What is Project Portfolio Management?
Project portfolio management (PPM (News - Alert)) is a strategic alignment process by which an organization’s projects are evaluated to identify the purpose, fit, and benefits as they relate to company goals.
Projects can then be grouped into programs based on relevance and similarities. All programs and their respective projects should then fall under a portfolio strategy undertaken by the project management office (PMO) to meet overall company objectives. As such, PPM is not just a process for aligning projects with strategy, but also for aligning project policies and processes with organizational objectives.
The Benefits of Project Portfolio Management
Carefully executed project portfolio management enables organizations to achieve higher rates of success and performance because projects, programs, and portfolios align with mid- to long-term goals. Other benefits of PPM include:
Clarity (News - Alert) of Purpose and Big-picture Thinking – With PPM, not only are project, program, and portfolio professionals able to execute at a detailed level, but they are also able to understand and visualize how project, program, and portfolio management ties to an organization’s vision and mission. PPM fosters big-picture thinking by linking each project milestone and task back to the broader goals of the organization.
Improved Capacity Planning and Resource Management – Capacity planning and effectively managing resources is largely dependent on how well your PMO executes its strategy and links the use of resources to company-wide goals. It is no secret that wasted resources is one of the biggest issues that companies encounter when it comes to scope creep. PPM decreases the chances of wasted resources by ensuring resources are allocated based on priority and are being effectively sequenced and wisely leveraged to meet intended goals.
Higher Degrees of Productivity – PMOs that communicate to project teams and other stakeholders, such as employees, why and how project tasks are vital in creating value increase the likelihood of a higher degree of productivity. Employees who understand their roles in reaching larger goals are more likely to work harder and pay attention to the quality of their deliverables.
Increased Agility – The process of aligning project and program activities with strategy helps companies become more agile, making it easier to manage change and to adapt as opportunities and obstacles arise.
Improved ROI – As PPM helps achieve clarity around broader company goals, improve resource management, and increase the productivity and agility of the organization, it can create greater wins and improve the return on investment (ROI) of any project. With PPM, projects investment is more likely to pay off and set companies on better footing for the future.
Project Portfolio Management Process
To succeed with PPM, PMOs should develop and implement a process to help ensure everything goes smoothly and as expected. Here are some key steps that should be included in the PPM process.
Identify all Existing and Potential Projects – Without a complete inventory of all current and on-the-horizon projects company-wide, it can be virtually impossible to establish a successful PPM strategy. This is the first step in developing effective project portfolio management and achieving the best ROI.
Determine how each Project will Impact Company-wide Strategy – Each project must provide clear and undeniable value towards furthering company strategy in the mid- to long-term. This value should be fairly easy to trace, document, and communicate to all stakeholders.
Prioritize each Project – Once the value of projects has been substantiated, the PMO must prioritize which projects should be executed in what order and why. They ‘why’ is a crucial question. Not understanding why one project is a priority over others can be costly if the sequencing is off.
Allocate Resources – Once projects have been selected and prioritized, resources must be allocated and managed. Allocation reduces the chances of resources overlap, overload and potential waste. Very few companies, if any, can afford wasted resources. Make sure to carefully and accurately identify all available resources and assign each in ways that do not cause overloading and potential conflicts.
Adjust Project Strategy as Required – Because change is constant, it is important to revisit company goals, each project within each program, and all available resources to ensure alignment with strategy remains. Pouring good money and resources into non-relevant projects is an unfortunate consequence of not revisiting and adjusting to changes in strategy. This can be costly in many ways.
PPM Best Practices
Best practices can not only increase the likelihood of PPM success but also provide companies with assurances as to the value of each project when attempting to identify projects to undertake. Here are some key best practices for doing PPM right.
Identify and Solicit Participation from all Potential Stakeholders – From the leadership team to front-line employees, full participation is vital to ensuring all angles have been covered. Often, a few key stakeholders who were overlooked could have saved companies time, frustration, and wasted resources.
Slow Things Down – Planning for success takes time. Slowing things down at the start to ensure all bases are covered often isn’t a popular approach, but it goes a long way in reducing stress, waste, and partial or full failure down the road.
Identify the Best Methods, techniques, technologies, and resources – Draw on experts inside and outside of your organization to help develop and put in place the best methods, techniques, technologies, and resources needed to increase your chances of success. Recognize and acknowledge your company’s strengths, weaknesses, opportunities, and threats by performing a SWOT analysis.
Document Everything – Careful and complete documentation saves misunderstandings and misinterpretation. PMOs, stakeholders, leaders, and sponsors are overscheduled on the best of days, and this makes it vital that everything is carefully documented. Company-wide goals, how programs and projects align with goals, capacity planning, resource allocation, and everything that follows should be documented.
Communicate Everything on Time – There is no benefit to having a plan or documenting everything if no one knows about it. Nor is there any benefit in communicating information to the wrong people, or not on time. Make sure to communicate the necessary information with the right stakeholders in a timely manner.