Do the proposed changes add value to the end-user? Are they critical or nice to have?
Clearly defining product goals and identifying success factors can help ensure that change requests and added features that aren’t aligned to objectives don’t threaten timelines.
5. Not using a project management tool
Many solid project management tools have great visual representations of the status of a project. To help keep projects on track, it’s important to use these tools to know where the project is, to make sure it is on pace to complete by the deadline, and to identify opportunities for additional efficiency or spot problems.
Additionally, project documentation should be updated weekly. If something of importance comes up (e.g., a change in task or scope or deadline), the PM should update the documentation within 24 hours. This will give everyone on the project accurate information about the project.