Hey guys, welcome the most authentic article on Project Portfolio Management you’ll find anywhere.
We promise that by reading the full article, you will become more enlightened on what this profession is about and the skills needed to excel in this field as a project manager.
In this article, we shall take a closer look at:
Let’s jump right in!
A Quick Intro
A career in Project Portfolio Management is right for anyone with the enthusiasm to work on multiple projects and monitor progress at the same time.
From executing strategic goals to developing ongoing project portfolios, Project Portfolio Management can be invaluable and lead to more empowered organizations.
Furthermore, it is a clear indication that an organization acknowledges your capabilities to handle considerable responsibility.
However, before leaping into pursuing a role in Project Portfolio Management (PPM), clarity is needed about the autonomy of Project Portfolio Management.
Here we provide an ultimate guide of everything you need to know about PPM.
What is Project Portfolio Management?
Project Portfolio Management (PPM) refers to a process used by Portfolio Managers to select and manage projects as a portfolio of investments.
This is done by focusing on undertaking the best projects at the right time, prompting substantial returns while ensuring the business objectives are met.
Project Portfolio Managers use exceptional analytical thinking and specialized software to organize and consolidate data about proposed and current projects.
The compilation of data by Portfolio Managers holds value to organizations wanting to discern project feasibility and importance before committing to investing in projects.
Project Portfolio Management also reveals vital insights about an organization’s initiatives.
These can be from interesting correlations to information regarding resources or finances that, upon analysis, prompt breakthroughs for an organization’s projects.
Why is Portfolio Management Important?
When it comes to business operations, the centralized management of an organization’s projects through good Project Portfolio Management brings forth an uncomplicated chain of command.
This, in turn, provides a clear big picture to all parties involved and many benefits for meeting strategic goals.
For one, good Project Portfolio Management increases a company’s ability to organize project team members to work towards a specific initiative.
Furthermore, it fosters effective communication between staff.
Executives know what Portfolio Managers need to reach strategic goals, stakeholders are kept in the loop on business operations, and communication improves amongst other teammates and leadership.
By taking advantage of Project Portfolio Management, an organization can make better decisions regarding resource allocation, time management, and budgets.
This becomes really helpful when an organization faces a large number of potential internal projects that cannot be implemented immediately.
Additionally, Project Portfolio Management helps the company decide which projects are likely to produce greater returns and prioritize them accordingly.
Project Portfolio Management also helps organizations bridge the gap between business strategy and implementation and aid in decision-making when faced with conflicting projects.
As a result of the above-mentioned benefits, many organizations invest in establishing and developing their PPM capabilities with the expectation of improving their project portfolio outcomes.
However, if the wrong person is appointed to the position of PPM to oversee and prioritize projects, it may lead to the misappropriation of resources (which are always scarce).
The most vital PPM capabilities
Because Project Portfolio Management is a multi-faceted discipline that includes several capabilities that aim to align projects with strategy a PPM must possess certain essential qualities.
The PPM must be able to balance projects and ensure the portfolio of projects fits with the organization’s resource and financial capacity.
Some of these PPM capabilities include:
This is the process of generating new project ideas.
The objective is to compile the best ideas from the organization to produce high-quality projects.
Involves developing a proposal for a project and submitting it for approval or rejection to the governance board.
This is used to evaluate, authorize, and monitor projects at various stages of their life cycles.
The process of evaluating the value of projects to determine which projects are most worthy of resources and the period for initiation.
Involves determining the optimal grouping of projects to maximize the risk-adjusted portfolio value within the specified budget.
This is the phase where the projects to be scheduled and how to sequence them based on resources and dependencies are determined.
Resource Capacity Planning
This phase covers determining the amount of work a company can accomplish within a portfolio.
Portfolio Risk Management
Portfolio risk management involves identifying and managing potential risks within the portfolio.
This is the process of identifying key stakeholders and team members in portfolio management and deciding on what to communicate to who.
Portfolio Reporting and Analytics
This phase provides insight into an organization’s portfolio’s progress, performance, and risk.
Portfolio Value Management
This entails ensuring investments in a portfolio reap good returns.
Is a process used to track a project’s progress to ensure a project is completed within budget and on time.
Refers to the Selection, prioritization, and control of all projects within the portfolio of an organization
Project Portfolio Management vs. Project Management
At this point, you have probably established that PPM helps outline clearer project objectives, helping to bring clarity and consistency to Project Management activities.
However, while Project Portfolio Management and Project Management exist to coincide in pure tandems, there are some differences between the two.
Project Management is simply delivering individual projects on time and to budget.
The result of an effectively managed project which has undergone proper evaluation for risk is a profitable product or service for the organization.
On the other end, Project Portfolio Management is a tad different.
It is about prioritizing and analyzing the potential of projects and programs within a portfolio concerning its ability to meet the overall business goal.
The objective of a project portfolio management process should be to manage and leverage the life cycle of investments, programs, projects, and initiatives.
In doing this, the projects prioritized must deliver the best return on investment and organizational strategic objectives.
While both PPM and Project Management hold distinct qualities, there are many overlaps, such as skill requirements, that could have professionals from both naturally perform both roles.
A constant remains, at any workplace, Project Portfolio Management is the foundation for efficient Project Management.
With the difference between Project Management and Project Portfolio Management now established, let’s see how Project Portfolio Management differs from Program Management.
We explore this in the next segment.
Project Portfolio Management vs. Program Management
While the two may come across as similar (more so than that between PPM and Project Management), the key to finding the differences is to understand the two terms side by side.
Program Management refers to grouping projects that are related to one another to manage them better.
The responsibility of Program Management includes defining a cross-organization roadmap, resource management, and managing interdependencies between projects – ensuring the fulfillment of program-related goals.
An example of Program Management is a construction company with a program to build Palmview Homes, consisting of building Palmview apartments, Palmview Villas, a community center, a basketball arena, and a golf course.
Since they are related due to their location, a Program Manager would be tasked to manage the finances and resources for the overall requirement of the Program Management.
In the discussion of Project Portfolio Management, you might have already noticed that both Program and Portfolio Managers direct groups of projects.
The difference is while Program Managers tend to manage similar projects, Portfolio Managers may direct a plethora of unrelated projects.
Additionally, Program Managers are responsible for maintaining budget and monitoring risk but only at the program level.
However, not only do Project Portfolio Managers worry about the budget and risk of multiple programs, they need to be concerned about future projects and meeting overall business goals.
While their job roles have distinct aspects in many organizations, a similarity is established in that Project, Program, and Portfolio Managers work together in one department called a Project Management Office.
A Day in the Life of a Project Portfolio Manager
If you have ever experienced getting a job offer, you would know it is often a lengthy task to decide on whether to accept it or not.
When deciding on whether to take the job, you might consider salary, other perks, and its overall contribution to the development of your career.
While this might be a completely unrelated scenario, it accurately depicts the amount of evaluation and consideration Project Portfolio Managers go through daily to manage projects and programs in a portfolio.
They often do this with the overarching goal to ensure development for the company.
Portfolio Managers put in long hours during weekdays and sometimes even weekends to review project ideas and portfolios, and communicate with relevant staff members and clients.
Furthermore, Portfolio Managers engage with various financial algorithms, models, and productivity tools to help align the project with strategic goals.
Also, they might decide on what Project Portfolio Management methodologies to use, such as Agile or Waterfall.
Generally, Project Portfolio Management can be stressful, particularly when managing and evaluating risk in complex projects and programs.
However, it may be very fulfilling when Portfolios Managers work on a string of successful portfolios serving as a career boost.
So what do Project portfolio managers need to align projects to strategic goals and success?
Apart from having adequate PPM capabilities, various Project Portfolio Management tools (PPM tools) and software which we will elaborate on below, are necessary.
Project Portfolio Management Software
Without a doubt, being responsible for multiple projects while ensuring you are up to date with the progression of each one can sometimes get confusing.
And while Portfolio Managers a couple of decades ago probably just had to suck it up, the present popularity of digitization in our world has made it easy for Portfolio Managers to manage multiple projects.
Today’s Portfolio Managers have embraced digitizing their processes and workflow using ppm software and tools.
Portfolio management software leverages cloud technology with an enterprise solution to help organizations become more efficient by providing multiple levels of data about projects.
All that is required is for the Portfolio Manager to upload data about business workflows from initiation to completion into the software.
Automatic analysis and optimization of the data, helping Portfolio Managers discern what does and does not work for people and projects quicker.
Additionally, digitizing processes has helped Portfolio Manager get a better grip with task management leading to increased productivity.
With many Project Portfolio software and tools in the market, ensuring that PPM software meets specific criteria will help determine the software that best facilitates centralized project management.
One critical standard to look out for should be whether the PPM software provides a user-friendly interface.
Next, consider checking for high functionality and the software’s capability to accommodate PPM at the enterprise level.
A pro tip is to opt for Enterprise PPM tools which are large-scale software with multiple functionalities that work across the business.
These enterprise tools help reduce the likelihood of confusion due to using several apps that can increase overhead.
With the pandemic evoking a lot of remote working, the best PPM software consists of enhanced online functionalities.
These new functionalities help facilitate remote collaboration and communication, practical for days when employees need to work from home.
Furthermore, PPM software that provides in-depth analytics and reporting is absolutely one you can bank on.
Report data is required when providing Stakeholders with the feedback necessary to predict which projects may require additional resources, budgeting, forecasting, risk, and reward.
Similarly, analytics helps with forecasting for both Portfolio management and stakeholders.
With good PPM software, Project Portfolio Managers can collect and consolidate data about their projects and programs to manage available resources, timelines, budgets, and risks and make informed decisions.
Nonetheless, using PPM tools to collect data for digitally managed workflows can only be efficient for Project Portfolio Managers with an understanding of the five management processes.
The Project Portfolio Management Process
Although Portfolio Managers can utilize PPM software for efficiency of workflow, the real driver in organizations is understanding PPM processes.
This is because they define how an organization approaches project prioritization, resources scheduling, and budgeting.
While many organizations have their own modified approach to defining the ppm process, generally, the PPM process follows these five steps.
Step 1: Clarify Business objectives
According to the Project Management Institute, before embarking on project portfolio management, you should define the organization’s objectives and strategic plan.
Typical strategic planning frameworks include strategic maps, which are visual representations of an organization’s initiatives arranged in cause-and-effect hierarchies to support one another.
Financial objectives usually form the top level in the hierarchy due to their importance to shareholders and owners.
Also included in the hierarchy could be the value the organization provides to the customer.
This may be followed by internal processes linked to customer value, and the learning resources that the company needs to make the processes work effectively.
Through the hierarchical criteria, Project Portfolio Management can determine which projects will be better than others for the organization.
For example, if a clothing company values environmental stewardship and wants to only sell sustainable clothes by the next five years, then projects which consider the environment will be prioritized.
Step 2: Capture and research requests and ideas
The nitty-gritty parts of building a portfolio start in this second step.
Here, PPMs research and capture what projects to undertake by compiling a list of in-progress projects and project ideas coming from various avenues.
These avenues include customer requests, team member suggestions, or initiatives from strategic planning.
Thereafter the PPM gathers data on all the prospective projects to prepare for step 3 which is to examine and evaluate against criteria detailed out in step 1.
Step 3: Select the best projects
Based on the project data in Step 2, determine what combination of projects creates the highest portfolio value based on high-level resource constraints.
This is known as portfolio maximization.
You could execute this by rating each aspect of the potential project against evaluation criteria.
Then you create a spreadsheet or use a software development tool to compute the score of each project.
Next, rank the potential projects from highest to lowest value.
Step 4: Validate portfolio visibility and initiate projects
Since Portfolio Managers work on multiple projects at once, it’s crucial to take a stand back and re-evaluate the feasibility of the portfolio in its entirety.
Have you gone through every detail of your portfolio?
Are there any constraints in projects eg., availability of skill to execute the project, which you may not have detected through the first round of valuation?
Once you are satisfied with the portfolio being balanced, aligning with business goals, and being free of clashes, then you are ready to delegate projects to Project Managers.
These projects are coordinated by the project management office (PMO).
Step 5: Manage and Monitor the portfolio
Despite the day-to-day activities of each project now being delegated to project managers, the portfolio manager’s jobs still proceed.
The Portfolio Manager is responsible for overseeing the update and execution of the ongoing portfolio.
This includes monitoring Project Managers and the performance of their projects, identifying and resolving portfolio-wide issues.
Also, adding new projects re-evaluating existing projects, and making necessary changes to steer the portfolio for success is part of a PPM’s overall job.
Periodically, Portfolio Managers are required to review the entire portfolio to make sure it still aligns with business objectives.
There you have it – we’ve come to the end of a very informative piece of article on Project Portfolio Management and the role of a Project Portfolio Manager in an organization.
Taking the plunge to escape from the same old work blues or simply taking a shot to grow in your career sometimes needs a thorough investigation of the new role.
Working in Project Portfolio Management and being tasked to handle investments for the organization can be demanding.
If you approach Project Portfolio Management with clarity of what team members and stakeholders require from you, then your transition into the job will be smooth.
You will also learn to work in a manner that motivates team members and produces results that are beneficial to the organization.