What is project portfolio management?
Project portfolio management (PPM) is a strategic alignment process by which an organization’s projects are evaluated to identify the purpose, fit, and benefits as they relate to company goals.
Projects can then be grouped into programs based on relevance and similarities. All programs and their respective projects should then fall under a portfolio strategy undertaken by the project management office (PMO) to meet overall company objectives. As such, PPM is not just a process for aligning projects with strategy, but also for aligning project policies and processes with organizational objectives.
The benefits of project portfolio management
Carefully executed project portfolio management enables organizations to achieve higher rates of success and performance because projects, programs, and portfolios align with mid- to long-term goals. Other benefits of PPM include the following.
- Clarity of purpose and big-picture thinking. With PPM, not only are project, program, and portfolio professionals able to execute at a detailed level, but they are also able to understand and visualize how project, program, and portfolio management ties to an organization’s vision and mission. PPM fosters big-picture thinking by linking each project milestone and task back to the broader goals of the organization.
- Improved capacity planning and resource management. Capacity planning and effectively managing resources is largely dependent on how well your PMO executes its strategy and links the use of resources to company-wide goals. It is no secret that wasted resources is one of the biggest issues that companies encounter when it comes to scope creep. PPM decreases the chances 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 to project teams and other stakeholders, such as employees, why and how project tasks are vital in creating value increase the likelihood of a higher degree of productivity. Employees who understand their role in reaching larger goals are more likely to work harder and pay attention to the quality of their deliverables.
- Increased agility. The process of aligning project and program activities with strategy helps companies become more agile, making it easier to manage change and to adapt as opportunities and obstacles arise.
- Improved ROI. As PPM helps achieve clarity around broader company goals, improve resource management, and increase the productivity and agility of the organization, it can create greater wins and 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 process
To succeed with PPM, PMOs should develop and implement a process to help ensure everything goes smoothly and as expected. Here are some key steps that should be included in the PPM process.
- Identify all existing and potential projects. Without a complete inventory of all current and on-the-horizon projects company-wide, it can be virtually impossible to establish a successful PPM strategy. This is the first step in developing effective project portfolio management and achieving the best ROI.
- Determine how each project will impact company-wide strategy. Each project must provide clear and undeniable value towards furthering company strategy in the mid- to long-term. This value should be fairly 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 a crucial question. 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 resources overlap, overload and potential waste. Very few companies, if any, can afford wasted resources. Make sure to 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. Pouring good money and resources into non-relevant projects is an unfortunate consequence of not revisiting and adjusting to changes in strategy. This can be costly in many ways.
PPM best practices
Best practices can not only increase the likelihood of PPM success but also provide companies with assurances as to the value of each project when attempting to identify projects to undertake. Here are some key best practices for doing PPM right.
- 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. Slowing things down at the start to ensure all bases are covered often isn’t a popular approach, but it 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 of your organization to help develop and put in place 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 and complete documentation saves misunderstandings and misinterpretation. PMOs, stakeholders, leaders, and sponsors are overscheduled on the best of days, and this makes it vital that everything is carefully documented. Company-wide goals, how programs and projects align with goals, capacity planning, resource allocation, and everything that follows should be documented.
- 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.
- Organizations around the globe are recognizing and adopting an Agile approach to PPM and company-wide business functions as a whole. According to Accenture, some of the benefits of Agile PPM are:
- 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
- Developed in the U.K., 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.
- 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 software
The right tools are essential to succeeding with PPM, and the following are among the best. They are all web-based with iOS and Android apps so your team can access mission-critical project information on the go. 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 is a project and portfolio management solution for larger IT organizations and professional services companies of 50+ employees. Contact Clarizen for pricing and to request information about Enterprise and Unlimited editions. A 30-day free trial is offered.
- 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. Pricing starts at $19 per user per month for up to five users. Mavenlink is offered in four pricing tiers (Teams, Professional, Premier, and Enterprise) and is available for a 10-day trial period.
- monday.com is a scalable project portfolio management tool designed for teams of up to 200+ users. Pricing is based on monthly or yearly plans and starts at $19 per user per month, and a free trial is offered.
- ProjectManager.com works well for managers and teams within all industries. Pricing starts at $15 per user per month for up to five users, and the service is available in four tiers (Personal, Teams, Business, and Enterprise). A 30-day free trial is available on each tier.
- Samepage was created for keeping teams and stakeholders working smoothly and efficiently. Pricing starts with a Pro & Enterprise package at $7 per user per month, billed annually. Samepage also offers Non-Profit & Education pricing and an Enterprise solution.
- Targetprocess is an enterprise planning solution that works well for midsize to large companies. Pricing for its Company tier starts at $20 per user per month when billed annually, or $25 per user per month when billed monthly. There is also an Enterprise tier. For pricing on this, contact Targetprocess. A 30-day trial is also available.
- Workfront helps companies better manage their work in one place and helps teams to stay connected. Pricing is available for Team, Pro, Business, and Enterprise plans. Contact Workfront for more information.
Project portfolio management training
Having the right training is essential when considering a career in portfolio management because of all the moving pieces, constant change, and complexities that are guaranteed to surface. When selecting the right option for your career, make sure to do your due diligence to protect your investment. Here are two examples.
PMI Portfolio Management Professional
PMI is the gold standard for globally recognized project, program, and portfolio certifications. They offer a Portfolio Management Professional (PfMP) credential, providing “advanced competency in the coordinated management of one or more portfolios to achieve strategic objectives.”
Prerequisites: 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.
Pricing: $800 (members); $1,000 (non-members
PMI Registered Education Providers
PMI also offers a list of organizations that it has approved to provide training in project, program, and portfolio management.
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