Project Portfolio Management: Its Features and Business Advantages
Decisive and global business goals require their befitting solutions. So that’s why it is a good practice to use so-called project portfolios that are true helpers in achieving the desired results.
Today we are in a serious mood, and we would like to discuss the main and important aspects of project portfolio management. It would be really interesting to know what a typical project portfolio includes and how it works as a matter of actual practice – let’s explore it together!
The meaning of project portfolio management
To start with, it is critical to consider the concept of a project portfolio. We all know what project management means – it is a set of different techniques and practices for performing the project works in an appropriate way. And actually, the project portfolio management has the same definition but it is a kind of specific ways of project realization.
Project portfolio management (or PPM) presents a verified set of the completed projects, programs or case studies, united by common themes and approaches to cooperation, that project managers or product managers and other members of the project team practice in order to execute their current project. Put it simply, project portfolio management is a certain tactic based on the previous positive experience of performing work on many similar projects, that is actively used by employees for further success in the implementation of future projects.
As usual, project portfolio management is intended for the following:
- ensuring the successful growth of the company with a focus on an active use of existing effective project management practices and with a support for possible innovative solutions
- improvement of high-quality communication skills with customers and partners of the company
- ensuring the financial well-being of the company with the help of a competent calculation and further distribution of the budget of projects
- providing the effective collaboration work of the company, focusing on proper interaction between employees both from the same team and different departments
Every single project portfolio has its own polarity, but in general, each of the portfolios reflects the essential strategy of the company, its approach to project works and even the entire business philosophy. So that’s why the PPM means a lot for every company and its business processes. There are many great resources where you can learn more general PPM information about Project Portfolio Management, but here we combine the most essential points.
Types & components of project portfolio management
We should emphasize again that project portfolio management is classified as a high-level process, when there is a necessity to operate with data on several projects even simultaneously and manage everything at the proper level. Like many complex and multi-component processes, PPM has some core components for its right consistent performance.
First of all, it is better to note that there are two main types (or groups) of project portfolio management:
- Aligning Process Group is a major type of PPM and contains all the basic steps of the project portfolio formation
- Monitoring Process Group is an assistant type of PPM that is usually practiced in some completed project portfolios
Aligning Process Group of project portfolio management implies the following steps (or stages):
- Identification of the project with the categorization of its components. This stage presents an accurate review of the structure, purpose and focus of the project scope for a better understanding and its further into the portfolio. Working teams usually study projects and classify them by their main idea, industry, working location and other criteria.
- Prioritization of projects. There projects are usually divided into groups: a division by project organizing aspects (cost saving, maintenance difficulty, the presence of innovations, etc.), a division by terms of the project investment (short-term, middle-term or long-term) or other criteria. This stage of project portfolio management may provide a certain draft of a particular project portfolio that is ready to be worked with.
- Project evaluation. This is one of the key activities in project portfolio creation: there specialists analyze projects in term of their financial, technical, risk weighting, human resources other important criteria. Evaluation, being a rather complex work, is made by means of a strategic plan and a list of the most significant components for a particular portfolio.
- Portfolio Balancing – it is the final step of a project portfolio formation. There projects are united into the portfolios. Then project managers and other top managers of the company start to choose the most appropriate project portfolios for their current project works in accordance with their relevant purposes and business interests. Proper implementation of the portfolio in the work will allow companies to achieve maximum benefits for them and make an easy implementation of all stages of the standard project development.
Now we would like to learn what Monitoring Process Group has in its regular work:
- Portfolio Reporting and Review stage is when there is a full revision of some existing project portfolios in the context of some new current directions or changed priorities of the company. This stage may contain an adding or removing of some projects from the portfolios, reprioritization of the entire project portfolio and other conceptual movements.
- Strategic Change is a more massive process when there is a fundamentally changed the working structure of the company, its changed priorities and business dimensions. It is not only about a new approach to project portfolio management – it is about all the formation of a new vision of the company and it requires more sources, tools and efforts in order to achieve it.
Useful recommendations on how to have an effective project portfolio management
As you can see, PPM is not a simple or regular thing: it is a choice of a real working strategy that has a direct impact on the entire business. The success depends not only the present working experience and knowledge – there are many factors and routine activities that are important too.
In the conclusion of our article material, we have collected some reasonable tips on what to do in order to achieve a proper PPM:
- Having many projects in work, you should not be afraid to delete the most unnecessary and those that have opposite business purposes and directions. You have to focus on the quality of your project portfolio, not on the quantity of the projects. If you realize it, your project portfolio management will give you the desired results!
- Use different PPM software in order to simplify many complicated work processes: it is better to try tools with roadmaps, backlogs and other helpful functions that make project management (including project portfolio management, too) more smooth and consistent.
- Avoid a strict hierarchy and micromanaging in your company. All these occurrences are considered to be things of the past, and it is strongly recommended not to practice them in the company that wants to be viable.
- Let your work team act like they like to do: it becomes easier with the help of comfortable work planning, flexible schedule and the freedom in using different approaches to work. If you want to reach the effective project portfolios, you should allow your employees to be an effective team.