As a project manager, your focus is on one task – deliver the project on time and within budget! Senior managers often have another focus – how is the organization performing?
Projects are key to meeting strategic goals and delivering real business value. Project portfolio management, the management of multiple projects, allows organizations to select the right projects and maximize the impact of each project.
What is Project Portfolio Management?
A project is a temporary endeavor with a defined beginning and end, scope, and assigned resources.
Organizations often use a portfolio, a collection of projects, to plan, resource, and manage work.
Project portfolio management thus refers to “the centralized management of one or more project portfolios to achieve strategic objectives”.
Projects are often connected in some way – budget, resources, or outputs. Rather than manage projects individually, project portfolio management looks at all projects across all departments.
PPM ensures all approved and ongoing projects meet agreed objectives and are managed to deliver results. It’s about doing the right projects at the right time in a standardized way.
Key to PPM is strategy, a direction set for the future of the organization.
The strategy outlines the goals and actions undertaken to reach this new desired state. Reaching these goals requires resource management, quick responses to opportunities, and improving performance.
Once the strategy is agreed upon, organizations use projects to start delivering on key requirements and milestones. Selecting the right project is critical to long-term success. Every approved project must contribute to larger goals and add value.
Project portfolio management helps organizations to answer questions such as:
- Are we making good decisions about projects?
- Are we working on the right projects?
- What should our teams work on instead?
- How are projects currently performing?
- How do we improve resource management?
- Can we run multiple projects at the same time?
- Are teams working on similar projects?
- Will our projects meet key strategic goals?
- Do we have a mix of short and long-term projects?
Answering these questions helps organizations to predict project outcomes and manage risks.
Unlike a project, a portfolio is not defined by a start or end state. Instead, new projects replace completed projects.
An organization can have one overall portfolio or several portfolios for different areas of the business such as IT or Marketing.
PPM increases visibility into progress and surfaces data about past performance. This information allows senior management to make informed decisions when approving projects, and also identify projects that should be stopped.
The Project Portfolio Manager
How does a project portfolio manager fit into PPM?
A project manager is typically concerned with individual projects. A project portfolio manager is concerned with all projects within the organization. A project portfolio manager focuses on improving project execution and delivering the expected business value from the portfolio.
Key responsibilities include:
- Project request management
- Resource allocation and management
- Risk management
- Identifying and reducing inefficiencies
- Liaising with senior stakeholder
- Change management
- Tracking the business value of projects.
Project portfolio managers ask key questions of projects such as:
- 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?
12 Benefits of Project Portfolio Management
The PMI reports that organizations with mature PPM processes completed 35% more of their projects successfully, wasting less time and money.
Organizations can use PPM to:
- Introduce a systematic approach to project request management and governance.
- Improve visibility with standardized project processes and cross-project reporting.
- Enhance collaboration with tools, templates, and a clear understanding of project goals.
- Create mature risk management processes at the portfolio level.
- Engage stakeholders with real-time reports to support decision-making.
- Enable transparency and accountability with defined processes and strategic goals.
- Increase the business value delivered by projects.
- Track, allocate, and optimize project resources throughout the organization.
- Improve decision-making with easier access to project data across the portfolio.
- Align senior management and teams around strategic goals.
- Deliver continuous improvement and evolution of project management processes
- Attract, recruit, retain, and develop talent.
Poorly implemented PPM, or even a lack of PPM processes, severely reduces organizational ability to deliver desired outcomes.
In fact, research indicates that only 21% of projects are consistently delivering business value.
Among the consequences of poor or absent PPM are:
- Weak governance structures, which mean business executives are not sure which projects to approve and why.
- Organizations attempting to complete more projects than they have capacity for.
- Bad projects taking precedence over good projects.
- Poor visibility into performance.
- Excessive project delays due to insufficient resources.
- High turnover due to burnout as contributors are working on too many projects.
- Frequent changes in 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.
In a competitive environment, businesses must do more with less. Projects are critical to delivering the solutions and innovations organizations require to move forward.
Without an overarching structure, projects often fail, wasting limited resources. With a focus on long-term strategic goals, project portfolio management ensures project success.
Editor’s Note: This post was originally published in July 2017 and has been 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.