Project Portfolio Management

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What Is Project Portfolio Management?

Project Portfolio

Project portfolios can cover either the organization’s projects or its whole investment portfolio. They have a mission focus and are aligned with the corporation strategy. [1]

Project Portfolio Management (PPM)

In a multi-project environment, you need to have processes for managing the whole project portfolio. Project portfolio management includes a systematic approach to selecting, monitoring, and cancelling projects.

Project portfolio management has three principal purposes [2]:

  • Strategic goals should always drive project selection.
  • Resources should be assigned based on priorities.
  • Deployment of resources should be optimised across projects.

Three Main Areas of PPM

Three main areas of portfolio management [2]:

Setting the Foundation for PPM

  • Define the goals and scope of the portfolio. Will the portfolio include only certain types of projects or programs? Will the portfolio include the entire organization or part of it?
  • Define portfolio categories. Define categories within a portfolio which make clear which purposes the projects serve. For example, growth, cost-cutting, and sustaining projects. This creates a framework for allocating resources and risk.
  • Define key performance indicators (KPIs). Try to find key KPIs already in place for the organization.
  • Identify stakeholders. Identify potential stakeholders, like executives, who will sponsor the projects, people or organizations that will provide input into portfolio decisions, and customers and the groups that execute projects.
  • Confirm roles in project portfolio management. You should have the following roles exist in some form: steering committee, portfolio experts, project sponsors, business analysts, and the PPM sponsor. Sometimes people can fulfil multiple roles.

Project Selection and Prioritization

  • Make sure the necessary information is in place. This information should support both portfolio selection and portfolio monitoring. PPM information often consists of a list of all active and proposed projects, information for each project, and information about the resources of these projects.
  • Use project proposals as input. Project proposals are the input to the selection process. Portfolio steering committee needs consistent information for project proposals.
  • Agree on selection criteria. Work with the steering committee to gain agreement on weighting the categories within the portfolio, using quantitative and qualitative criteria for ranking projects. The overall strategy should always drive these decisions.
  • Make sure project charters are formed and sponsors are assigned. The project selection work is not complete until the projects are formally chartered (project definition is in place) and have a sponsor assigned.

Ongoing Portfolio Management

  • Have regular portfolio review meetings. Plan and review portfolio at regular intervals – make updates to existing plans where necessary. The frequency of the meetings depends for example on the size of projects within the portfolio, economic conditions, strategy, and customer priorities.
  • Monitor the results. Monitor the results of projects and the portfolio. The frequency of review points should be consistent for all projects. Record also the final cost and schedule performance of a project to have all the necessary details for the calculations.
  • Remember that the portfolio changes over time. The business climate changes over time, so naturally the content and priorities of the portfolio should change as well.

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Sources

  1. Thiry, Michel (2015). Program Management (Second Edition).
  2. Verzuh, Eric (2016). The Fast Forward MBA in Project Management (Fift Edition). John Wiley & Sons, Inc. Hoboken, New Jersey.