What is Project Portfolio Management?

A report published by Gartner research found that IT projects deployed in North America generate up to 30 percent waste, a figure that amounts to hundreds of billions of dollars annually. While there are many mechanisms that create waste within projects, organizations can also waste resources by funding the wrong projects—those with low benefits, high risks, and whose outcomes have insignificant effects on the organization’s strategic goals.

To help reduce waste, organizations are adopting project portfolio management (PPM), a strategic approach to project and resource management at the enterprise level. PPM allows organizations to analyze current and prospective project requests, identify the projects that best advance their strategic objectives, efficiently deploy assets and allocate resources to the top projects, and increase cross-project visibility within the organization.

This article is a great starting point for learning about PPM—you’ll learn what PPM is, how it benefits the organizations that use it, how it fits with your existing paradigm for project management and how to get started.


Projects, Programs, and Portfolios—Pieced Together

An understanding of effective PPM begins with a breakdown of how project management works at the organizational level. Projects, programs, and portfolios form an organizational hierarchy of initiatives at an organization—let’s look at each item individually and develop a definition of what’s included.

In today’s business environment, IT deployments are typically project-oriented and revolve around the successful deployment of specific services, initiatives, or products that satisfy a business need. Project managers are responsible for clarifying the objectives of a project, breaking the project into work-streams and assigning work to their teams, planning and tracking project timelines and milestones, monitoring the project’s risk profile, managing interpersonal relationships and conflict, and ensuring that the project satisfies its financial, timing, and business objectives.

A program is a group of related projects that work together to fulfill the same strategic objective or business benefit. Program managers are typically in charge of several projects at once, but from a higher-level perspective. They may spend less time ensuring the success of each individual project and more time ensuring that the overall strategic objectives of the business are being met by the sum of the results of all projects in the program. Program managers may oversee a group of project managers that are assigned to the specific projects that they control.

At the top of the hierarchy are portfolios. A portfolio contains several programs, often each having its own program manager, and each containing several projects that may have project managers assigned to them. Project portfolio management can be done by one person, or by a Project Management Office (PMO), a whole department whose goal is to identify and allocate resources toward the projects and programs that best satisfy the organization’s strategic objectives.

Keep reading to learn about the key tasks that make PPM effective for organizations.



PPMs Evaluate Benefits, Risks, and Costs to Prioritize Projects

To effectively allocate resources, PPMs use expertise, technology, and specialized methods to determine the viability, efficiency, and impact of prospective projects and projects in the current portfolio. Project portfolio managers look at projects and ask the following questions:

  •  How will successful completion of this project benefit the organization?
  •  How will successful completion of this project advance the organization’s business objectives?
  •  How will successful completion of this project benefit other groups working on other projects in the organization?
  •  What risks are associated with the project?
  •  What assets must be deployed to ensure successful completion of this project?
  •  How much will the project cost?

These ideas capture the general inquiries associated with a successful PPM analysis of a project, but the analysis can be much more detailed when organizational objectives are clearly defined which drives a common set of weighted criteria for assessing the viability and impact of projects.

Through these assessments, organizations can prioritize the projects that provide the greatest benefit and avoid projects that are high-risk, too costly, or don’t align to company objectives when completed.



PPM Facilitates Cross-Project Visibility for Executives

A major struggle for large organizations is a lack of visibility between and across project teams. High-level managers cannot efficiently allocate resources in the form of human or physical capital without specific information about the needs of each department. PPM solutions provide intuitive dashboards where executives can track project progress across the organization in real-time.

Enhanced project visibility allows better project monitoring across the organization, and can help managers address potential sources of delays before they balloon into critical failures.

Cross-project visibility is crucial for the effective allocation of resources by the PMO and by managers themselves. When PMO executives lack visibility of ongoing projects throughout an organization, they often assign too many low-impact projects to teams that already have too many projects. This is especially the case when there is no accessible framework for evaluating the impact and viability of projects and determining what resources are available to complete them.

Implementing too many unimportant projects leads to a situation where team members are overworked and overextended—they’re involved in too many projects that don’t matter, and without clear priorities that align with organizational objectives, their success, and the success of the company, is essentially left up to chance. PPM software helps ensure that organizational resources are allocated efficiently to projects that have a real impact.



PPM Drives Business Growth by Managing Project Demand

When project managers or program managers are asked to implement projects without input from a PPM, the drive for success that exists across departments in an organization can sometimes become its own worst enemy. Without adequate cross-project visibility, it is impossible for managers in separate departments to contextualize the organizational impact of their separate project loads.

As a result, organizational objectives are swept aside and forgotten, and the company gets bogged down with too many managers working towards their department’s goals, but not efficiently and in unison with other groups. PPM should drive collaboration between groups by unifying the organization under a set of clearly defined strategic objectives and coordinating resource allocation between projects to best achieve those objectives.

With a fully implemented PPM system, department leaders and program managers who want to undertake new projects or recruit new resources for their team can submit their project requests to the PMO office for review. This ensures that any new initiatives that the organization choose to fund have been properly assessed for their risk and benefits, and can either be rejected, or approved and prioritized appropriately.

PPM opens the door for organizations to accept more project proposals from their leading managers, prioritize the best ideas, and move forward with projects that have the largest possible impact.



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At its core, project portfolio management is all about efficiently deploying resources between departments, programs, and projects in a way that best serves the organization’s overall strategic objectives. Effective portfolio managers use a balanced scorecard to evaluate projects for risk, benefits, and cost, then assign resources to those projects that promise to deliver the greatest overall benefit to the organization. PPM is also a tracking methodology that is used to measure the ongoing status of projects, preventing delays and avoiding missteps on the path to project delivery.

Ultimately, PPM is about producing better project outcomes.