In a previous blog post, we wrote about the importance of project management – it helps organizations deliver projects on time, on budget, and within the scope of their goals. But it’s one thing to ensure projects run smoothly, and another thing to decide which projects your company should be working on: how do you balance limited resources, maximize ROI and align efforts with your mission?
Project portfolio management (PPM) exists to address these issues. Today, organizations lose large amounts of money from executing the wrong projects – choosing the right projects and planning them effectively is the best way to prevent that. In this article, we’ll explain what portfolio management means, how it differs from project management, and how it can benefit your business.
Project Portfolio Management Explained
Project Portfolio management takes a high-level view of the projects your organization is running at any given time, and proposed projects which have not been approved yet. The scope of project portfolio management can vary, and so can the timeframe: portfolio and business managers may be handling projects for a single division or department. They can also plan your portfolio out for periods ranging from a few months to multiple years.
No matter where you apply project portfolio management and no matter how far into the future it extends, the goals remain the same: set priorities based on your business’s strategic objectives and choose the right projects for a given time frame that will provide optimal business value based on limitations like budget constraints and resource availability.
Comparing Project and Portfolio Management
While project and portfolio management are complementary processes, there are important differences between them in terms of goals and processes.
- Project management is focused on overseeing projects to ensure they are done on time, within budget and within the scope of original project goals. Project Portfolio management is focused on ensuring your whole project portfolio (and investments within it) aligns with your mission while working around business constraints and achieving maximum ROI.
- Project management is focused on achieving realized value over a short time span – project portfolio management is focused on over a long time span.
- Project management requires a talented team of employees and experts to produce deliverables and achieve goals. Project Portfolio management requires collaboration between executives, stakeholder and high-level decision makers.
Ultimately, the most effective organizations combine project management with project portfolio management, planning their projects well ahead of time (based on business priorities, project and product cycles, etc.) and tracking their progress over the mid to long term to ensure goals are being met.
Benefits of Project Portfolio Management
The process of planning and managing a project portfolio provides the high-level visibility and insights required to achieve better long-term outcomes. Major benefits include:
- Clarifying Business Drivers – the project portfolio management process requires decision makers to clarify and set priorities for major business drivers (such as expanding to new markets, growing your sales team or improving customer satisfaction). Knowing your major business drivers allows you to select projects more strategically, maximizing business impact across your whole portfolio.
- Better Resource Utilization – according to 26% of executives, resource utilization is a difficult problem that often hinders project success – large enterprises struggle both to use their employees effectively, and ensure their employees aren’t overscheduled or spread across too many projects. High-level visibility for resource utilization ensures that projects are planned according to resource availability.
- Risk Reduction – a non-trivial number of projects fail due to poorly defined goals and lack of milestones needed to track progress. A successful project portfolio management strategy can prevent poorly aligned projects from making it to the approval stage and replace them with more viable projects that are more likely to provide true business value.
- Higher ROI – a good project portfolio management solution can assist with driving ROI for multiple portfolio scenarios, allowing businesses to identify the best strategy for maximum ROI while accounting for resource availability and budget constraints.
Without a basic project portfolio management process, decision makers are often shooting in the dark. With the right tools driven by actionable business data, project portfolio management is a science that pays dividends in the long term, improving productivity and providing a positive impact on your bottom line.
Hang Out with a Project Portfolio Management Professional
What would you give to spend an hour with a subject matter expert who knows exactly what your business needs to execute a world-class project management strategy?
Good news: now is the chance you’ve been waiting for. Join Projility co-cofounder and PPM expert Rob Hirschmann on December 6th at 10:00 AM Pacific Time/1:00 PM Eastern Time for a free webinar that will teach you how to:
- Set up a project portfolio management environment within Microsoft Teams that interfaces with Microsoft Project, Power BI and other Office 365 products
- Generate visually rich, on-demand reports with key organizational, portfolio-level metrics
- Plan your project portfolio at a high level with automated scenario creation, ROI projection and business driver analysis
- Set up application specific dashboards for your DevOps Team, project and portfolio management leads
- Simplify the complexity of your distributed workplace and increase team member engagement
The Webinar is coming up soon- register now to be reminded ahead of time and receive free resources after the event.