Ultimate Guide to Project Portfolio Management
Blog: Zvolv Blog
If you are a project-driven company, you know the importance of project portfolio management. It’s essential for your growth and success. Without it, it is difficult to prioritize projects, maximize human resources and capital, and support the highest efficiency. In this article, we’ll discuss everything related to project portfolio management (PPM), including:
- what is project portfolio management;
- why organizations should consider it, and
- What are some of the PPM best practices.
What is Project Portfolio Management?
Project Portfolio Management (PPM) is more than just running multiple projects. It’s how an enterprise approaches budgeting, resource allocation, scheduling, and other components based on project priorities. Each portfolio project is assessed on its business value and importance to the business strategy.
By definition, PPM is the centralized management of technologies, processes, and methods that project management teams use to monitor and assess current or proposed projects based on multiple factors, including customer demands, external market conditions, government regulations, competitive environment, etc.
In other words, PPM is an effective way to bridge the gap between project implementation and strategy. It offers complete visibility to the leadership teams to make informed decisions about all things related to projects.
Why Consider Project Portfolio Management?
PPM has emerged as the go-to approach to handle projects effectively. That’s because all projects need funding, time, and resources to conclude successfully. However, in most cases, resources are usually limited.
Moreover, not all projects have the same value to an enterprise. Because of this, the management needs to prioritize and allocate the right resources and projects for maximizing ROI and ensuring success.
The Project Portfolio Management Process
The PPM process is iterative and ongoing. It allows project management teams to respond to sudden changes due to its ongoing nature, which also helps mitigate any issues that can compromise the project’s success.
The entire process encourages improved judgment to achieve business objectives. Despite being fluid, the PPM process is divided into three phases: plan, authorize, and monitor and control. These three stages can further be classified into two categories: aligning, and monitoring and controlling processes.
Aligning Process
The aligning process includes project selection, introduction, classification, and all the latest information on how the projects fit with strategic objectives and existing operational guidelines. This strategy provides assessing individual projects while managing the portfolio as a whole.
Aligning process is critical when an enterprise refreshes its strategic goals and finalizes organizational plans and budgets. It could be frequently, quarterly, or annually.
Monitoring and Controlling Process
The monitoring and controlling process analyzes performance metrics and keeps track of how they match with strategic goals. It guarantees that the entire portfolio meets the organization’s predetermined metrics. Performance can be tracked using the metrics either individually or collectively. Such measurements can, for instance, include ROI or net present value.
Top 3 Use Cases of Project Portfolio Management
Get real-time visibility
Project portfolio management gives visibility to executive leadership by providing them with a high-level overview of all the projects. This can include information about each project step, such as status, resource allocation, technology, potential risks, and expected outcomes.
All this information is helpful in identifying what’s happening with the project and understanding the potential impact of the project on the organization’s overall business strategy and objectives.
Pre-empt potential challenges
Project portfolio management like Zvolv helps organizations monitor the progress of their projects and pre-empt potential challenges with status updates, dashboards, and reports at every stage gate.
A stage gate is a point where the project is reviewed and evaluated to determine whether it should proceed to the next stage or be terminated.
While dashboards and reports provide real-time visibility into the progress of projects, status updates are important to identify potential bottlenecks and address those issues before they become significant problems.
Manage risk
Organizations use project portfolio management to develop contingency plans and take other steps to mitigate risks. For example, suppose a project team identifies a potential issue with the supply chain. In that case, they may diversify their suppliers or build in additional lead time to allow for potential delays.
Project Portfolio Management: Best Practices
There are several best practices to ensure success with the PPM. Here are some of them:
Determine company goals and strategy
Establishing company goals and a clear business plan to attain them should be the first step towards effective PPM. Each project in the portfolio should align with the company’s strategic objective. This help businesses create an action plan.
Create a solid project portfolio management approach to ensure that projects align with your business strategy and that you can focus on delivering projects that add the most value.
Most companies successfully identify business goals but lose track of each project. To avoid this, assess how individual projects stack up against your organization’s goals. You can do it by identifying all the current projects and available resources, including evaluating projects in the pipeline for redundancies, delayed projects, and other possible areas for cost savings and maximum resource utilization.
Set Up a Project Management Office (PMO)
PMO is a standard, dedicated department in many organizations. Its main job is to control the portfolio management process and synchronize activities across the entire organization.
Creating a PMO helps shield a company from “pet projects” proposed by C-level executives and influential senior management. This is because the PMO would need to approve all project efforts. Executive leadership support for PMOs is essential for this to succeed.
Create project evaluation criteria
The PMO can collaborate with executives to create project evaluation criteria, which will aid the company in assessing, reviewing, and authorizing projects to ensure they align with the enterprise’s strategic goals.
When assessing new project initiatives, it’s crucial to consider several factors, including:
- Whether each project drives business goals;
- What the anticipated tangible results will be;
- Whether the outcomes can be attained by a project already in progress;
- What is the project’s risk-return profile is;
- What resources are required to complete the projects
- Create a risk management strategy
One of the most critical steps in the review phase is analyzing project risk-return profiles. Instead of just comparing project initiatives side by side, businesses need to assess the inherent and prospective risks that each project poses to the entire portfolio.
Risk assessments should be conducted multiple times throughout a project’s lifecycle to allow project managers to update the PMO and stakeholders on any changes. Stakeholders may compare new efforts to the entire portfolio more accurately.
Invest in a PPM solution
Finally, businesses must invest in a PPM solution that can improve the coherence and transparency of their operations.
Business leaders can use these technologies to construct a historical project archive, which can be referred to while making future investment decisions. Before investing, companies must thoroughly evaluate the product, including organizing demonstrations and reviewing feedback from PPM platforms.
PPM software can spot initiatives not worth funding and offer transparency into projects at every stage, from goals to costs. They can assist in prioritizing the most valuable work, deliver project initiatives on time and within budget, and provide strategic insight and visibility into the most significant projects that make sense for an organization.
Summary
Success with Project Portfolio Management involves standard procedures, training, and applications. Having them can help you effectively exchange information for portfolio analysis, decision-making, goal-setting, project status, project prioritization/ranking, and resource distribution.
With the proper PPM process, you can ensure your projects are aligned with strategic organizational goals. It might be an excellent idea to have a corporate change management discussion to get everyone’s buy-in.
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