What is Project Portfolio Management?
Project portfolio management (PPM) refers to a process used by project managers and project management organizations (PMO’s) to analyze the potential return on a doing a project. By organizing and consolidating every piece of data regarding proposed and current projects, project portfolio managers provide forecasting and business analysis for companies looking to invest in new projects.
Project portfolio management gives organizations and managers the ability to see the big picture.
- Executives – know what project managers to reach.
- Project managers – easy access to team members.
- Team Members – improved communication with leadership and other teammates.
- Stakeholders – kept in the loop with reliable and consistent feedback.
Take Informed Risks
Taking risks is an inherent part of business. However, when taking a risk it is important to remember, the bigger the risk does not always equal the bigger reward. Risk vs. reward all boils down to smart decision making.
Understand Risks, Reap Bigger Rewards
The project portfolio management process helps companies predict the outcome and plan for projects that will offer the best results. It highlights questions such as:
- Do I have the resources/budgets available to take on this new project?
- Is there a similar project in my portfolio I can use to model after this one?
- What current projects might act as a barrier to completing this project?
- Are the stakeholder’s expectations realistic? Where can we compromise?
- Does this project help reach our overall objectives as an organization?
Project portfolio management helps companies break down every detail of a proposed project – budgets, resources, tasks, timelines and goals. Using in-depth analysis of proposed projects, weighed against current projects, a company can define what risks offer the most rewards.
Using key indicators that illustrate costs versus returns, organizations are able to determine whether a project should go forward. This allows for the creation of fluid and replicable workflows that ensure efficiency and optimal team performance.
By using PPM, project managers and PMOs have a global view of each project. When every element of a project is presented as whole, problems can be predicted before they ever occur.
The PPM process gives organizations the foresight to identify potential risks and put the necessary measures in place. This helps a company proactively manage risks, allowing teams to realistically estimate potential delays and put into place measures to prevent or mitigate those risks, should they prove to be unavoidable. Risk mitigation can entail:
- Aligning each proposed project with overall organizational goals
- Providing measurable data used to weigh risks against rewards
- Determining potential bottlenecks and design flaws at more than one level
- Reconciling team bandwidth with the amount of work needing to be done
Project Portfolio Management vs. Project Management
At the most basic level, PPM and project management differ by number of projects. Project management looks to focus on an individual project’s road to completion, whereas project portfolio management takes into consideration every project or potential project and its viability to meeting overall business goals.
A smarter approach views project portfolio management as the process which lays the foundation for more efficient project management.
Here are a few ways in which project portfolio management helps support the fundamentals of project management.
- Avoids project management disasters by pointing out good projects versus bad projects, the ROI and the projected value the project might have to the organization
- Offers a clear path to prioritization that allows project managers to create flexible timetables
- Lists what team members and project managers are available
- Helps assign monetary value to a project, making project budgets firm
Effective PPM helps project management become an easier road to travel. When used in tangent, they are invaluable to a organization.
Project portfolio management lays down a methodology used to predict potential problems, review progress towards operational goals, manage budgets and stakeholder concerns. Allowing project managers to then follow up with precision execution.
See the Big Picture
Project portfolio management gives companies a “bird’s eye” view of upcoming, current and past projects. By seeing the big picture of how a proposed project will fit into the goals and objectives of the organization, companies can make better decisions on what projects to choose and what initiatives will create the most return.
Tools for Project Portfolio Management
Project portfolio management helps leadership plan projects and predict outcomes. To effectively plan, PMO’s use project portfolio management tools such as project portfolio management software, scenario analysis tools and good old-fashioned spreadsheets, in addition to other software tools used by project managers.
Though there are many types of project portfolio management tools, the best ones:
- Accommodate project portfolio management at the enterprise level
- Offer user-friendly interfaces and functionality
- Deliver enhanced online features for remote collaboration and communication
- Provide robust reporting and analytics
Outlined are a few of the benefits that come with using project portfolio management software.
Easy to Use Enterprise Project Portfolio Management Software
Enterprise means one resource with multiple functionalities that can be used across the entire business spectrum.
Most PPM tools are created as enterprise software, decreasing the reliance on multiple applications that can increase overhead and confuse workflows. As an enterprise solution, this usually means you do not have to be an Information Technology whiz to figure how they work. These tools incorporate simple functionality like the “drag and drop” and do their best to organize information in ways that seem intuitive to most users.
Centralized Communication Hub
Often businesses and organizations who take on multiple projects have employees and team members working remotely. When you have various team members working from multiple locations, effective communication can be difficult.
The best PPM tools are accessible online, eliminating communication barriers.
When communication is streamlined through one central hub you can:
- Connect and coordinate with all team members and provide real-time status updates
- Track, share and store data, files and feedback
- Answer questions and solve problems faster
- Quickly and easily mine data that can be shared with stakeholders
A Step Ahead with Better Reporting
A good PPM tool should offer robust reporting options. Report data provides executives and managers perspective that allows them to predict what projects may require excessive resources by highlighting active projects or circumstances that may act as impediments to organizational goals.
PPM reporting tools also allow companies to actively monitor every facet of the organization’s current and potential projects, including budgeting, forecasting and risk/reward analysis.
Individual project budgets may go over, but effective use of PPM tools may help a company see the potential impacts to other projects and determine whether going forward with a project that is already over budget will pose a problem in terms of multiplied financial overages in other areas. When projects fall behind, leadership has the ability to stifle the potential ripple effect using project portfolio management techniques.
Reporting makes for factual and informed project portfolio management that in turn helps set expectations within the company regarding what projects should, and should not, go forward.