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. They are always ensuring business goal alignment with company goals.

In this article, we’ll share five of the most important advantages and disadvantages of project portfolio management.

5 Benefits of Project Portfolio Management

A well-structured portfolio approach improves how projects are selected, resourced, and delivered. Below are five ways project portfolio management can enhance business outcomes, from making smarter decisions to achieving faster delivery and promoting stronger collaboration.

1. Better Decision Making

Our first branch of PPM benefits concerns its ability to drive better business decisions. These advantages of project portfolio management are particularly evident when good data is available, making visibility important from both a strategic, top-down perspective and from a tactical, bottom-up perspective.

When you have a firm grasp on past project metrics, it becomes much easier to predict future factors, such as resource utilization.

When you understand what is happening in your current project portfolio, you can identify 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 minimize risks, while also balancing the risks necessary to produce sufficient profits. You must strike a balance between playing so safely that you never reach your full potential and taking too many risks, which can result in losing everything.

Even successful projects can reflect overspending. Overspending can be caused by numerous factors, including poor project estimating, inaccurate scheduling, improper resource allocation that undermines resource planning, and a lack of visibility into project data.

Overspending often results from poor estimating, inaccurate scheduling, and limited visibility into project data. Project portfolio management tools help address these challenges by improving cost estimation and aligning resources with actual project needs. When implemented effectively, these systems can lead to measurable cost savings and better financial control across the portfolio.

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.

Effective project portfolio oversight, coupled with defined processes aligned with PPM technology, allows 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, it 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 numerous factors, including cost overruns, schedule delays, poorly defined requirements, mismanaged resources, a lack of strategic alignment, unresolved issues, or technical limitations.

PPM enables organizations to minimize these factors within project delivery, which is essential for achieving successful value management.

PMI’s Pulse of the Profession 2024 survey (PDF) of 2,254 project professionals shows that organisations sitting in the top quartile for project performance complete 96% of their projects, more than double the 41% recorded by bottom-quartile peers.

These high performers also restrict scope creep to 23% versus 37% and trim budget loss on failed work to 20% compared with 29%. The findings confirm that mature portfolio-management practices and tools significantly increase delivery success while reducing waste

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 transferred and updated through email or other means is not considered real-time information and can become outdated 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, providing them with the insight they need to complete their work. 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 project portfolio management (PPM) system. These advantages mean that 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, showcasing clear benefits of PPM software adoption.

5 Common Project Portfolio Management Mistakes

Even with a solid framework in place, organizations can slip into patterns that limit portfolio performance. The following mistakes highlight where portfolio strategies often fail and how to correct course for better decision-making and project execution.

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 essential to understand the unique needs of different business units, secure participant agreement, and then develop strategies that support 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, perhaps using a work breakdown structure, and break those small pieces into even smaller pieces if possible. And assign each task to the team members who are best suited to accomplish it.

3. Not prioritizing projects and/or tasks

Many departments have multiple, concurrent projects running for both internal and external customers. And too often, we see staff keeping their heads down on a project that is a lower priority while a higher-visibility project starts to slip.

That’s why it’s important for 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 headaches.

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. 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:

• 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 with objectives don’t threaten timelines.

5. Not using a project management tool

Many solid project management tools offer excellent visual representations of a project’s status. To help keep projects on track, it’s essential to utilize these tools to stay informed about the project’s progress, ensure it remains on pace to meet the deadline, and identify opportunities for further efficiency or potential issues.

Additionally, project documentation should be updated on a weekly basis. If something of importance comes up (e.g., a change in task, scope, or deadline), the PM should update the documentation within 24 hours. This will give everyone on the project accurate information about the project.

Bringing It All Together with Effective PPM

Project Portfolio Management enables better decisions, faster delivery, and fewer failures – but only when done well. While the benefits of PPM include improved alignment, reduced risk, and increased productivity, the most common mistakes (like poor prioritization or not using dedicated tools) can negate those advantages.

To effectively leverage the advantages and mitigate the disadvantages of project portfolio management, organizations require a structured, scalable system that supports both strategic oversight and tactical execution.

BrightWork 365 provides the tools to avoid common pitfalls and realize the full benefits of portfolio management, including visibility, governance, and real-time collaboration. Watch our demo to see how BrightWork 365 supports smarter portfolio management across your organization.