Project Portfolio Management
What is the role of portfolio management and why do we need it?
Often, directors and business owners do not realize what portfolio management is and why it is needed. Usually, their insights come down to investment portfolio management. Our goal is to explain portfolio management in business terms in the context of Agile project management.
If the number of your projects and tasks continues to grow continuously, and if you are not sure which ones to launch first and which ones to refuse, a portfolio of projects will help you to prioritize and get all things done.
What Is Project Portfolio?
A project portfolio is a certain number of projects that a certain company is working on to achieve a strategic business objective. If the organization has more than one goal in priority, then several project portfolios will be needed. Each of them should be observed by a special unit or department.
Project portfolio quick example
Let’s say you work in a pet food store. The management decided that the main feature of the store’s positioning on the market would be not a wide assortment and brand exclusivity, but low prices. So you have a defined strategy. Now, from the list of planned and current projects of your company, the team should select those that best meet the set goal. They will constitute a portfolio that will help you to effectively control the path from a business idea to its implementation.
What Is Project Portfolio Management?
Project portfolio management (PPM) is a process that allows project managers (PMs) to analyze their overall performance, and get a holistic picture. For performers, it is the way to effectively organize their work and joint activities.
Summarizing and consolidating information about all ongoing projects is the main task that PMM resolves. This, in turn, allows predicting deadlines, proactively solving problems, and planning the launch of new projects.
Each participant in this process have particular benefits:
- The top manager has an idea of the success of project managers.
- Project managers can ensure interaction with all team members involved.
- Team members can boost collaboration with top management and other people involved.
- Stakeholders are aware of the work being done and have reliable feedback.
Why Is PPM Important?
Well-created PPM management bridges the gap between the strategy of the project and its implementation. The role of portfolio managers is to guarantee that the right projects are being performed at the right time with the aim to maximize investments.
When your company has many internal portfolio projects, this should be especially important to you. You can get ideas from projects from wherever you want; however, there usually is not enough money, resources, or time to do them all right away. Businesses need PPM to understand which projects will have the largest beneficial impact on the organization and prioritize them accordingly.
Portfolio Management Objectives
The main PPM objective is to maximize the benefits an organization gets from the projects it undertakes. This includes picking the projects with the right amount of value; considering how the required resources relate to the available ones; and checking how well projects strategically fit the goals of the company. Among other objectives, we can highlight reaching the balance between high and low risks projects, as well as short and long-term ones. By creating an optimal mix of projects, project portfolio management ensures that your team will be able to achieve financial and operational goals.
PPM versus PM
A well-defined strategy is a paramount component for business development and growth. But not the only one. It is impossible to implement even the most ingenious strategy without daily planning tools. They support and help you to gradually implement the idea, display the current picture and give a complete understanding of the situation.
Project management and project portfolio management are two sides of the same coin for doing business. So what is the fundamental difference between them? Let’s define it like this:
- Project management is the competent implementation of projects.
- Portfolio management is the right choice of projects.
In both cases, managers set deadlines, maintain budgets, assess risks, and control the workload of each employee.
The main difference is that the task of the portfolio manager is broader and more global: to pick up and launch the most profitable projects for the company. In turn, the project manager is focused on the most efficient implementation of each of them.
In other words, portfolio management is about the control of the overall picture of the selected projects leading to the achievement of the main goals of the company; and project management is about the successful completion of a specific project within a given period.
How a Program and a Portfolio Differ
A program involves a range of related projects. Here is a brief example:
A program to install solar panels in rural areas can include an initial research project, an infrastructure project, and a PR project. So, program and program management are the driving forces behind a set of projects.
The portfolio relates to the organizational strategy as well as how it affects the company’s business. The purposes determined at the portfolio level give shape to various projects and programs. The interpretation of these terms actually depends on a particular company.
What Do Project Portfolio Managers Actually Do?
The main responsibility of a portfolio PM is to oversee a company’s portfolio with relevant projects. He or she should ensure the projects are being executed at full potential and, if necessary, jump in quickly.
They can manage several portfolios and deal with different financial models. The main idea is to align the company’s projects to its overall objectives. Often they act as a part of the PMO. The PP managers should also develop and maintain project management standards and procedures. They should receive feedback throughout the project lifecycle to ensure that project efforts meet customer expectations.
PPM Key Benefits
- PPM brings alignment between the company’s projects and their objectives.
- It has a positive impact on resolving project conflicts.
- It eliminates personal bias in project planning, so there are no “favorite” projects.
- It assists the PMO in turning down projects that are not aligned with business priorities.
- It outlines the importance of focusing on the big picture.
- It provides governance and oversight into the project management.
Defining the Core Project Portfolio Management Processes
Professional skills, budget, time, risk management, and performing the projects without sacrificing quality are what PPM really requires. Portfolio PMs typically have 5 tools in their arsenals to succeed:
- Resource management
- Change control management
- Financial management
- Risk management
- Pipeline management
5 Stages of Project Portfolio Management
Healthy portfolio management contains five basic stages, and here they are:
1. Clarifying business objectives
A simple example can illustrate this point. Say, you work in a food store. Your goals will be to provide fresh food, a large selection, or the lowest prices. In case your priority is the lowest price, then the projects to promote cost savings will be more important than projects to boost the quality.
2. Capturing requests and ideas
You may find ideas for your project everywhere. Having a formalized intake process to capture these ideas is crucial. With its help, you will be able to track and evaluate them. This can even be an online database or a simple spreadsheet where anyone in your team can enter ideas as they think of them.
3. Selecting the best projects
After gathering ideas, portfolio managers must evaluate and pick up the projects that will move forward. It is more than just fitting the global company’s objectives. It can be a challenge when decisions are made on multiple projects at once. Creating a list of criteria that each project is measured and scored against is a common way to simplify the process.
4. Validating portfolio feasibility and initiating projects
After determining which projects to move ahead with, it’s time to validate the whole portfolio. You should care about ensuring these projects are not too large, too expensive, and too risky. The portfolio should be aligned with business goals and be thoroughly balanced. Once it is validated, it is time to assign project managers and initiate projects.
5. Managing the portfolio
New ideas may be added to the list of potential projects over time, and the current projects can change. So managing the portfolio may include:
- Identifying the conflicts between projects and resolving them.
- Working with PMs to track the performance of projects.
- Changes to the portfolio if needed.
- Keeping projects aligned with the business objectives.
How to Improve Project Portfolio Management? Essential Tips to Succeed
If your portfolio is active, it can be tricky to understand where to go next. The following tips will help your team to reach success:
- Give a high priority to identifying possible risks.
- Enable managers and planning specialists to reconcile execution with the global strategy.
- Do not doubt to cancel projects if they do not fit the company’s strategy anymore.
- Provide your colleagues with the flexibility to capture time and task data (if necessary).
- Also, give a high priority to accurate data.
- Apply appropriate tools to keep on track and make the process more comfortable.
- Do not practice micromanagement.
The Role of PPM Software Solutions
Modern software for portfolio management is designed to centralize the actual management of a portfolio. Implementing such software solutions has become a necessity for project managers especially with the increasing amount of data. Portfolio managers all over the world work with PPM systems to gather data, analyze info, and direct the results to achieve the company’s goals.
Choosing software for project portfolio management
Nowadays you may find a variety of great PPM tools. The best of them should:
- Give you a chance to manage portfolios at the enterprise level.
- Provide robust functionality and friendly interfaces.
- Offer reliable features for remote collaboration.
- Provide advanced analytics tools and reporting functionality.
Selecting proper portfolio management software is not a big deal. With these tools, you can use a single resource with multiple useful features for the purposes of the entire business.
Portfolio management tools minimize the reliance on numerous applications. You may easily select a handy PM tool that will be friendly for everyone in your team, not just for the initial adopters.
Desktop PPM or Online Versions?
Online portfolio management apps and their stationary analogs have common conditions in terms of features. They actually differ in price, speed, and some security issues.
Desktop tools are usually more expensive and require a special license to use (often for each team member). Security on desktop software is better than on many digital platforms.
Online portfolio management systems are the monopolists in the PM sector. Their pros are connectivity, collaboration, and real-time data. Having a good internet connection, your employees can use such tools no matter where they are.
What Are the Obligatory Features of Project Portfolio Management Tools?
Some of the must-have features for PPM software include:
- Task management
- Online Gantt charts
- Resource management
- In-depth reports
- Live data
How to Use Professional Software to Manage a Project Portfolio?
Managing a portfolio is more complex than managing single projects and hence requires a powerful PPM tool.
Hygger helps project managers to apply project portfolio management principles in a professional way and without extra pain. Once you’ve got it up and running, follow these steps:
- Define your project’s goals and objectives. Having them for your project portfolio is important because they give your team a target to hit when trying to increase ROI and keep risk at bay.
- Group all related projects. This will give you the data you will need to make better business decisions about costs, resources, and more.
- Set milestones that will define the end of one major phase and the beginning of another. Use handy Gantt charts for this aim as a means to measure progress.
- Define dependencies. It is important to link dependent tasks by dragging one to the other to avoid blocking teams. It will save these dependent tasks from falling through the cracks during the project execution.
- Use a roadmap that will place all your projects in your portfolio on one Gantt chart.
- Keep resources balanced. Visualize the effort for each team member working across your portfolio in a color-coded chart. It will show who has too many hours assigned and who has too few. It will allow you to reallocate their hours from the same page.
- Track portfolio progress with a dashboard. This high-level view will alert you of issues to address before they become problems.
- Analyze reports. Status reports will communicate important data to stakeholders, keeping them updated.
- Collaborate constantly. Get in touch with anyone in your team by tagging them in a comment or using email notifications. You may customize alerts so that your inbox doesn’t get cluttered.
Portfolio management is a methodology for presenting a company’s strategy as a portfolio of projects for planning, implementing, analyzing, and re-evaluating it to effectively achieve the strategic goals of the company. Reliable PPM software will help you to succeed in the path towards the company goals and project implementation and will provide an effective system with countless advantages.