For the past ten years, companies, organizations and specialized businesses have been using Project Portfolio Management techniques and methodologies as part of their ever-growing strategy. Project Portfolio Management was never designed to profligate an organization’s mission and goal but to systematize the processes of your organization’s needs and wants, whether it’s in an organization’s need to collectively analyze a group of key characteristics and determinants as per strategic objective needs.
Project Portfolio Management has been a staple in many successful businesses, from your organization’s structural strategy and execution or the effective alignment of resources, both financial and human, all while working within limitations imposed by real-world factors, a client, a customer or simply due to priorities in your strategy’s objectives.
Project Portfolio Management is not like traditional project management that focuses solely on one particular project constricted by budgetary limitations, schedule and the scope of a project. Project Portfolio Management is a crucial modern-day discipline, a system for an organization’s success especially in multiple projects and in varying circumstances. In essence, Project Portfolio Management is a system about achieving success in multiple projects, all with defined timelines, scenarios, and markers in achieving each project’s strategic goals.
1. Project Portfolio Management: What Is It?
We all know that a company’s system is infused with a basic organizational structure with accompanying functions and a business goal. Projects are not organic or inherent to this system but are temporary activities conceived, attached to the main framework and set up to achieve a result in the short term, whether it is a product or a service, and which substantially contributes to achieving the business or organizational goal.
It is this temporary sphere, which now assumes prominence because of proven effectivity and has developed into a system. Project Portfolio Management, like a branch in a tall tree, is now grafted successfully into the business or organizational structure with its long term goal. Because of its proven credibility, Project Portfolio Management has likewise developed, as a field of study in the academe.
Project Portfolio Management is a system of processes which evaluates how ongoing or future projects in a company or in an organization, can be effectively managed, both policy-wise and in process, to achieve substantial returns, aligned to company or organizational goals. This process analyzes project purpose and benefits. The process also includes methods and technologies used by project managers.
Project Portfolio Management Foundation:
- Mitigation Framework: Provide a framework to not only minimize risk but solve organizational deficiencies and issues.
- Managerial Blueprint: Provide managers a blueprint of current resources, budget restrictions and allocation, scheduling and the necessary skillset to accomplish multitudinous objectives and tasks.
- Integrated Overview: Provide an integrated overview meaning a battle-map of simultaneous projects, their status, their position, their strengths, needs, and weaknesses. An integrated overview helps communicate to your project manager on how their team should choose the most viable approach to achieve strategic results.
- Visual Imprint: Provide project manager the capabilities needed to manage the time, resources, skills, and budgets necessary to accomplish all interrelated programs found in your project’s objective timeline, it serves to centralize visibility to help planning and scheduling teams to identify the fastest, cheapest, and/or most suitable approach to accomplishing a project.
2. Objectives of the Project Portfolio Management
Companies and organizations inveterately aim to succeed in their goals, as they conceive, map out and align projects and programs with the company or organizational objective insight, both in the medium term and in the long term perspective.
Project Portfolio Management sees to it that the combination of human capital, financial base, information, technology, time which serve as the resource base of projects is maximized to deliver value and achieve the strategic goal of companies and organizations. This resource combination is also taken within the context of external market conditions and contingencies. This is not done in isolation from the fundamental business or organizational marketing thrust.
Here are three key objectives of the Project Portfolio Management:
- Maximum Value: effective allocation of resources to achieve and offer the greatest value of a project.
- Strategic Alignment: ensures that all efforts (people, processes) and resources are aligned to the project’s overall business strategy.
- Systematic Balance ensures that all complications, issues, personnel, problems, and risks are given the appropriate affirmative-response to ensure that the project is moving towards the correct strategic pathway.
3. Project Portfolio Management Processes
The strategy, the plan of action, and implementation of the projects are necessarily aligned with the strategic goal of the company or organization and its operations. Hence, the projects address a common market in the long term, even while as a tactical move, each project may address a part of the demand or an existing market problem. It is, therefore, important to identify the strategic goal and state how the projects will be a part of the overall picture and as with any system, there are certain exact steps that you undertake as someone in-charge of project portfolio management. These including the following.
Scheduling of Projects:
The process, on the whole, consists of a plan and strategy which are mapped out, towards implementation and achievement of results. The key factor of optimization underlies the selection and scheduling of projects, the allocation of resources, budget, and other components. Another factor may well be prioritizing projects based on Maslow’s higher key of needs. This principle is what is also used in hospitals, basically, it goes from the direst cases to the least dire cases. Of course, we are talking in terms of value.
Placement of Resources:
The placement of resources is the ratio of available resources to be allocated to project scale and importance. Weigh the importance of each project, prioritize the major undertakings over the minor ones with regard to resource allocation. Monitor the speed and efficacy of execution. Some projects may need attending to, in view of exigencies.
Budget Allocations:
Also, keeping track of simultaneous projects may lead to the realization of redundancy of efforts, and wastage of time, human resources, of cost. Monitoring of elements such as time, cost, direction, is needed – ensure an aerial view to scan the movement, performance, and effects of the project in the market scenario.
A constant evaluation may likewise lead to a substantial change in direction, for instance, with new developments or contingencies. Adjustment in project features may be needed due to the rise of exigencies.
Information Reporting:
The last factor is information, the tracking of project status information to be made available to decision-makers and to stakeholders. With the undertaking of simultaneous projects, there is a need to monitor performance, to ensure that efforts do not fall off the track and ensure sight of the objective of the company or organization.
4. Duties and Responsibilities of the Project Portfolio Manager
The Project Portfolio Manager supervises the performance level of projects. He or she closely coordinates with the core and staff who work in the implementation of the projects. There is regular monitoring of the progress of the project because the market is not static. Dynamic conditions may affect performance and needs may arise to necessitate adjustment of schedule, budget, even tactical moves. The continuing evaluation will be a means to assess what each particular phase of the project has achieved in terms of the mapped out plan and possible market opportunities that may enhance results.
- Organization and Motivation of a Team: a good team leader will never overwhelm their team with massively elaborated spreadsheets, overly detailed whiteboards, and long checklists. A good team leader will develop a no-nonsense, straightforward plan that stimulates and motivates a team to achieve their full potential. There’s no bureaucracy, the team leader leads his/her team down a path to their end goal(s).
- Time and Expectations Management: setting expectations and delivering on time is crucial to a client’s satisfaction hence a team needs clear guidelines from their team manager as to developing and maintaining a schedule of defined activities, action sequences that must be done and when must these actions be finished in order to achieve project success.
- Analysis of Risk Mitigation: the project portfolio manager must meticulously analyze all potential pitfalls and hurdles, to minimize their impact and develop countermeasures for such cases, even before a project has started.
- Planning of Resources and Activities: the project portfolio manager must map out an integral plan of utilization of human and technical resources and a coherent layout of the essential activities to increase proactive audience reach, clarify product or service profile to the market audience and cumulatively reach the level of the project goal
- Project Monitoring: tracks the performances of each stage of the project, making sure that there is a clear vision with high hopes on achieving the desired results and should there be a problem, a countermeasure has already been developed.
- Client Satisfaction: a key skill that a good manager has is the minimize uncertainty that is to avoid unwanted surprises and involves the client as reasonably possible.
- Documentation and Reporting: provides the client with a clear comprehensive report; documenting the project’s lifetime, dilemmas, issues, achievements, and recommendations for the project.
5. Benefits of Project Portfolio Management
Project Portfolio Management gives a more comprehensive overview of projects.
Before the onset of PPM, projects would pile up, at times, redundant as there was no mechanism to monitor and evaluate the status of the many ongoing projects. Managers at different levels of the organization came up with initiatives but lacked alignment with the strategic objectives of the company or organizations. One problem was the reliance on the same resources which led to problems on which projects to prioritize when resources would be lacking.
A Bottoms-Up Analysis Framework
Project Portfolio Management, with its multiple project frameworks, provides a more integrated as well as a broader database. The different projects and the regular track on performance based on human resource, capital, technology, can identify the essential factors which play in resource output of each project. This is a bottom-up framework, rooted on the ground of actual project activities. So, when compared to the top-down decision-making process in business companies and organizations, the Project Portfolio Management framework provides a hands-on, timely, more concrete, more reliable database toward maximizing performance and production output.
There is also a better, more reliable gauge on which resources are to be tapped for specific levels and phases in marketing or organizational work and how these can be used effectively to achieve the strategic objective. The mitigating and contributive factors to optimum scheduling of use of resources can be more easily identified and studied. This also improves the basis for strategic planning.
Involvement of Executives and Portfolio Managers
Because Executives in key levels are involved in the various projects or phases of projects, the result is more involvement and personal direction in specific areas of work. While Portfolio Managers have different positions within and across the companies, the Executives and Portfolio Managers have a common goal, that is – to harmonize the simultaneous projects with differing tactical goals with the strategic goals of the company. Also, there is an increase of collaboration with regards design of criteria for decisions and methodologies for tracking end results of project aims. Most of all, there is a consolidation of management commitment to fully harness the competencies in the multiple projects arena.
Increased Rate of Project Success
Surveys of organizations that applied Project Portfolio Management were undertaken by the Project Management Institute (PMI). These showed that with PPM tools, these organizations were able to increase their potential for project success by 30% and that number of project failures went down by 60%. This high increase in performance rating is enabled because of the tools provided by Project Portfolio Management, with a centralized data system. This helps the team to deal effectively with negative factors, for instance, delays in schedule, no clear layout of requirements, misallocated resources, lack of appropriate response to issues that are not anticipated or limitations on technical knowhow. It removes inefficiencies, such as avoiding overspending, unnecessary bureaucracy, etc., thus increasing the project’s value in success rate.
Clearly Defined Milestones
In each stage of the project, there are milestones that indicate parameters of achievement. Essentially, they are the stepping stones that are guided tours of success. They are the testimonials of these efforts.
Different Types of Projects:
- Expansion Projects: are often long-term projects but sometimes, they last from two months, a quarter of a year
- R & D Projects: are often seasonal projects that have a very specific scenario and outcome, based on a targeted market
- Influential Projects: are projects that strive to continue to improve the customer value
6. Challenges of Project Portfolio Management
Prime examples of challenges that often occur in Project Portfolio Management are:
- Lack of clarity in investment strategies – Lack of understanding of the integral needs of specific units in the business or organizational structure and their role in aligning their work results with the strategic objective of the business or organization can lead to failure in prioritizing certain projects.
- Inability to breakdown the project into a manageable scale – Sometimes, the scale of the project needs to be brought down to an extent, that is comprehensible and manageable to the team. So there is a need to analyze the phases of the project and work out specific tasks to be assigned to the team
- No control of changes – Sometimes there are new requests which are not expected and other features that overstretch resources. This negatively affects the efforts in accomplishing the needed tasks and following the direction of the project. This hampers the road to achieve project goals.
- Priorities are not clear – Because of the many simultaneous tasks to be attended to, the team staff who are assigned to more than one project sometimes are not properly informed by the program manager on what tasks to prioritize and when changes affect these priorities.
- Lack of appropriate countermeasures to face inevitable complexities – Look, the reality of the market is unpredictable and that those unexpected scenarios will emerge with stringent conditions. As per experience will show us, there are certain scenarios that surface and take hold of the situation.
- Lack of accountability – is one of the most common problems that you will encounter. And Project Portfolio Management ultimately stems down from a lack of leadership as we mentioned above. True leadership means taking responsibility for providing clear, defined expectations and the motivation that must come with it.
- Delay in action is an uncontrollable factor. This is often due to a client taking way too long to approve the next step, hence, causing unnecessary complications in the process. There is also the factor of the delay in the release of funds
7. Practices of Industry on Project Portfolio Management
The following companies differ in their application of Project Portfolio Management. The case studies below were undertaken by the Project Portfolio Management Institute. The companies are from different categories of the industry sector. Here are some cases that show concrete data on the Project Portfolio Management
Case 1: A financial institution with services on insurance, banking, asset management services
- The number of managers is equal to the number of projects
- Projects in a portfolio in a year – 180 projects
- Duration of projects -: from 9 months to 3 years
- Budget – 300,000 to 8 million Euros
- Project Portfolio Management Team size – 5 to 150
- Project Type – Banking
- PPM set up for 12 years; 2009 – formally organized
- Purpose of Project Portfolio Management was to address the needs arising from a merger of two institutions. And consequent restructure of the organizations
Case 2: A Mobile Telecommunications and Landline Provider
- The same manager handles many simultaneous projects
- Number of project managers – 130 managers
- Projects in a portfolio in a year – 250 projects
- Duration of projects – from 2 months to 2 years
- Budget – 5 million Euros
- Project Portfolio Management Team size – 20
- Project Type – IT
- PPM set up for many years
- Purpose of Project Portfolio Management was to consolidate the foundations of correct management of IT projects
Case 3: An Electronics Producer, a multinational company, doing research and generation of innovative technologies
- Number of project managers – 340 managers
- Projects in a portfolio in a year – 380 projects
- Duration of projects – an average of 3 years
- Budget – 450,000 Euros
- Project Portfolio Management Team size – 2
- Project Type – Research
- PPM set up in the 1990s
- Purpose of Project Portfolio Management was to manage the environment of multi-stakeholders. Many participants in projects had different, sometimes conflicting interests. PPM paved the way to reconcile these differences.
Case 4: A Seller of Software and Equipment for Control of Climate and Solutions to this, a private company
- Number of project managers – 10 managers
- Projects in a portfolio in a year – 60 projects
- Duration of projects – an average of 1 year
- Budget – 600,000 Euros
- Project Portfolio Management Team size – 5- 10
- The entire business activity plan is done in projects tackling environmental issues
- Project Type – Research
- PPM set up 2 years ago
- Purpose of Project Portfolio Management was in answer to the implementation of the corporate strategy. This meant that projects, be properly prioritized. And budget and resource planning are to be undertaken, at optimal levels.
Conclusion
“There is strength in numbers.”
Let this truism be a byword for users of the Project Portfolio Management
The Project Portfolio Management offers increased collaborative work among Senior Executives and Portfolio Managers which lead to more coherent and workable marketing designs for the multiple project achievement results.
Project Portfolio Management is an integrated system that one must introduce in a pro-active manner. We have surely crossed the threshold of organizational project complexity. Challenges of varied dimensions and of an ever-expanding scope await the executives and managers of business entities and organizations, which seek to reach still unmeasured heights of performance. The ultimate decision to adopt Project Portfolio Management is the next step.
If you are looking for the right combination of compounded strategic executions and application tactics, then Project Portfolio Management is the discipline for you. If you are looking for a challenge, this is the best opportunity to master this integrated discipline.
