Organizations use project portfolio management as a formal method to find, rank, plan, and track projects that fit their objectives and strategy. By this approach, each project’s risk-versus-reward, financial resources, expected timeframe, and intended outcomes are reviewed. The main job of project portfolio management is to improve the whole set of company projects, unlike project management, which only manages individual projects for completion.

Project portfolio management means bringing together one or more project portfolios to achieve business aims. It consists of selecting, ranking, and supervising initiatives and projects to support the strategy and abilities of the organization.

In essence, PPM aims to support smart choices, use resources well, match efforts to the strategy, and ensure projects provide the hoped-for advantages. There is a need to tell PPM and project management apart from each other. Rather than only supervising single projects, PPM tracks every project to make certain that every project stays focused on the company’s goals and achieves the best results.

What is project portfolio management?

PPM is designed to be managed at the top level. Following direction, an organization’s decision-makers look at every possible project to check if it fits with the company’s aims and objectives. Projects are removed from consideration if they don’t meet this initial condition. The relationships and contingencies between projects are also examined by the PPM team. These connections may have an impact on the portfolio’s project selection, funding, prioritization, and ranking.

The PPM group keeps an eye on ongoing projects after they have been identified and prioritized. In order to maximize overall value, the portfolio must be continuously monitored because underperforming projects might have an impact on other projects. PPM decisions at established companies are made under the direction of or in coordination with a project management office (PMO). In the case of organizations with many PMOs allocated to different projects, this is known as an enterprise project management office.

Why is project portfolio management so important?

Project portfolio management serves as a link between the collection of various projects required to accomplish an organization’s overarching strategic goals. According to the Project Management Institute (PMI), PPM helps an organization use its project results to bridge the difference between an established strategy and actual implementation.

PPM helps an organization succeed by assessing each project according to how it supports its overall strategies. It can also support goal achievements that save costs and resources. The PPM group needs to find out what technologies, procedures, and methods are used to complete projects and keep an eye on them.

1. The act of running a project portfolio management.

The first thing to do in project portfolio management is to decide on the main business strategies and expected results. When looking at which projects to back and how to fund them, the PPM group considers the organization’s skills, approach, and systems, along with any factors that might influence project delivery. The PPM group’s supervision function in project management doesn’t end with project selection.

Once the group has decided on corporate objectives and strategic direction, the PPM process usually involves the following fundamental steps:

2. Arrange the portfolio

First, we must decide what new projects to introduce and compile data on projects that are currently ongoing. The work could mean collecting ideas from staff and externals, analyzing the competition, noting weaker spots, and studying market trends.

3. Choose and rank the projects

PPM teams score projects according to strategic value and return on investment using a variety of selection techniques, including complex financial measures.

4. Examine the portfolio’s viability

Working with those who are managing current projects or will oversee proposed ones is necessary for this step. Teams determine specific risks to a project linked to market conditions and delays due to technology, talent, or budget with the help of data tools and other metrics.

What does the project portfolio manager do?

One crucial role in PPM belongs to the portfolio manager. Making sure all of the projects are worthwhile and meet the organization’s strategy, they lead the portfolio management. Portfolio managers have a wide range of duties, which start with making a plan and end with carrying it out.

1. Planning strategically

• Developing the project portfolio’s strategy and ensuring it supports the business’s main objectives.
• Involving myself in making decisions to ensure company projects help reach set goals.

2. Prioritization and project selection

• Create standards for project selection and prioritization while making sure they are in line with corporate goals.
• Directing the selection procedure and making sure that the portfolio only contains initiatives that are strategic and add value.

3. Allocation of resources

• Ensuring that resources are efficiently distributed throughout the portfolio following strategic alignment and project goals.
• Keeping an eye on resource usage to prevent either over- or under-allocation.

Portfolio monitoring and control

To guarantee that projects stay in line with strategy and make progress toward their objectives, active portfolio monitoring and management are required. 

• With regular portfolio reviews, the company can modify its portfolio to match up with changes in the market, the organization’s goals, and available resources.
• Managers in portfolio management use KPIs to monitor the total performance of the portfolio and each separate project. Common KPIs involve checking how healthy the project is, how it supports the future strategy, how much money is being earned, and how well resources are being used.
• All uncertainties that can influence portfolio performance negatively should be identified, measured, and controlled as part of risk management. It means that both projects and portfolios should have risk management strategies worked out together.

The future of project portfolio management

Projects are very important. The size of global project-oriented operations is likely to double from $12 trillion in 2017 to over $20 trillion by 2027. Worldwide, approximately 88 million people have jobs in project management.

PPM grows and evolves because both business situations and technology keep improving. AI and machine learning are now commonly used in project selection and for forecasting performance, sustainability is being considered in choosing portfolios, and being flexible and agile has become essential in portfolio management.

Since markets change all the time, those managing portfolios have to learn about new developments, regularly practice their skills, and prepare for any necessary changes. 

Project portfolio tips and best practices

PPM-recommended practices are a safeguard against the typical PPM issues described above and are an integral aspect of the PPM process.

• Coordinating initiatives with corporate objectives
• Adjusting the portfolio’s scope to the organization’s operational capabilities, culture, and skill set
• Employing tried-and-true techniques to balance the portfolio and prioritize initiatives
• Implementing uniform project templates and procedures to promote uniformity
• Distributing resources according to the necessity and significance of the project
• Tracking the development of the project and promptly resolving any problems that emerge
• Monitoring and modifying the goals of the portfolio as needed
• Speaking with all parties involved with PPM

End up

Overseeing a project portfolio takes effort, but it is necessary. Ensuring project portfolios contribute to a company’s success can be accomplished by applying PPM and making well-planned, key project decisions, monitoring projects, picking suitable technologies, and adopting trends early. Even though it requires a lot of effort and regular updates, the rewards of strong value delivery and organization are enough to make the process valuable.

The best Project Management Training Courses at Oxford Training Centre can help you advance your career! Learn practical skills, become an expert in industry-leading methods, and earn your certification so you can confidently lead successful projects. Become a certified project management professional by enrolling today!