A Complete Guide to Project Portfolio Management

Portfolio Project Management (PPM) is about Capturing, Selecting & Delivering projects in the most efficient way possible. While this process is generally straightforward in scenarios where an organisation has a minimal number of projects to execute, at larger scales, the complexity of projects and demand on resources increases, so it is important to look at formalising your process of portfolio management.

Benefits of Project Portfolio Management

So, what value can developing a PPM process bring to an organisation?

1. Improved demand management
2. Centralisation of new project ideas
3. A shared approach to project management (resource demand and reporting)
4. Ease of alignment with Organisational goals
5. A portfolio analysis process focused on value optimisation and doing the right work
6. Scenario planning and ‘what if’ analysis to better plan future work

Why Might You Need Project Portfolio Management?

Some signs that an organisation can benefit from PPM are:

1. First up, the Squeaky Wheel gets the Oil – the project in trouble gets resources, EVEN if not the best decision for the business, better projects being starved as a consequence.
2. Too Many Projects AND all or many of them are classified as urgent, resulting in none of them being executed with the correct level of urgency.
3. Too Many projects, ALL defined as urgent, result in resources being pulled in many directions, which often leads to people getting burned out, frustration, and potentially great people leaving the business or developing health issues.
4. Constantly Changing Priorities – Project A is the priority today, something else tomorrow. Poor selection criteria result in projects being selected based on emotion and not a structured approach.
5. Another indicator is that there are no strategic criteria for project selection. The result is that project teams have little or no idea of the impact their project has on the overall organisation strategy.
6. Lack of a process to decide on what is the true priority in addition to the other indicators results in the inability to effectively control change in the business.

What to Consider When Integrating Project Portfolio Management?

1. Process -Standardising the process of how projects are proposed, centralised, prioritised, and executed
2. Technology – Building a scalable and robust solution to support the new process
3. People – Training staff to understand and follow the new process and use the technology correctly.

A Sample PPM Process

A mature PPM process will incorporate decisions and strategic drivers defined as part of an organisation’s overall strategic plan to help drive decision making and portfolio planning. This strategic plan and supporting department roadmaps will provide guidance throughout the PPM process in defining what areas and initiatives an organisation should align their portfolio delivery towards. 

By starting with a strategic plan, it can help guide an organisation when making difficult decisions about what projects should be prioritised over others. By defining strategic drivers, weighting, and ranking them against each other, a portfolio of projects selection and prioritisation processes can be made easier, as a project’s merits to how well they align to a particular set of drivers can be the main influential factor in appraising a project for inclusion in the overall portfolio.

PPM Process Stages Overview

The PPM process consists of three key elements:

• Capture
• Selection
• Delivery

Capture

Capture begins with project ideation. The generation of new project ideas and proposed initiatives. PPM requires a formalised ideation phase to ensure new ideas are properly captured and recorded so that ideas can be held in a centralised location for discussion and review. 

A structured data set of information relating to the project ideas will need to be defined and adhered to, to ensure that projects can be prioritised relative to other project ideas. Project ideas can be captured in any number of ways. Smaller organisations may use a simple document template to capture inputs, while larger organisations may opt for a more structured approach with a tool in place to capture project ideas and feed data to a central repository where the data can be reviewed and reported on programmatically. 

Some PPM tools have features built in to allow for ideation capture, review, and approval. Allowing for the possibility of an idea flowing from a submitted project idea ultimately turning into a project within a committed portfolio.

Selection

Selection for a portfolio of projects takes the structured data that has been captured and assesses and prioritises the projects against one another. Projects are initially authorised once it is deemed that there are no obstacles to the organisation tackling this project or initiative. However, the next step is to review the desired set of projects against the cost constraints of the organisation. There should be a full cost analysis performed against the desired portfolio of projects to help determine which projects should ultimately be selected. 

Following from cost analysis, we must now consider the constraint of resources who will ultimately deliver the cost-constrained portfolio we have selected. Projects may need to be rescheduled, dropped from the selected portfolio or new resources hired in order to deliver the desired portfolio. 

PPM tools such as Microsoft Project Online allow for this type of portfolio analysis to take place within a sandbox environment, allowing for scenario modelling for your differing portfolio options and resource analysis. Users can perform multiple ‘what if’ type scenarios and find the best solution in terms of planned portfolio execution within the boundaries of their given constraints.

Delivery

At this point, an organisation has now captured project ideas, reviewed, analysed, and selected their desired portfolio of projects and have a resulting committed portfolio of projects. They have identified the right work for the organisation to focus on, but they must embark on the next step of the journey in PPM, Delivery or doing the work right. By following a structured PPM process for project selection, the delivery of projects can be improved as an organisation’s goals and objectives align with their portfolio. 

Project stakeholders understand the priority and urgency of the work they are contributing and are being given clear direction on the requirements being placed upon them from projects. People can be confident that the work they are doing is the right work at the right time and can clearly see the work planned on the horizon for future projects and initiatives. 

Tools such as Microsoft Project Online can allow for project managers to monitor and control their individual projects within the delivery phase and ensure that overall progress, schedule, and work completion can be accurately tracked and monitored at a portfolio level. 

Having proper portfolio management processes in place will ensure that changes or delays to projects in one section of a portfolio will have their impacts accurately illustrated on other projects and ensure that portfolio-level decision making can be made with as much accurate and up to date data as possible.

Conclusion

Project Portfolio Management when done right, is around enabling an organisation to deliver their selected projects on time and within budget. Taking a wider view of the portfolio of projects and weighing their value and delivery in the context of the overall strategic goals and drivers of the company. It benefits not just the organisation and senior leadership in project selection but also provides improvements for project managers and project stakeholder’s processes and execution, as the portfolio view of projects provides better monitoring and risk mitigation, reducing the negative impacts of risks and issues from one project impacting on the execution of others, avoiding a ripple effect across projects.