An Introduction to Project Portfolio Management
One of the most useful yet most complicated processes in Project Management is Project Portfolio Management. Organizations that successfully implement a Portfolio Management Policy and Process have the potential to see not only positive project results, they can also realize positive financial impacts, resource efficiencies, and business growth.
What is Project Portfolio Management?
Put simply, Portfolio Management prioritizes the projects that are most critical to a company’s success. Portfolio Managers take project ROI and organizational objectives into account to enable leadership to make informed decisions on projects, programs, and operations. Every organization has a set of goals, and typically, each business project exists to support one or more of those goals. Portfolio Management provides a global view of these individual projects and the goals they support, identifying those projects most critical to accomplishing the organization’s strategic objectives. This practice helps to balance risk against performance.
Why does Portfolio Management matter?
When it comes to implementing strategic initiatives for the organization, the most efficient and effective method is to execute a productive Portfolio Management process. As the Project Management Institute puts it, “portfolio management is a way to bridge the gap between strategy and implementation.” This is by far the most impactful benefit of Portfolio Management, creating project results that are consistent with the organization’s mission, vision, and values.
Portfolio Management also serves to strengthen internal business processes. Through standardization, centralization, and repetition, organizations can become tactical experts in project execution. Yet another positive impact is on the employees themselves; effective Portfolio Management supports employees through leadership investment, clearer direction, and more efficient resource allocation. Company culture can be drastically improved by better aligning projects and people to strategy.
What is the key to Portfolio Management success?
Leadership buy-in. Creating a successful Portfolio Management process is not an easy task, and it first and foremost requires C-level involvement. This is a top-down initiative that can either flounder or thrive depending on the level of attention and investment from leadership. The biggest reason leadership needs to be the cheerleader for Portfolio Management is that the process requires significant resources in the form of time and staff. Without the right people aligned to the Portfolio Management vision, it will fail to stick.
What are the first steps in building a Project Portfolio Management process?
When you’re ready to implement a Portfolio Management process, the first step is to review the organization’s strategic objectives and current project landscape. Do those projects support the defined goals? Identify the projects that are coming up in the next few years and evaluate if those support the direction of the company. Create an evaluation system that reviews whether each project meets the financial, business, and reputation need of the business. Then prioritize the current and future projects based on the defined criteria. Finally, present the consolidated and prioritized portfolio to leadership to gain buy-in from the start.