When the organization grows by leaps and bounds, it becomes vital to handle its project portfolio efficiently. It becomes challenging for the enterprises to align the project with higher-level business goals. Higher management finds it challenging to allocate resources, prioritize the project, and gain optimal efficiency during the entire process. This is where the concept of Project Portfolio Management (PPT) peeps in.
Project implementation requires continuous management from inception to the delivery phase. Often projects become siloed and unsuccessful due to varied reasons. Approving projects prior to looking at their objectives/proposals leads to delayed delivery, project dismissal, and budget overrun. In addition, PPM help to overcome these issues by creating a more efficient project execution process by critically analyzing every proposed project. The PMP certification is the world’s leading project management certification offered by the Project Management Institute (PMI), a non-profit organization whose goal is to advance the profession of project management. So, this article provides a comprehensive understanding of PPM, its lifecycle, how it is related to project management, and the best practices involved.
What is a Project Portfolio?
To gain a thorough understanding of Project Portfolio Management (PPM), let’s split the keyword into two major parts, i.e., Project and Portfolio.
A project is defined as the individual effort of a professional invested in creating unique products/services in the given duration. Moreover, a portfolio includes managing various programs/multiple projects, with each having an objective.
A project portfolio is defined as an assortment of projects, processes, and programs that are efficiently managed together and optimized together to attain the organization’s strategic goals. It can be managed either at the organization or functional level. Combining programs and projects under portfolio management helps manage those effectively rather than being managed independently.
What is Project Portfolio Management?
Project Portfolio Management is about analyzing and optimizing processes, technologies, and budget for the programs and projects within the portfolio. Therefore, the target of PPM is to guarantee that outcome of the portfolio supports the business objectives and strategic goals of the organization.
Project Portfolio Management (PPM) is handled by a project management office (PMO) or portfolio managers. Moreover, the PPM process is accomplished by thorough business analysis, budget analysis, and forecasting, minimizing the risk and handling the stakeholder expectation.
“Centralized management of one or more portfolios that enable executive management to meet organizational goals and objectives through efficient decision making on portfolios, projects, programs, and operations.”
Project Management Institute (PMI)
PPM help you to gauge a project considering both qualitative and quantitative approach.
However, the main objective of Project Portfolio Management is to increase the efficiency of a project through a reliable and efficient process.
In the current scenario, PPM has become an organization-wide process to evaluate, prioritize, schedule, track the ongoing project and align it with the organization’s goals. So, we can conclude by saying PPM is an iterative process and evolves along with the technology and the business process and support them.
Key terms of Project Portfolio Management
Before we delve deep into PPM, let’s understand some of the key terms involved in this article:
The concept of program management is about managing a portfolio of projects with the same goals as Portfolio management, except that the projects are in the portfolio.
It is about creating graphs, charts, and other required documents to know the project’s progress and other portfolio metrics.
Change Control Management
Change control management involves recognizing and responding to the changes in the portfolio.
It is the process of identifying and resolving the risk before and after it occurs.
The process of distributing the resources throughout the portfolio’s lifecycle.
The process involves making estimations and decisions wherein the project’s budget aligns with the organizational strategy.
Recognizing the risk associated with each project and using this information to make portfolio decisions.
Project Management Office (PMO)
It is a group entrusted with maintaining project management standards within that organization.
Business Realization Management
The practice of properly managing change initiatives and projects to attain desired outcomes.
Project Management vs. Project Portfolio Management
Before we move deeper into Portfolio management, it’s vital to learn about its related fields, such as project management.
The terms “Portfolio management” and “Program management” are interrelated in the business management process. But, first, to know where they differ, we need to define each process in detail and explain the areas where they diverge.
Firstly, let’s start with project management.
Project management is about managing the projects.
PMI defines project management as
” The application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.”
In addition, a Project is a temporary endeavor having a beginning and end, and the outcome results in a product/service.
On the other hand, we have project portfolio management.
PPM is defined as a higher-level approach that recognizes, prioritizes, and analyses the potential value of the programs and projects in the portfolio. The main goal is to manage and leverage the project’s lifecycle and attain the overall organizational goals and objectives.
Thus, we can conclude this section by saying that project management is a subset of project portfolio management. Moreover, the ultimate objective is to meet the strategic goals of the organization.
Steps Involved in Project Portfolio Management/ Project Portfolio Management Process
The Project Portfolio Management process explains various project phases wherein the team members know project milestones, conflicts, exceeding budget scenarios, and resource thresholds.
It is clearly evident that organizations globally have started implementing PPM, with PPM tools projected to be approximately $3.2 billion in 2021. However, irrespective of the PPM tool you use for your organization, there are five steps/process that helps for successful centralized project management.
Identify the Business Objectives
The first step involves gaining a comprehensive understanding of business objectives and goals. Moreover, the main intention is to check whether the project portfolio aligns with strategic planning and customer’s value and financial objectives are good enough for your organization.
In conclusion, after establishing a proper project prioritization process, the next step is to determine how well the project aligns with the business goals.
Gather Project Ideas
Once you are clear strategic goals of the organization, start developing them. To accomplish the task, you need to keep track of prospective projects and projects you have considered. Therefore, gather all the essential data, design valuation criteria, and select the best one. In addition, keep track of project status, categories, and other important details that helps to determine each project to your business objectives. Simultaneously, you can also assess the resources required to execute the project, which further helps to measure the project’s cost and feasibility.
Choose the Best Projects for Your Portfolio
The next step is choosing the best projects for your portfolio and it requires you to do a cost-benefit analysis using valuation criteria. In addition, the valuation criteria process brings out the amount of value that each project provides.
Your portfolio should be a combination of tasks/projects that help to accomplish both short-term and long-term business objectives. During the process, don’t forget to consider the feasibility. If a project isn’t feasible, your team shouldn’t take up the project.
Once you have the best fit project for your portfolio, it’s your turn to make a feasibility study adhering to various criteria like capacity planning, financial risks, and resource management.
Start the resource allocation process as you list down the project you want to undertake. So, divide the team members, the budget of the project, and other resources considering the project priority. Simultaneously, create a timeline for the project portfolio wherein you can also key milestones to make your project timeline more comprehensive.
Another major step to consider is Risk Management. Therefore, if you lack the resources to accomplish the selected projects, give a second thought to project priorities and develop a portfolio that doesn’t require your team to put extra effort.
Manage Project Portfolio and Resources
Tracking your projects throughout the process is a major component of project portfolio management. In addition, project key metrics such as project failure rate, ROI, and other aspects will help to improve the PPM process.
Projects evolve and change, so it is essential to manage portfolio execution. Therefore, many new ideas are put into the list of prevailing projects. Also, working alongside the project and program manager, you will need to coordinate the execution of programs and projects parallelly.
Managing a project includes the following aspects:
- Recognizing and resolving the conflicts occurring in a project
- Customizing the project portfolio includes canceling the projects, adding the new ones, and putting them on hold
- Working in coordination with project and program managers to measure the project’s performance
Project Management Processes Required for PPM
Implementing PPM at the organizational level requires a proper balance of time, skill, resources, and budget. And the most important thing is running projects conveniently and carefully without needing to compromise with the quality. However, this can be done using the project management process.
The change management process is all about identifying and prioritizing the change requests. Further, the change request can be classified as feature requests, business strategy, and regulatory requirements. Also, these are based on business strategy, demand strategy, capacity planning, and financial and operational constraints.
Resource management uses the organization’s various resources such as materials, equipment, employees, and financial resources.
The process ensures that all the project proposals in the pipeline are evaluated using valuation criteria. In addition, post evaluation, projects are determined if they are worth executing.
The financial management process ensures managing financial resources and managing the portfolio’s outcome adhering to the organization’s goals and objectives.
The process involves identifying risks that contribute to the development of a portfolio. And also come up with a risk mitigation plan to reduce uncertainty in the process.
Organizations that Benefit Project Portfolio Management
Organizations working on several projects at a single instance benefit from Project Portfolio Management. So, in this relate, there are quite a lot of enterprises/organizations. Following is a list of organizations that gains the benefits of implementing project portfolio management:
- Construction/ automotive
- Service and staff recruiting
- IT/computer software
- Banking sector
- Telecommunications and Insurance
- Government sector, and more
Project Portfolio Management focuses on minimizing project inefficiencies and eliminating the risks while undertaking any project. This can occur due to lack of information about the project. The PPM process helps the organizations to align with the project work to meet the project deadline while using the resources optimum.
Nevertheless, the concerned project managers must possess a thorough knowledge of enterprise project portfolio management to accomplish organizational goals and strategic objectives.
We hope, this blog helps you to understand comprehensively about project portfolio management
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