Project Portfolio Management (PPM) is a critical aspect of project management automation that involves the centralized management of processes, methods, and technologies used by project managers and project management offices (PMOs) to analyze and collectively manage current or proposed projects based on numerous key characteristics. The objective of PPM is to determine the optimal mix and sequencing of proposed projects to best achieve the organization's overall goals.
PPM is not about running projects, but rather about selecting which projects to execute and how to fund them. It's about investing in projects and ensuring that these investments align with the organization's strategic goals and objectives. PPM can be a powerful tool to ensure that an organization is investing in projects that offer the highest return on investment and align with its strategic objectives.
Understanding Project Portfolio Management
Project Portfolio Management is often compared to managing an investment portfolio, where the goal is to maximize value while managing risk. Similarly, in PPM, the aim is to balance the organization's investment across various projects to maximize returns and minimize risks. This involves making decisions about project priorities and resource allocation based on strategies and policies.
PPM is not just about selecting the right projects, but also about managing the project portfolio to ensure that the organization is able to achieve its strategic objectives. It involves ongoing review and realignment of the project portfolio, which includes adding, removing, starting, stopping, and reprioritizing projects as necessary.
Key Components of Project Portfolio Management
The key components of PPM include the project inventory, the project management methodology, the project governance structure, and the project portfolio management software. The project inventory includes all projects that are currently underway, proposed, or completed. The project management methodology provides the framework for how projects are run, while the project governance structure defines who makes project decisions.
The project portfolio management software is used to collect and analyze project data, and to support decision-making. It provides the tools necessary to manage the project inventory, apply the project management methodology, enforce the project governance structure, and analyze project portfolio data.
Benefits of Project Portfolio Management
PPM provides a number of benefits to organizations. It helps organizations make informed decisions about which projects to execute based on their strategic objectives and resource availability. It also helps organizations manage risks by providing a framework for identifying, assessing, and managing project risks.
PPM also improves project success rates by ensuring that projects are well-aligned with the organization's strategic objectives, and that they have the necessary resources. Furthermore, it increases project visibility and accountability by providing a comprehensive view of all projects and their status.
Project Portfolio Management Process
The PPM process typically involves five steps: Identify, Categorize, Evaluate, Select, and Manage. The Identify step involves identifying potential projects based on the organization's strategic objectives. The Categorize step involves categorizing the potential projects based on various criteria such as strategic importance, risk, return on investment, etc.
The Evaluate step involves evaluating the potential projects based on the categorization criteria. The Select step involves selecting the projects to be executed based on the evaluation. The Manage step involves managing the selected projects and the overall project portfolio.
Identify
The Identify step is the first step in the PPM process. It involves identifying potential projects that could help the organization achieve its strategic objectives. This could involve brainstorming sessions, strategic planning sessions, suggestion boxes, etc. The goal is to generate a list of potential projects that could be executed.
Once the potential projects have been identified, they are documented in a project charter or a project initiation document. This document includes the project's objectives, scope, deliverables, stakeholders, estimated costs, estimated benefits, and potential risks.
Categorize
The Categorize step involves categorizing the potential projects based on various criteria. This could include strategic importance, risk, return on investment, resource requirements, etc. The goal is to group similar projects together so that they can be evaluated and selected in a systematic way.
The categorization criteria are typically defined by the organization's strategic objectives and resource availability. For example, if the organization's strategic objective is to increase market share, then projects that could potentially increase market share would be given a higher strategic importance score.
Evaluate
The Evaluate step involves evaluating the potential projects based on the categorization criteria. This could involve a detailed analysis of each project's estimated costs, estimated benefits, potential risks, resource requirements, etc. The goal is to determine the potential value and feasibility of each project.
The evaluation process typically involves a variety of tools and techniques such as cost-benefit analysis, risk assessment, resource allocation models, etc. The results of the evaluation are typically documented in a project business case or a project feasibility study.
Select
The Select step involves selecting the projects to be executed based on the evaluation. This involves making decisions about which projects to start, which projects to stop, which projects to postpone, etc. The goal is to select the projects that will provide the greatest value to the organization and that are feasible given the organization's resource availability.
The selection process typically involves a variety of decision-making tools and techniques such as decision matrices, decision trees, portfolio optimization models, etc. The results of the selection process are typically documented in a project portfolio roadmap or a project portfolio plan.
Manage
The Manage step involves managing the selected projects and the overall project portfolio. This involves tracking the progress of each project, monitoring the performance of the project portfolio, making adjustments as necessary, etc. The goal is to ensure that the projects are executed successfully and that the project portfolio is achieving its objectives.
The management process typically involves a variety of tools and techniques such as project management software, project portfolio management software, project performance dashboards, etc. The results of the management process are typically documented in project status reports, project portfolio performance reports, etc.
Project Portfolio Management Software
Project Portfolio Management software is a tool that helps organizations manage their project portfolio. It provides features for project inventory management, project categorization, project evaluation, project selection, and project portfolio management. It also provides features for project management such as project planning, project scheduling, resource management, risk management, etc.
PPM software provides a centralized platform for managing all aspects of the project portfolio. It provides visibility into all projects, facilitates decision-making, improves project success rates, and increases project accountability. It also helps organizations align their project investments with their strategic objectives, and manage project risks.
Key Features of Project Portfolio Management Software
PPM software typically includes a variety of features to support the PPM process. These may include project inventory management features to manage the list of current, proposed, and completed projects; project categorization features to categorize projects based on various criteria; project evaluation features to evaluate projects based on the categorization criteria; project selection features to select the projects to be executed; and project portfolio management features to manage the selected projects and the overall project portfolio.
PPM software may also include project management features such as project planning features to create project plans; project scheduling features to schedule project tasks; resource management features to manage project resources; risk management features to identify, assess, and manage project risks; and project reporting features to generate project status reports, project portfolio performance reports, etc.
Benefits of Project Portfolio Management Software
PPM software provides a number of benefits to organizations. It provides a centralized platform for managing all aspects of the project portfolio, which improves visibility, facilitates decision-making, and increases accountability. It helps organizations align their project investments with their strategic objectives, which improves project success rates. It also provides tools for managing project risks, which reduces the likelihood of project failure.
PPM software also improves efficiency by automating many of the tasks involved in the PPM process. This reduces the time and effort required to manage the project portfolio, and allows the organization to focus more on executing projects and achieving its strategic objectives. Furthermore, PPM software provides a repository for project data, which improves data accuracy and consistency, and supports data-driven decision-making.
Conclusion
Project Portfolio Management is a critical aspect of project management automation that helps organizations align their project investments with their strategic objectives, manage project risks, and improve project success rates. It involves a systematic process for identifying, categorizing, evaluating, selecting, and managing projects based on their strategic importance, risk, return on investment, and resource requirements.
PPM software provides a centralized platform for managing all aspects of the project portfolio, and provides a variety of features to support the PPM process and project management. By leveraging PPM and PPM software, organizations can improve their ability to achieve their strategic objectives, maximize their return on project investments, and increase their project success rates.
