Project Portfolio Explained
Project portfolio management lets managers leverage and optimize investments and initiatives across multiple projects to better achieve the overall goals and objectives of an organization. Finding synergies within a portfolio and acting upon them can seem daunting at first. Project portfolio management requires a balance of time, skill, budgeting and risk mitigation, but when pulled off successfully, can reap massive rewards for an organization.
Project portfolio is a collection of projects, programs and processes that are managed together and optimized for the financial and strategic goals of an organization. A portfolio can be managed at either the functional or the organizational level. Unlike a project, which has a defined end goal or deliverable, a portfolio represents a more structural commitment to continuously optimizing the allocation, prioritization and scheduling of resources across many projects.
Project portfolio management (PPM) is the analysis and optimization of the costs, resources, technologies and processes for all the projects within a portfolio. Project portfolio management is typically carried out by portfolio managers or a project management office (PMO).
The key focus of PPM is to make sure that all the outcomes in the portfolio support the strategic goals of the organization. The portfolio manager or PMO does this through business analysis, reviewing budgets and forecasting while minimizing risk and managing stakeholder expectations.
The Project Portfolio Management Process, has four steps, which are;
- Define the priorities and strategic concerns of the organization
- Collect portfolio data to discern insights into its management
- Model and analyse data and review it carefully
- Synthesize what your learned and communicate it to stakeholders
Project portfolio managers oversee the management of the project portfolio. They are responsible for getting a return on investment and meeting the goals and objectives of their organization. The project portfolio manager can be tasked with managing one or more portfolios.
The job is done by working with various financial algorithms and models to help the project portfolio manager align the projects to strategic goals of the organization. They are further guided by a set of standards that help when they are taking a high-level look at portfolio metrics.
Project portfolio managers are often involved with the PMO, which also sets the processes and standards for the portfolio. The project portfolio manager and PMO can also provide direction on what methodologies are used, whether traditional waterfall or an agile framework, when managing the project.
In the hierarchy of business management, project portfolio management is the link between project management and enterprise management, which deals with the overriding vision, mission and strategy of the organization.
To understand where project portfolio management and project management differ, there must be an understanding of each. Put simply project management is the management of a project. A project is a temporary endeavour that results in a product or service. It has a beginning and an end. Project goals are defined, and tasks are broken down into a schedule. Cost and budgets are set; resources are assigned, and reports to stakeholders.
Project portfolio management, on the other hand, is a higher level approach that orchestrates, prioritizes and analyses the potential value of many projects in a portfolio. The goal is to manage and leverage the life cycle of investments, initiatives, programs, projects and outcomes to best reach the overall goals and objectives of an organization. Therefore, project management is a subset of project portfolio management. It leads to the ultimate objective, which is meeting the strategic goals of the organization.
Project portfolio management requires a balance of time, skills, budgets, risk mitigation and running the projects in the portfolio frugally and expediently without sacrificing quality. Managers do this through the use of five key processes.
- Change Control Management: Identifying and prioritizing change requests. These can be feature requests, operational constraints, regulatory, etc., based on demand, financial and operational constraints.
- Risk Management: Identifying risks in projects that make up the portfolio, and developing contingencies and risk response plans in order to mitigate uncertainty within the project portfolio.
- Financial Management: Managing financial resources related to the projects in the portfolio and demonstrating financial value of the portfolio in relation to organizational strategy, goals and objectives.
- Pipeline Management: Ensuring project proposals are in the pipeline and determining if they’re worth executing.
- Resource Management: Efficiently and effectively using an organization’s resources, from materials and equipment to people and technical skills.
Projects are hard enough to manage, and a portfolio of them even more so. It’s many times more complex and requires robust project portfolio software, must should provide the requirements needed to manage a portfolio effectively. Having goals and objectives for project portfolio is important, as it gives managers a target to hit when trying to increase their return on investment and keep risk at bay.
Grouping projects in a portfolio and creating reports around them collectively, rather than individually, gives managers the data they need to make better business decisions about costs, resources and more.
Milestones mark the end of one major phase and the beginning of another. They can be easily inserted on the Gantt chart, where they’re represented by a diamond symbol.
Set milestones and break up the project into more manageable parts. This boosts the team’s morale by giving them a series of successes as they work through their tasks. Managers can use milestones as a means to measure progress.
Tasks are not all the same. Some can’t start until another has finished, or must start or finish at the same time as another. It’s important to know which tasks are dependent to keep the portfolio healthy.
When managing a portfolio, it’s important to keep the big picture in sight. Keep goal-minded with the roadmap tool, which places all the projects in the portfolio on one Gantt chart.
Workload represents what the team has been assigned, in terms of their tasks. By overburdening one team member, they may not be as productive and morale will suffer.
A dashboard is a tool that graphically depicts various project metrics, so it is easier to determine how a project is performing.
Status reports are a way to measure the current state of a project. They communicate important data to stakeholders, keeping them updated. They also maximize portfolio performance.
Collaboration means working together to increase productivity. This can be at the task level for teams, or on an executive level. Ideally, it’s practiced throughout every department in an organization.
PPM leads to better decision-making, helps with risk management and creates a faster turnaround time for projects by streamlining processes and getting more investments.
But it’s not only that projects move faster and cheaper. Project portfolio management also increases product delivery success. PPM streamlines data and that makes for a more efficient collaboration.
All these factors and more make it clear that project portfolio management is a methodology that can serve any organization with a portfolio of projects. Let us know your thoughts and if you manage a portfolio, all the very best on your project management journey.