When Do I Need a Project Portfolio Management Solution

What Is a Project Portfolio?

A project portfolio is a collection of projects, programs and processes that are managed together and optimized for the financial and strategic goals of an organization. A portfolio can be managed at either the functional or the organizational level.

Unlike a project, which has a defined end goal or deliverable, a portfolio represents a more strategic planning commitment to continuously optimizing the allocation, prioritization and scheduling of resources across many projects.

What Is Project Portfolio Management? (PPM)

Project portfolio management (PPM) is the analysis and optimization of the costs, resources, technologies and processes for all the projects and programs within a portfolio. Project portfolio management is typically carried out by portfolio managers or a project management office (PMO).

The key focus of PPM is to make sure that all the outcomes in the portfolio support the strategic goals and business objectives of the organization. The portfolio manager or PMO does this through business analysis, reviewing budgets and forecasting while minimizing risk and managing stakeholder expectations.

Project portfolio management tools (PPM tools) are often used to collect and analyze that data to ensure that their project portfolio is aligned with the overall strategic planning and goals of the organization.

Project Portfolio Management vs Project Management

In the hierarchy of business management, project portfolio management is the link between project management, which we will define briefly below, and enterprise management, which deals with the overriding vision, mission and strategic planning of the organization.

To understand where project portfolio management and project management differ, we must first define each and explore the areas where they diverge.

Project management is, quite simply, the management of a project. A project is a temporary endeavor that results in a product or service. It has a beginning and an end. Project goals are defined, and tasks are broken down into a schedule. Cost and budgets are set; resources are assigned, and stakeholders are reported to.

Project portfolio management, on the other hand, is a higher level approach that orchestrates, prioritizes and analyzes the potential value of many projects and programs in a portfolio to manage them simultaneously and optimize resource management. The goal of the portfolio management process is to manage and leverage the life cycle of investments, initiatives, programs, projects and outcomes to best reach the overall goals and objectives of an organization. Therefore, project management is a subset of project portfolio management. It leads to the ultimate objective, which is meeting the strategic goals of the organization.

The Project Portfolio Management Process

There are five basic project portfolio management steps:

1. Define Business Objectives

Before you start thinking about portfolio management, you'll need to understand your organization's business objectives and strategic goals. The idea is that your project portfolio aligns with the strategic planning of your organization, so you'll need to check if its financial objectives and customer value are good enough for your organization.

As a project portfolio manager you'll need to reach an agreement about the strategic goals of the project portfolio with stakeholders, and then proceed to establish valuation criteria for project selection.

2. Collect Project Ideas for Your Portfolio

Once you've defined your portfolio's strategic goals it's time to start building it. To do so, you'll need to start collecting projects. Those could be in-progress projects or project ideas that are similar enough to be managed simultaneously. Gather project management data and prepare the valuation criteria to choose the best.

3. Select the Best Projects for Your Portfolio

To determine which are your best projects for your portfolio, you'll need to do a cost benefit analysis and use your valuation criteria. This valuation criteria will measure the amount of value that each project brings into the portfolio.

There are a variety of aspects that can go into the project selection scoring criteria, such as the payback period, net present value, or risk level.

4. Validate Project Portfolio Feasibility

Now that you've chosen the projects that are the best fit for your portfolio, it's time to do a feasibility study that takes into account all the financial risks, capacity planning and resource management constraints.

5. Execute and Manage your Project Portfolio

Now you'll need to coordinate the execution of the projects and programs in your portfolio simultaneously by working with project and program managers.

ProjectManager's portfolio road map is one of its many PPM tools.

What Does a Project Portfolio Manager Do?

Project portfolio managers oversee the management of the project portfolio which includes approving or rejecting project and program ideas. They are responsible for getting a return on investment and meeting the goals and objectives of their organization. The project portfolio manager can be tasked with managing one or more portfolios.

The job is done by working with various portfolio management tools, financial algorithms and models to help the project portfolio manager align the projects to strategic goals of the organization. They are further guided by a set of valuation criteria and standards that help them through the portfolio management process.

Project portfolio managers are often involved with the PMO, which also sets the processes and standards for the portfolio. The project portfolio manager and PMO can also provide direction on what project management methodologies are used, whether traditional waterfall or an agile framework, when managing the project.

5 Project Management Processes for PPM

Project portfolio management requires a balance of resources, time, skills, budgets, risk mitigation and running the projects in the portfolio frugally and expediently without sacrificing quality. Managers do this through the use of five key project management processes.

1. Change Management: Identifying and prioritizing change requests. These can be feature requests, business strategy, regulatory requirements, etc., based on business strategy, capacity planning, demand, financial and operational constraints.
2. Risk Management: Identifying risks in projects that make up the portfolio, and developing a risk management plan to mitigate uncertainty within the project portfolio.
3. Financial Management: Managing financial resources related to the projects in the portfolio and demonstrating financial results of the portfolio in relation to the organization's business goals and strategic objectives.
4. Pipeline Management: Ensuring project proposals are in the pipeline and using valuation criteria to determine if they're worth executing.
5. Resource Management: Efficiently and effectively using an organization's limited resources, from materials and equipment to people and financial resources.

Project Portfolio Management Software

Project portfolio management software is a tool that's designed to centralize the management and maintenance of a project management portfolio. With the increasingly large amount of data now associated with a single project, let alone a portfolio, the use of portfolio management software has become a necessity for project managers.

Portfolio managers and project management offices (PMOs) use portfolio management software to gather data, analyze information and use the results to better manage the portfolio and achieve the goals of their organization.
Typical PPM software offerings are also used for portfolio optimization to better achieve the financial goals of the organization. Managers or PMOs use portfolio management software to find complementary processes, methods and technologies that will help each project succeed and the portfolio flourish. Microsoft Project is one of the most commonly used project management software, but it has major drawbacks that make ProjectManager a better choice for project management, program management and portfolio management.

Desktop vs. Online Project Portfolio Management Software

Managing a portfolio is like keeping many plates spinning at once. To keep up, you need robust project portfolio management software. The question is, what kind should you go for?

In terms of features, desktop and online software applications, at this point, are on an even playing field. It depends on the product, of course; but for the most part, both offer similar PPM tools. The major differences are price, security and speed. For example, desktop portfolio management software tends to cost more and require a license for each team member to use. This can add up.

Pros of Desktop PPM Software

Security on a desktop, even one linked to an office intranet, is likely better than many online services. Performance for a cloud-based software depends on your internet connection, and if your service goes out you're out of luck. This, obviously, is not a concern for desktop apps.

Pros of Cloud-Based PPM Software

Online apps are monopolizing the project management sector, and for good reason; they excel at connectivity, collaboration and real-time data. So long as your team has an internet connection, they can use the tool—no matter where they are. This creates a platform where even distributed teams can work together anywhere and at any time. As teams update their status, you get live data that is more accurate and timely to help make effective decisions.

When Do I Need a Project Portfolio Management Solution

Source: https://www.projectmanager.com/project-portfolio-management

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