Your business is growing, your team is busy, and your projects are starting to pile up. It’s the perfect time to start learning how to manage a project portfolio effectively. Or maybe you’re not new to the world of portfolio management but are looking to beef up your skill set and bring something new to the table. Regardless of where you stand, learning to manage a project portfolio is invaluable. Let’s explore some of the basics you need to know to plan, create, and oversee a portfolio that serves your organization well.
The Basics: Defining Project Portfolio Management
Project portfolio management (PPM) is a discipline that focuses on the management of groups of interconnected and interdependent projects. PPM bridges the gap between execution and strategy. In doing so, it enables an enterprise to make the most out of its project activity.
You don’t need to use PPM methodologies or practices to manage a project portfolio, though. Likewise, managing a portfolio of projects doesn’t necessarily mean you’re engaging in PPM. Portfolio management is only one piece of the puzzle. If you’re new to PPM, it might help to first become familiar with what it takes to oversee a single portfolio. From there, diving deep into all that PPM encompasses – risk assessment, resource allocation, collaborative work management, etc. – becomes much easier.
How to Manage a Project Portfolio in 4 Easy Steps
So, what does managing an individual project portfolio look like? Here’s a step-by-step guide to managing portfolios efficiently and successfully.
1. Get to understand the strategies and map out projects.
Managing a project portfolio all starts with an information roundup. You need to gain a clear understanding of your organization’s goals, objectives, and strategies.
Read the firm’s vision and mission statements carefully, gain access to documentation detailing key strategic plans, and connect with high-level decision-makers to make sure you fully understand the definition of success at the enterprise level.
Then, gather key data about all active and potential projects so you can determine which are effectively supporting those strategic objectives (and to what extent). Some factors you should consider when you look at each project include its:
- Purpose
- Scope
- Expected strategic benefits
- Potential return on investment (ROI)
- Risk level
- Resource needs, including critical and non-critical resources
- Planning quality
2. Assess the portfolio and check strategy alignment.
After evaluating each project in your portfolio individually, you can group them into general categories — by ROI, chances of success, value, etc. – that make sense based on your business goals. This will help you understand which projects to merge for the sake of efficiency, move to a different portfolio, or terminate altogether.
This will also enable you to evaluate the overall health and risk levels of your project portfolio and to perform an alignment analysis. The goal here is to understand whether your critical resources will go to the highest-value-added projects and ensure that the projects an organization launches align with its strategic orientations. Likewise, you should aim to make sure that the portfolio and its projects as a whole make sense from business and economic perspectives.
You should also consider the balance at the portfolio level. Taking into account the full spectrum of possible project risk — including, but not limited to, financial risk, technology risk, and market risk — try to assess the overall exposure of your portfolio. Evaluate the mix of projects in the portfolio by type, time horizon, and probability of achieving return.
3. Manage and drive alignment.
Now that you have a clear view of your portfolio make-up and status, it’s time to make and implement decisions. Based on your findings, reallocate budgets and resources, reprioritize, reorganize or reschedule projects in order to maximize alignment and meet internal requirements. Keep your target risk level in mind as you do so.
At this stage, you should be prepared to answer the inevitable questions from team members, workers, and decision makers across the business. They may wonder things like:
- What is PPM? Why is it necessary?
- What is the rationale behind the changes you are making?
- How much will this cost the business?
- How will this impact the rest of the team?
To assist you in the change management effort, it helps to be supported by a dedicated project portfolio management team, but also by senior leaders willing to act as champions and possibly as a governance body. Your team should also include technical experts to aid in the implementation of your digital PPM system.
4. Evolve and fine-tune.
Lastly, you will probably need to adjust your approach and process over time. Implementing project portfolio management in a company is all but simple.
Because of the sheer number of variables to be taken into account and coordinated, the first project portfolio you manage may not be perfect. For that reason, you should stand prepared to adapt and adjust your portfolio management process in real-time based on stakeholder feedback and performance..
Best Practices for Managing a Project Portfolio
Getting started with portfolio management can be tricky. While the potential benefits are definitely worth the effort, it comes with its shares of challenges. Make sure the practices and routines you develop are sustainable and set you up for long-term success by following these portfolio management best practices.
Always Consider Risks
Identifying the risks that might derail your projects is of key importance. Qualify and quantify the various types of risk, and come up with clear mitigation and remediation strategies.
Don’t Shy Away From Ending Projects
Many project and portfolio leaders feel disinclined to terminate active projects. However, halting or canceling projects that no longer make sense against the strategy of the business definitely is a healthy practice.
Ensure Great Data Visibility
Quality data is at the foundation of sound decision making. Having access to accurate and reliable data is an absolute prerequisite to the success of your project portfolio management initiative.
Use the Right Tools
In order to manage the complexity of the portfolio management process, you need the proper equipment. In this case, that means finding the right digital tools – like Sciforma’s software solutions – that will help you analyze, store, and utilize information about each project.
As you begin to piece together a strategic project portfolio, you’ll need to be able to fall back on accurate data that supports your decisions. A PPM software tool like Sciforma’s allows you to view and manage your team’s resources, time, and project activity all in one place. Don’t leave your portfolio management decisions to chance – track project statuses, model project trajectories, and assess potential risks in real-time.
