Managing different projects at the same time can be exciting yet challenging. Figuring out how to monitor, share, and collect results is often confusing, especially if the projects depend on or relate to each other.
You can easily resolve this challenge with a bit of structure to ensure you don’t neglect some areas. Project portfolio management gives you this structure, enabling you to work with a single point of truth. Having such visibility keeps you focused on key areas and project goals while helping you forecast returns and risks.
Let’s explore everything about project portfolio management to empower you as you manage multiple projects like the pro you are.
What is Project Portfolio Management?
In theory, projects are independent units, but in reality, we don’t work on a project in isolation. Most aspects are often interconnected in one way or another, whether through resources, timeframes, or budget.
PPM (Project Portfolio Management) elaborates on how to manage interconnected, dependent, or related projects. It looks at the broader picture of future, present, and past projects, helping you pace and prioritize tasks for the best results.
Unifying how you manage projects helps your team realize how everyday tasks relate to your company or business goals. Furthermore, you’ll have an easier time tracking business objectives without losing sight of the ultimate goal.
The right PPM approach enables you to recognize and select the projects with the highest ROI (Return on Investment) before you pour in resources. Instead of overworking an already overwhelmed team with new projects now and then, a smarter way to work is using PPM to prioritize your projects.
Keeping your team focused
Taking up all projects that need attention can confuse your team and cause them to lose focus. When you prioritize projects using PPM, you can work with a well-planned strategy instead of making rushed short-term decisions that will harm your business or company.
Providing a guideline for future projects
Previous projects you managed using PPM can become a benchmark that will inform future decisions on how and where to allocate resources. For instance, if a certain project type is not up to par with your expectations, you can re-arrange your priority list and bump up more successful projects.
Establishing a priority list for future plans
Besides helping you identify your next project to focus on, project portfolio management helps you come up with a priority list. This list will come in handy when preparing for your next project and work plan. It increases the chances of upcoming projects succeeding while optimizing results.
Identifying the projects to invest in
Project portfolio management helps you recognize where to direct the resources and investments you already have. This will depend on whether your company wants to maximize profits for long-term or shorter-term objectives. Whichever way you go, PPM helps you identify where your resources should go next.
Everyone will have a clear understanding of the next steps and direction, which will positively impact your company’s value.
Ready to streamline Your Projects with PPM!
Differences Between Project Management and Project Portfolio Management
Although they sound similar, project management and project portfolio management are entirely different. Let’s highlight some key differences between the two:
| Project portfolio management | Project management |
|---|---|
| Deals with large-scale projects and several initiatives | Involves managing and seeing through one project to completion |
| Requires collaboration between cross-functional teams | One team collaborates on one project |
| Involves evaluating the right initiatives | Deals with allocating responsibilities and roles |
| Requires planning and monitoring team objectives and priorities | Mainly involves managing tasks |
| Assists in visualizing progress in different projects | – |
| Links daily activities with strategic goals | – |
| Keeps you on track towards overall business goals | – |
| Involves managing and eliminating risks | – |
Project management mostly involves handling one project, while PPM focuses more on timing when to execute different projects. In a way, project management is part of project portfolio management.
The Benefits of Project Portfolio Management
PPM offers an all-rounded approach to keep tabs on resources allocated to a project, interdependencies, health, and status. Regardless of the size of your company or industry, the real-time updates you get will help you improve your workflow.
You’ll also enjoy other major benefits, such as:
Alignment Between the Business Strategy and Project Goals
The main goal or purpose of any project is to deliver on the short-term and strategic goals. Each project you handle takes you a step closer to these goals. It’s, therefore, essential to keep all projects in line with the main goal. Without this alignment, your team’s effort and resources will be a waste.
PPM addresses this issue by bringing all the puzzle pieces together. This approach ensures that each project you select, assess, and prioritize lines up with the overall business strategy. It’s easier to gain perspective, which enables you to make informed decisions about the company’s future.
Better Decision-making
PPM brings deep visibility into projects from a tactical and strategic angle. This visibility offers valuable insights into key metrics, such as:
- Resource utilization
- Work Quality
- Timelines
- Profitability
- Project costs
With this information at hand, you can confidently make decisions involving project selection, risk management, and resource usage.
Refined Project Selection
In most companies, there are no clear criteria by which leaders select new projects. If the available information is not enough, you’ll have a hard time viewing the project in terms of the company strategy.
Additionally, it’s often tempting to add other minor projects when the major one fails to try and salvage the situation. These multiple low-impact projects make it hard to manage the project portfolio because it becomes more complicated over time.
PPM helps you decide the best projects to ensure resources are available and that you abide by the company’s goals. It gives you a clear framework you can use to select projects and oversee all processes. This allows you to work only on projects that bring maximum value to your company while removing the initiatives that add little value.
Maximum Business Impact and Minimal Risks
Risk is sometimes inevitable in a project, so the best move is to craft an efficient risk management plan to avoid total failure. Minimizing the effects of any risk on work processes and finances should be a priority, depending on the effect, type, and recurrence. Doing so saves you from over or underestimating the resources you need for current and upcoming projects.
You can avoid unnecessary delays and overstretching your budget with a good PPM. You’ll have a simpler job noticing differences between the original plan and the actual work, such as expenses. This real-time information is useful as it enables you to prevent financial risks after you start a project.
Project management methods are standard, so you’ll have a framework you can rely on.
Optimizing Resources Within the Company
Project portfolio management saves you and your team from wasting or duplicating efforts on tasks that have no financial benefits. It ensures valuable resources go to initiatives with the most returns.
Since you have clear visibility into all projects, you can estimate the demand and need for various skills based on the resources at your disposal. This gives you time to retrain or upskill your team to ensure they can work on different types of projects.
Besides reducing overhead and project costs, you can cut down the time your team spends on a project. Additionally, managing how your team uses resources and deciding the proper workload will no longer be stressful.
The PPM Process
Creating an effective PPM strategy involves figuring out how to manage five key aspects. Each aspect helps to determine the right KPIs (Key Performance Indicators) to keep the project in line with the business objectives.
Demand
The first step in this process is to determine the number of projects your team can handle at any given point. Do they have the capacity to work on several projects at the same time?
To find this answer, you need to closely examine your resources. Before taking on new projects or expanding the current workload, you need to know the capacity these vital resources have:
- Availability and time
- funds
- Team members
Key stakeholders and decision-makers need to determine whether:
- The project builds the value of your portfolio
- The initiative aligns with the PPM and company strategy
- You have enough resources to take on the project and deliver quality results
Remember, value is not always monetary. A project can bring value to your company in other ways, like enhancing team productivity and efficiency, getting new partnerships, and building your company’s reputation.
Finances
Monitoring finances is another key aspect of any project. As you develop your PPM strategy, work with your finance team so that all projects, future and current, result in a balanced budget. For upcoming projects, keep a close eye on aspects like:
- Estimated budget
- Estimated billing
- Estimated costs
For current projects, you have to monitor finances to ensure the costs don’t affect the company’s bottom line in a negative way. It’s wise to check budget-related metrics such as:
- Expected profit margin (%)
- Every project’s earned value
- Budget spent (%)
- The amount allocated to a project compared to the overall budget (%)
- The total amount available for the remaining efforts
Resources
When working on any project, you must be strategic in how you assign people to the initiative to maximize returns and lower costs. Giving people responsibilities simply because they are available can lead to an imbalanced talent mix. While it seems like a minor misstep, such random allocation can cost you more than you expected.
An effective PPM should guide you when assigning resources to every project. Before accepting a new project, you need to answer these questions:
- How much resources do we have at hand?
- Which resources can we set aside for the project?
- When will they become available?
- For how long can we use these resources?
Risks
It’s essential to remember that your company is not immune to various risks, regardless of the number or type of projects on your portfolio. We exist in this reality, so your PPM strategy should aim to remove or reduce the risks as much as possible.
It should give you an unfettered view of all the risks associated with your projects. This real-time visibility and transparency will keep everything under control and help you forecast issues and stop them in their tracks.
Project Changes
As the famous Greek philosopher Heraclitus resonates, the only constant thing in this life is change. Even if you plan your projects to a T, changes are bound to happen along the project lifecycle.
For instance, stakeholders or clients may request changes in some functions, features, or processes when the project is well on its way. Failing to prepare for such unexpected hurdles can throw you off track, ruining the project outcomes or bringing in extra costs.
Such instances are avoidable as long as you have a well-thought-out PPM strategy. It gives you the techniques and tools you need to handle the requests, assess their benefits or effects, and come up with a new plan on how to implement the changes.
There’s no way to guarantee that you got the PPM process right the first time. Be ready to make swift changes and adapt as necessary until you have a solid strategy that works for your team and company.
Tools and Software for PPM
Project portfolio management is an engine with many different moving parts. As your projects and scope broaden, you need portfolio management tools to help you manage every aspect to ensure positive results.
Portfolio management software equips you with the right tools to succeed. The question is, how do you determine or measure success or failure? The best way to go about it is by monitoring the project results and then comparing them against the expected outcomes.
You need advanced project portfolio management software to help set benchmarks that will guide decisions about new projects. Since, by now, you understand your team’s challenges and needs, it will be easier to compare different software solutions to see if their functionalities suit your company.
Although there’s no unified list of all the features these tools must have, there are some qualities that make them effective. As you compare tools and software, look at the following areas:
Dashboards
A dashboard aims to help you visualize data that you’ll use to monitor high-level metrics. Advanced PPM software should have this key functionality as it takes your analytics and reporting skills to the next level.
Reporting
As a portfolio manager, your PPM software should come with tools to help you generate automatic reports involving different metrics.
Data Storage
Depending on your industry and company, you need a software solution that has enough capacity to accommodate your storage needs. There are different types of files, so ensure you confirm the new platform is compatible with what you use.
User Interface and Usability
The user interface should be organized, simple, and easy to use. You don’t want software with a steep learning curve, especially if you need to organize training for your team.
Integrations
Your new tool should be compatible with existing software and systems. Otherwise, it beats the purpose of getting the tool in the first place. Ensure you confirm you can use it on different platforms like mobile devices and it seamlessly connects to your system.
Communication and Collaboration Features
Your PPM software should come with built-in communication and collaboration features. These features simplify sharing information by automating messages and accessing them in real time.
Best Practices for Beginners
Creating an effective project portfolio management strategy is an excellent step, but you may face some challenges trying to determine where to start the implementation process.
Here are some tips and best practices that will empower you to hit the ground running.
- Embrace Flexibility
Change is inevitable, so encourage your team to be flexible so it’s easier to adapt to the dynamic project needs.
- Have Prioritization Criteria That stays true to the Company Goals
Prioritization is a very important aspect of PPM. The way you prioritize projects should take you a step closer to your goals. Don’t shy away from canceling projects that you feel are holding back your team.
- Integrate PPM Tools
When used the right way, enterprise project management software can help you achieve goals you never thought you’d reach in every project. Ensure you have access to accurate data that informs decision-making and compliance with various regulations.
Conclusion
A proper project portfolio management strategy has the power to transform your company and make your operational and financial goals achievable. Such a positive impact nurtures excellent client relationships while giving you a strong competitive stance in the dynamic market.
As more companies adopt diversification, you need to take on more projects to broaden your horizons and portfolio. As easy as it may sound, monitoring each project’s metrics can prove to be very challenging.
That’s why you need a well-defined framework that simplifies project management to ensure success. A PPM strategy paves the way for strategically aligned projects that are also profitable.
The question is: are you ready to elevate your PPM skills to new levels? With the above guidelines and a drive to thrive, you have the potential to achieve ultimate project success. Take charge of your project portfolio with innovative software solutions and watch your projects deliver exceptional value.