A Comprehensive Guide to Project Portfolio Management
Brought to you by Polaris, the world’s first self-driving Project Portfolio Management.
What is Project Portfolio Management?
Project portfolio management (PPM) can be defined as the centralized management of all projects in an organization. These projects may have no relation to each other but they are managed under a portfolio for overseeing competing resources. Managing a portfolio also involves project intake processes such as identification of potential projects, assigning managers and authorizing them. High-level controls and tracking systems are put in place to ensure that all projects in the portfolio support the overarching goals and strategies of the business.
To be successful, business leaders and project managers need to do 2 critical things. The first is to get their resources and projects properly aligned with the strategic priorities. Second, they must get up-to-date information on how those projects are performing, so they can make course corrections while continuing to support current project execution systems.
Managers can get all the execution data from the different systems used by their teams. However, they have no way of determining aspects such as if the project must be prioritized or how much should be spent. There is also a lack of an aggregated view across the portfolio.
Such fragmentation of critical data results in several problems such as prioritization and budgeting. It becomes difficult to properly understand and analyze the current status and progress of projects to formulate strategic plans effectively. You need a way to unify all of these disparate project and resource data, spread across multiple systems used by different departments and teams. This is where project portfolio management shines.
Project portfolio management is a rapidly growing industry that has begun to transform the way project managers go about their work. Globally, the market size for project portfolio management was valued at $4.2 billion in 2019. It is expected that it will grow at a CAGR of 13.4% between 2020 and 2027. It is, therefore, the perfect time for your organization to learn about project portfolio management and leverage it for success.
Difference Between Project Management And Project Portfolio Management
Project portfolio management is, in a way, an application of project management but on a much bigger scale. However, there are other differences between the two and to understand them we must first learn how they diverge.
Project management entails the management of a set of tasks and activities in a project. Projects are temporary in nature and have a definite end. In this process, goals of the project are defined and then skills, tools and knowledge are applied to meet those objectives. The assigned project manager will deal with breaking down tasks, allocating resources, establishing budgets and costs, and reporting progress to stakeholders.
Project portfolio management, by its very nature, is a high-level process. It involves analyzing, prioritizing and managing several projects grouped together in a portfolio. Projects that support strategic objectives are prioritized over those that do not. Some projects may even need to be sacrificed to free up resources for the ones that do contribute to the organization’s goals.
PPM centralizes the management of the portfolio’s investments, programs, projects, initiatives, and outcomes to achieve the strategic goals of the organization. There is no end to project portfolio management as new projects are regularly added to the portfolio.
What are the Objectives of Project Portfolio Management?
To understand the objectives of PPM, we must first analyze the reasons why organizations seek it. Typically, enterprises looking for PPM are unable to answer one or more of the following:
- Are the projects delivering value to the organization?
- Are the projects supporting the business objectives?
- What is the current performance of the different projects?
- What are the current interdependencies among projects and what risks do they pose?
- Are the right resources available to take on a new project?
- Is there a good balance between short term and long term projects?
- Why are there too many projects getting delayed and forcing deferred ROI?
- Why are resource conflicts arising?
Project portfolio management helps these organizations manage a large number of projects by grouping them strategically. This is followed by data-driven analysis to discover projects worth continuing and those that must be shut down. With PPM, organizations learn how they can streamline their efforts to improve their bottom line, eliminating projects that put undue burden on the organization.
What are the Challenges of Project Portfolio Management?
Organizations looking to implement project portfolio management can run into one or more roadblocks such as those around resource allocation, risk management and project execution. Managing large-scale projects that run simultaneously is a complex endeavor and challenges are to be expected.
Governance Conflicts: Successful project portfolio management requires complex governance processes that involve several stakeholders across several departments. Contrast that with project management which can be successful even with a simple hierarchy. The complexity in governing portfolios can lead to conflicts between stakeholders that can impede management efforts.
Massive Delays: When there are several projects running together, resource conflicts, bottlenecks, and missed deadlines are to be expected. The portfolio manager needs excellent leadership, coordination, organization and administration skills to minimize those risks and keep all tasks running smoothly. The software also plays an important role here as the right one can do wonders in streamlining the management process.
Financial Investment Issues: Implementing project portfolio management in any organization is not an easy or inexpensive task. It takes considerable time, effort and money to develop the processes necessary, not to mention the costs of PPM software. That is an investment that the organization’s leadership might not be willing to make.
Technological Factors: It is a no-brainer that the success of PPM efforts can depend on the software used. After all, by its nature, PPM is a massive and multi-faceted undertaking that covers a vast range of metrics and data. A good project portfolio management solution can go a long way in helping managers deploy PPM processes successfully. Conversely, the wrong solution can make life difficult for everyone involved.
The Project Portfolio Management Process
Successful project portfolio management requires a structured and strategic process. With that in mind, we have outlined the 5 major phases of the process below.
- Establishment of Inventory and Strategy: The first step in project portfolio management is to identify all projects in your pipeline, including any potential ones that may arrive. Gather all key project information and categorize those projects. Now, it is time to identify and establish the business objectives and strategic goals of your organization. With all of these details in hand, you can develop strategies to bring those projects to a successful conclusion.
- Analysis of Portfolio: The next step in PPM is to analyze the project portfolio you created. Determine its strengths and weaknesses. Make sure each project is evaluated individually. Consider all metrics such as milestones, potential ROI, resource allocation, and reporting schedule etc. The analysis should help you understand if a given project is worth continuing. Some projects must be halted while others may have to be combined together to prevent duplication. As a part of the analysis process, the overall risks of the portfolio must be assessed as well. This can be done by comparing the probability of success against the potential benefit the project offers.
- Confirmation of Alignment: This step is all about ensuring that the projects in the portfolio are in alignment with the strategic goals and initiatives of the organization. There are a few areas to look into for this step. Start by determining how well the portfolio fits into the overall strategy. There should be a balance between long-term goals and near-term growth while supporting the longer-term need for innovation. Make sure project distribution is aligned to different goals while being financially sensible. Evaluate the risks in the portfolio not just in financial terms but also from the scope, schedule, resources and technology perspectives.
- Project Portfolio Management: The 4th step is the project portfolio manager’s crucible. Take a look at the portfolio and make the relevant decisions around budgets or resources. You may even feel the need to reprioritize projects and tasks based on the data you gathered in the previous steps. In addition to resource management, managers may also need to implement change management and risk management processes.
- Testing and Adjustment: The final step is to test and adjust as needed. Project portfolio management is a continuous process. There can even be situations where changes are needed in real-time. Moreover, it is highly likely that your PPM process will not be perfect the first time. Look for areas which you can improve upon by gathering feedback from stakeholders and running tests as needed.
Role of the Project Portfolio Manager
A project portfolio manager is not just an upgraded project manager role. The portfolio manager is not only concerned with completing projects but also overseeing the responsibilities of the entire portfolio and all the projects contained in it. Here are, broadly, some of the duties of the project portfolio manager.
Project Request Management: The portfolio manager must carefully select the right projects from the requests that come in. They will evaluate each project request against strict value-based standards before accepting them. This is to ensure that every project supports the outlined organizational goals and strategy.
Efficiency Improvement: As portfolio managers are responsible for supervising the project tasks and objectives, they have the opportunity to uncover inefficiencies. By identifying and eliminating those inefficiencies, these managers can ensure that projects are not unnecessarily impacted in any way.
Collaboration With Stakeholders: Portfolio managers need to keep all senior stakeholders informed about all relevant project data. Collaboration is the key to success especially when multiple projects are involved. These managers need to have the ability to effectively communicate and collaborate with different stakeholders.
Resource Management: As project portfolio managers are involved in multiple projects, they have a better understanding of resource availability and allocation. It falls upon them to determine which resources should be allocated to certain projects based on skill requirements and upcoming project requirements.
Which Industries Benefit from Project Portfolio Management?
Any industry or organization that requires multiple projects to be run simultaneously is going to benefit from project portfolio management. In fact, the bigger the number of projects, the better it will be for them to implement PPM practices. PPM can help them integrate business strategies and project workflows to prime them for success. Here are some industries known to employ PPM practices:
- Government administration
- Banking and Financial Services
Tips for Successful Project Portfolio Management
Successful project portfolio management depends on correctly adapting its process to meet the needs of the organization. Nonetheless, there are a few tips that can help both managers and organizations make the most of PPM.
- There shouldn’t be any hesitation to cancel projects when they stop being aligned to organizational strategy.
- Keep time tracking and task management simple. Choose self-service solutions that offer employees flexibility to capture the needed time and task data easily.
- Capturing accurate data must always be a priority. Inaccurate data leads to incorrect decisions which directly impact project performance and, in turn, the bottom line and the strategy of the organization.
- Real-time access to the data is critical as well. Any delays in getting data can affect the managers’ ability to make decisions, hampering project progress and performance.
- Choose the right tools to support PPM activities. Cloud-based solutions that deliver real-time accurate data will benefit collaboration and decision-making processes while saving time and effort.
Benefits of PPM Software
Project portfolio management software is a boon for organizations that deal with multiple simultaneous projects. Manual methods can never cope with the level of complexity that arise in such organizations. Moreover, technological advancements have massively increased the capabilities of PPM software, making them indispensable for any organization investing in PPM.
PPM software can take over the heavy-lifting involved in capturing and analyzing data, freeing up managers to focus on other activities such as collaborating with stakeholders and making decisions. The right software will help PPM processes become more efficient and deliver results faster. Here are some of the notable benefits provided by the right project portfolio management software.
Better Alignment with Priorities: With PPM solutions, it becomes possible to get an in-depth view of all projects and programs. It becomes easier to make smarter decisions as they will be driven by data. Access to this kind of information also helps in aligning projects better with organizational goals and priorities.
Strong Execution: Any deviations between planned and actual work in budgeting and resourcing can pose a risk and, with these tools, you can minimize those instances proactively. Through real-time notifications, PPM tools help managers to make course adjustments and take other corrective measures to ensure strong execution.
Improved Resource Management: Again, the enhanced visibility into project details simplifies resource management considerably. Requirements can be mapped quickly to resource availability. Overallocation can be eliminated as managers can get every resource’s tasks at a glance.
Real-Time Analytics and Reporting: Modern PPM software comes with AI-based capabilities which can perform real-time analysis of incoming data to deliver timely reports to all stakeholders. They have the functionality to enable better portfolio budgeting and ROI forecasting, all of which help to better manage project portfolios.
Why Choose Polaris for Project Portfolio Management?
Considering the complexity and the wide range of data involved in PPM processes, it is no wonder that managers look for the right project portfolio management tools to help them out. As the world’s first self-driving PPM tool, Polaris can definitely do that and more. Here is how project portfolio managers can leverage Polaris for success.
Automate Project Initiation: Polaris can automatically create projects from potential opportunities that are nearing closure in CRM tools. This allows managers the opportunity to proactively gather all required information and resources to kick off the project smoothly.
Leverage Historic Data: Managers can leverage historic project data to develop accurate project timelines and even resource requirements for future projects. Historical information can also be leveraged to help develop profitable bids and to determine which projects will be profitable, a key task in PPM.
SmartBeats: SmartBeats harvests data from users and systems to gain real-time visibility into work progress, completion estimates and more. This can help managers quickly identify and re-prioritize tasks for maximum productivity.
SmartMatch: Polaris also supports resource management with SmartMatch, an intelligent resource recommendation engine. With SmartMatch, Polaris identifies the ideal resources for any task based on skills, availability, location and other details, ensuring managers have the right person for the job every time.
Mission Control: The MissionControl dashboard provides an advanced view of the complete picture across the entire organization and project portfolio. It is not just high level data. Managers can easily drill down to view data at a granular level to make proactive decisions.
Project Pulse: With Polaris, you can run projects on auto-pilot as it gives you real-time visibility into all project metrics at a glance including hours and finances. Actuals to estimates can be tracked live, as the project progresses to allow for better understanding of project progress. The real-time data also provides an early warning system to allow for proactive decision making to solve problems before they are.
Streamline PPM with Polaris
Polaris was designed to meet the unique challenges that come with managing multiple projects simultaneously. Its capabilities, powered by artificial intelligence, helps project portfolio managers simplify much of their day-to-day tasks.
Make the best decision for your project portfolio management process by choosing Polaris PPM. Talk to our experts to learn more.