Project portfolio management definition
Project portfolio management (PPM) is a process by which an organization’s projects are evaluated and executed to ensure strategic alignment with company goals. PPM provides executives, project managers, team members, and stakeholders an overarching view of their projects, including how they fit into the organization’s directives and strategy, thereby lending insights into the potential returns and risks involved.
Under PPM, projects are grouped into programs based on relevance and similarities. Those programs and their respective projects should fall under a portfolio strategy undertaken by the project management office (PMO) to meet overall company objectives. In this way, PPM does more than just align projects with business strategy; it provides a means for aligning an organization’s approach to project management, including all project policies and processes, to its goals.
The benefits of PPM
Project portfolio management enables organizations to achieve higher rates of success by aligning them with mid- to long-term company goals. PPM also drives the following positive outcomes:
Clarity of purpose and big-picture thinking: PPM enables team members to not only execute at a detailed level but also understand and visualize how project, program, and portfolio management ties to an organization’s vision and mission. By linking each project milestone and task back to the broader goals of the organization, PPM fosters big-picture thinking.
Improved capacity planning and resource management. Capacity planning and resource management largely depend on how well your PMO executes its strategy and links the use of resources to company-wide goals. Wasted resources are among the biggest issues companies encounter when it comes to navigating project scope. PPM decreases the chance of wasted resources by ensuring resources are allocated based on priority and are being effectively sequenced and wisely leveraged to meet intended goals.
Higher degrees of productivity. PMOs that communicate why project tasks are vital in creating value are more likely to increase productivity. Employees who understand their role in reaching larger goals work harder in general and pay attention to the quality of their deliverables.
Increased agility. By aligning project activities with strategy, companies become more agile, making it easier to manage change and adapt as opportunities and obstacles arise.
Improved ROI. By helping to achieve clarity around company objectives, improving resource management, and increasing productivity and agility, PPM greatly improve the return on investment (ROI) of any project. With PPM, projects investment is more likely to pay off and set companies on better footing for the future.
Project portfolio management software
The right tools are essential to succeeding with PPM, and the following are among the best. Each offers features such as easy access dashboards, portfolio management, project planning, requirements management, collaboration, budget and issue management, task management and status tracking.
- Clarizen One is a project and portfolio management solution for larger IT and professional services organizations.
- Mavenlink is best suited to small to large professional services businesses, particularly within industries such as marketing, advertising, public relations, architecture, engineering, IT services, management consulting and education.
- monday.com is a scalable project portfolio management tool designed for teams of up to 200+ users.
- ProjectManager.com works well for managers and teams within all industries, and is available in four tiers (Personal, Teams, Business, and Enterprise).
- Targetprocess is an enterprise planning solution that works well for midsize to large companies.
- Identify all existing and potential projects. Without a complete inventory of current and upcoming projects, it is virtually impossible to establish a successful PPM strategy. This is the first step in achieving the best ROI.
- Determine how each project will impact company strategy. Each project must provide clear value in furthering company strategy in the mid- to long-term. This value should be easy to trace, document, and communicate to all stakeholders.
- Prioritize each project. Once the value of projects has been substantiated, the PMO must prioritize which projects should be executed in what order and why. They ‘why’ is crucial. Not understanding why one project is a priority over others can be costly if the sequencing is off.
- Allocate resources. Once projects have been selected and prioritized, resources must be allocated and managed. Allocation reduces the chances of wasted resources. Carefully and accurately identify all available resources and assign each in ways that do not cause overloading and potential conflicts.
- Adjust project strategy as required. Because change is constant, it is important to revisit company goals, each project within each program, and all available resources to ensure alignment with strategy remains.
- Identify and solicit participation from all potential stakeholders. From the leadership team to front-line employees, full participation is vital to ensuring all angles have been covered. Often, a few key stakeholders who were overlooked could have saved companies time, frustration, and wasted resources.Slow things down. Planning for success takes time. Ensuring all bases are covered at the outset goes a long way in reducing stress, waste, and partial or full failure down the road.
- Identify the best methods, techniques, technologies, and resources. Draw on experts inside and outside your organization to help develop the best methods, techniques, technologies, and resources needed to increase your chances of success. Recognize and acknowledge your company’s strengths, weaknesses, opportunities, and threats by performing a SWOT analysis.
- Document everything. Careful, complete documentation saves misunderstandings and misinterpretation.
- Communicate everything on time. There is no benefit to having a plan or documenting everything if no one knows about it. Nor is there any benefit in communicating information to the wrong people, or not on time. Make sure to communicate the necessary information with the right stakeholders in a timely manner.
Key PPM frameworks
Frameworks can have a positive impact on your PPM strategy and execution. Popular PPM frameworks include the following.
- A more committed and effective organization around value streams
- The ability to select the right initiatives, based on a rolling forecast
- The ability to create and maintain meaningful oversight
- Higher degrees of transparency of work items and resources
- The ability to continuously steer on value and metrics in smaller increments
Prince2: Developed in the UK, Prince2 (Projects in a Controlled Environment ) focuses on business cases rather than projects. Prince2 works well in companies with a defined PMO and where there is a focus on breaking down a project into stages that are more manageable and controllable. This framework can be used at any level and is more often employed at larger organizations. Prince2 is considered easy to learn and use, even for those with limited experience.
PMBOK: Project Management Body of Knowledge, developed by the Project Management Institute (PMI), is considered the gold standard for project managers. PMBOK takes a knowledge-based approach that is heavily reliant on the experience and knowledge of the project manager. It is focused heavily on documentation and works well if your organization prefers to leave most of the decision-making to the trained professionals within the PMO.
Project portfolio management certification
Certification requires a minimum of eight years of professional business experience and a secondary degree (high school diploma, associate’s degree or global equivalent) with 10,500 hours of portfolio management experience; or four-year degree (bachelor’s degree or the global equivalent) and 6,000 hours of portfolio management experience.
Project portfolio management training
Author: Moira Alexander
Moira Alexander is the author of "LEAD or LAG: Linking Strategic Project Management & Thought Leadership" and Founder of PMWorld 360 Magazine and Lead-Her-Ship Group. She's also a project management and digital workplace freelance columnist for various publications and former contributor to Price of Business Talk Radio and USA Business Radio. Moira has 20+ years in business (IS&T) and project management for small to large businesses in the U.S. and Canada.