What is Project Portfolio Management?
Until recently, I had no idea what project portfolio management, also known PPM or portfolio management, was. Like many people, I’m an ‘accidental’ project manager, someone who has to manage projects from time to time to deliver my work but is not a qualified professional project manager.
I can just about get my head around managing one project at a time, never mind worrying about multiple projects!
My interest in project portfolio management was sparked after I read two surveys on the status of project management in 2017. The surveys from the Project Management Institute and KPMG outline the importance of successful projects to strategic commercial goals, highlighting the role of PPM in delivering those projects.
I dug a little deeper into PPM, and have put together some key ideas for anyone new to this discipline.
What is Project Portfolio Management?
A portfolio is a collection of projects grouped together; an organization may have one overall portfolio or several portfolios for different areas of the business.
Project portfolio management refers to “the centralized management of one or more project portfolios to achieve strategic objectives”. In essence, project portfolio management ensures all approved and ongoing projects meet strategic objectives, and are managed efficiently to deliver the optimal results. It’s about doing the right projects at the right time.
The objective of a project portfolio manager is to link business strategy with project implementation. Key responsibilities include project request management; overall resource allocation and management; risk management; identifying and reducing inefficiencies; liaising with senior stakeholders; change management, and tracking the business value of projects.
When implemented effectively, project portfolio management helps to improve project management processes and methods, reducing project failures and improving customer satisfaction. The PMI reports that organizations with mature PPM processes completed 35% more of their projects successfully, wasting less time and money.
13 Benefits of Project Portfolio Management
The below presentation outlines 13 main reasons for implementing PPM.
In summary, organizations introduce PPM to:
- Support project request management with an objective process to log and rank new requests.
- Improve visibility with standardized project processes and cross-project reporting.
- Enhance collaboration with the right tools and processes.
- Introduce mature risk management processes at the portfolio level.
- Engage stakeholders with real-time reports.
- Enable transparency, governance, and accountability.
- Ensure benefits realization
- Track, allocate, and optimize project resources.
- Deliver a competitive advantage.
- Improve decision-making and problem-solving.
- Align senior management.
- Maintain continuous improvement and evolution of project management processes
- Attract, recruit, retain, and develop the right talent.
Poorly implemented PPM, or even a lack of PPM processes, severely hampers organizational ability to deliver desired outcomes. In fact, research indicates that only 21% of projects are consistently delivering business value. Amongst the consequences of poor or absent PPM are:
- Weak IT governance structures, which mean that business executives are not sure what to approve and why
- Organizations attempting to complete more projects than they have the capacity to do
- Bad projects taking precedence over good projects
- Poor visibility
- Excessive project delays due to insufficient resources
- High turnover due to burnout and stress as key project contributors are working on too many projects
- Frequent change of project status (i.e., moving from “active” to “on hold” to “top priority” and back)
- Completion of projects that don’t really meet a strategic need
- Intense internal competition for resources, reducing collaboration and cooperation.
3 Key Elements of Project Portfolio Management
PPM covers a number of areas and practices. In this section, I will summarize three essential considerations: strategy, software, and asking the right questions.
Business strategy underpins successful project portfolio management. Strategy refers to the long-term direction and scope of an organization, working towards the goals of growth and competitive advantage.
A strategy must be supported by implementation plans, which take organization capabilities and resources, and external threats into consideration, and also by metrics of success. Projects are increasingly core to the delivery of agreed strategy, but only when a strategy is clearly defined and communicated.
Choosing the right software solution for your organization is essential to PPM success. Quite often, an absence of integrated software which combines data from various sources in a single view prevents organizations from fully realizing the benefits of PPM.
Portfolio managers and stakeholders who are forced to rely on spreadsheets spend too much time locating information or worrying about low-value initiatives, instead of focusing on strategy development and implementation.
When evaluating solutions, look for a system that is easy to deploy and use to ensure end-user adoption.
Depending on your requirements, a solution should encompass scalable project request management; dashboards and automated reports, and resource management.
An effective PPM solution also acts as a single source of project truth, aiding collaboration and task tracking. This is particularly important for team members and managers working on several projects simultaneously or working remotely. Teams need optimal levels of visibility to meet their obligations and take corrective action where needed.
3. Asking the Right Questions
The link between business strategy and project portfolio management has been mentioned several times but how is this relationship managed? Project portfolio managers need to ask certain questions about all projects in an organization, including:
- Does each project contribute to the overall achievement of the portfolio?
- How well is each project performing?
- Are any projects dependent on each other?
- Will any project negatively impact on other projects in the pipeline?
- Will the successful delivery of all projects produce the desired objective or benefit?
- Are resources/budgets available to start a new project?
- Is there a similar project in the portfolio to use as a template?
- Are the stakeholder’s expectations realistic?
- Is everyone in the organization familiar with our strategic goals?
- Are available resources used effectively?
- Is it easy to get the right project information to inform decision making?
In an increasingly competitive and challenging operating environment, businesses must do more with less. Projects are critical to delivering the solutions and innovations organizations require to move forward. Unfortunately, without an overarching structure, projects tend to run over time and budget, consuming limited resources. By placing an emphasis on long-term strategic goals, organizational requirements, and governance, project portfolio management ensures project success.
Editor’s Note: This post was originally published in July 2017 and has updated for freshness, accuracy, and comprehensiveness.
In her free time, she enjoys a challenging session at the gym, tucking into a good book, and walking the beautiful Galway coastline with her dog.