Mastering Project Portfolio Management: The Overview

Understanding Project and Portfolio Management

Project portfolio management (PPM) involves centrally managing an organization's projects and initiatives to achieve strategic goals. Unlike traditional project management, which focuses on single project execution, portfolio management considers multiple projects as strategic investments aligned with overall business objectives.

To look for the origins of project portfolio management, one has to go back to the 1950s and to the pioneering work by Harry Markowitz, who was also later recognized by a Nobel prize. The key fundamentals, which different types of resource planning software like Operating are built on, originate from the principles of project portfolio management.

According to research from Acuity PPM, many strategic initiatives fail due to inadequate project management approaches. Effective portfolio management addresses this by aligning projects closely with organizational strategies, so looking at project management in the broader context of the company's targets and other projects.

Key Elements of Successful Project Portfolio Management

• Strategic Alignment: Ensuring every project supports defined business goals
• Resource Optimization: Allocating resources to deliver maximum value
• Risk Balancing: Managing portfolio-wide risks effectively
• Performance Measurement: Regular tracking against organizational targets
• Governance Structure: Clear frameworks for making project selection and continuation decisions

Project portfolio management differs from program management, which groups related projects with shared outcomes. Portfolio management takes a strategic view, focusing on selecting and managing projects that collectively enhance organizational value.

Key Insights

Strategic Alignment

Aligning projects to strategic goals improves resource use and strengthens decision-making. To have strategic alignment, you first need to have an idea of your company's strategy as a whole. In professional services, this often dictates which types of clients and projects the company wants to strive for.

Governance Importance

Effective governance ensures the right projects are selected and managed, optimizing value delivery. In professional services, the governance happens early: by recruiting the right types of competence, and selling the right types of projects, you can ensure proper governance. It's tough to have an explicit governance process in place, as projects are sold to clients, and that determines the project portfolio.

Performance Measurement

Consistent performance tracking is essential to align projects with business objectives and ensure successful outcomes. It's good to have a solid process in place for project management, resource planning, and time tracking to ensure proper monitoring data is generated.

Using Proper Tooling

Appropriate technology significantly reduces project overruns and enhances overall portfolio management success. Running a business at scale that's dependent on manager's memory, or complex and disconnected spreadsheets is a recipe for operational chaos and busywork.

Aligning Projects with Business Strategy

Strategic alignment connects projects directly with organizational goals. According to Planview research, many organizations struggle with actual versus perceived alignment, leading to gaps between strategy and execution.

Effective strategic alignment offers several benefits:

• Improved resource allocation across projects
• Clear prioritization, eliminating low-value projects
• Enhanced transparency in investment rationale (i.e. it's easier to justify investments)

Achieving this alignment requires clear criteria for project selection, regular portfolio evaluations, and measurable indicators directly connected to business outcomes. For example, it might be that the company is running projects not related to its overall strategy, but it has no formal structure in place to evaluate its portfolio as a whole. Having visibility over projects on a high level is crucial so you're able to get rid of initiatives that are not providing value for the organization.

Frequently Asked Questions

What is project portfolio management?

Project portfolio management (PPM) is the centralized process of managing multiple projects to achieve strategic business objectives by selecting, prioritizing, and overseeing their execution.

What are the main components of effective portfolio management?

Effective portfolio management involves strategic alignment, optimized resource allocation, risk management, performance tracking, and governance structures for clear decision-making.

Which tools enhance strategic alignment?

Useful tools include strategy maps, portfolio scoring models, as well as project management tools, and resource planning tools that give insights on the project quality, progress, and type.

Enhance Your Project Portfolio Management with Operating.app

Effective strategic alignment and optimized resource allocation are critical for successful project portfolio management. With a high rate of project failures, ensuring that every initiative aligns with your firm's goals is essential.

Operating.app addresses common project and portfolio management challenges with real-time forecasting, skill-based staffing, and seamless integration with your other systems to have one place for the whole team to see the full project portfolio. By replacing inefficient spreadsheets with intuitive resource planning tools, your consulting firm can achieve greater efficiency, improve consultant satisfaction, and prevent burnout and revenue losses.