The City of Roseville’s Electric and Environmental Utilities departments all had their own strategic plans for their units. But they shared services staff from the utility business systems team. That led to numerous challenges: competing priorities, limited insight into resource allocation, no data-backed means to justify hiring new employees, and no way to demonstrate the impact of the departments’ combined efforts.
The solution? Project portfolio management.
Roseville established a Utility Business Systems team and selected Prism PPM to equip the new team with the project management and resource management tools and reporting capabilities. This created greater transparency, introduced standardized project plans, and ensured a data-driven approach to PPM.
It’s clear PPM matters. “Good portfolio management increases business value by aligning projects with an organization’s strategic direction, making the best use of limited resources, and building synergies between projects,” according to the Project Management Institute (PMI). But what is project portfolio management?
In this article, we will explore the PPM basics, why it matters, and how you can hone your approach for a stronger organization.
What Is Project Portfolio Management (PPM)?: A PPM Definition
You’re struggling to align multiple projects with organizational strategy. There’s a lack of visibility into portfolio-wide performance. Prioritizing is becoming increasingly difficult. Project portfolio management helps you address these and other challenges.
Project portfolio management is the process of choosing and prioritizing projects that the organization undertakes in order to achieve maximum value and ROI. A portfolio includes many projects that the PMO or portfolio manager selects to align with the company’s mission and goals.
It involves accounting for the entirety of an organization’s projects, centralizing them so they are not siloed by individual departments or units. It means selecting and prioritizing projects that align with and further organizational goals. Essentially, it connects strategy to execution.
PPM is most suitable for organizations that grapple with numerous projects and want to ensure these initiatives are delivering value. It involves project intake, the identification and evaluation of prospective projects. It also includes monitoring and assessing how these projects are progressing and offering value to the organization.
Organizations must be flexible, scaling and evolving in response to changes in their environments, according to research.
By embracing flexibility and ensuring that you are taking on the right projects at the best time, you will be fully prepared to take on obstacles—including projects or challenges that may seem to come out of left field. A strong PPM approach allows you to determine which projects will have the greatest ROI for your overall organization.
PPM vs Project Management vs Program Management
PPM is sometimes confused with project management. But the terms are actually very different.
When you’re thinking about PPM vs project management, visualize a puzzle with many different pieces. Each piece represents a discrete project, while the entire puzzle is the project portfolio. Projects are temporary, while portfolios are longer-term.
There are also programs, which represent a middle ground between projects and portfolios. Programs are typically groups of related or interlinked projects. There may be several programs within a portfolio. Continuing with the puzzle metaphor, the program might be a particular section. This group of projects is managed as a unit.
Bear in mind that projects, programs, and portfolios can come in all shapes and sizes. These terms describe how they fit into and support one another. While an organization may have many temporary projects and programs, it could have one or more portfolios, which are long-term.
What Are the Key Components of Effective PPM?
All project portfolios begin with several key components. The components of PPM include:
Portfolio Plan
Your plan outlines the goals, portfolio elements, timelines, key deliverables, stakeholders, and critical resources. It guides the PPM process, although it’s essential to remain agile because priorities and needs may shift. You will need to account for changing timelines, scope creep, and other unexpected occurrences.
Project Prioritization
Establish criteria for prioritization and evaluation, ensuring alignment with company goals. This relates to strategic alignment, or confirming that each project is oriented to the company vision. You want to rank projects using these criteria to determine which ones will deliver the greatest value to the organization. It’s also important to achieve a balance within your portfolio and ensure projects appropriately complement one another.
Resource Management
Resource management goes hand in hand with project prioritization. You must allocate your resources—people, budget, and time, for example—to the projects that are the highest priority. When mapping out your resources, consider where they are best directed.
PPM KPIs and Metrics
In order to assess projects’ potential value, you should establish KPIs and metrics about what you want to deliver and how you will track their progress. Creating strong KPIs upfront enables you to gain visibility into your project and portfolio health.
PPM Software
PPM software centralizes your efforts and ensures visibility into your processes. It also delivers valuable data and analytics, helping you make informed decisions. Additionally, it aids portfolio management, allowing you to monitor your projects, tasks, and overarching efforts.
Tools like Prism PPM centralize your project portfolio management strategy and efforts. They allow you to track and measure progress, as well as easily allocate resources and manage the various pieces of your puzzle.
Approach/Methodology
Select the approach that is right for your team and portfolio. For example, you may choose an agile approach to maximize flexibility. In any case, make sure your methodology is standardized across the PMO and organization.
Monitoring
You will need to continue to monitor your portfolio, even as individual projects are completed. There will always be new projects, and your efforts to align and balance the mix of projects must persist. That’s how you can ensure your holistic portfolio will keep delivering maximum value.
Who Typically Owns and Manages the Portfolio?
While various departments and teams within your organization may be in charge of discrete projects, it is typically the project management office (PMO) that owns and manages entire project portfolios.
The PMO centralizes all the PPM efforts at the enterprise level, ensuring that all projects are funneled through the office and go through the same assessment process. The portfolio managers evaluate not only the project’s individual feasibility but also how it will contribute to the larger organization’s success and goals. Essentially, they contextualize each potential project.
The PMO also tracks and manages the project portfolio, evaluating how each project is continuing to contribute to the organization and how resources should be adjusted or rearranged to maximize portfolio performance and value.
If the organization doesn’t have a PMO, executives or leaders may lead the portfolios.
What Are the Benefits of Project Portfolio Management?
PPM offers an abundance of advantages to PMOs and larger organizations:
Process Standardization
An important part of project portfolio management is standardizing project intake and assessment. You are less likely to encounter conflicts when you can present a standardized and objective list of evaluation criteria. This also contributes to greater transparency for stakeholders and everyone involved.
Resource Optimization
PPM ensures that you are maximizing your resources, allocating them to the strongest and most impactful projects. It also allows you to have the right mix of projects. That helps you better allocate resources and more efficiently share them among your projects, preventing over or under-utilization, reducing waste, and eliminating overexpenditure.
Risk Management
Risks can be internal or external. They can affect individual projects or multiple.
Say, for example, you’re facing budget cuts. This is where your prioritization efforts as part of your overall PPM strategy allows you to take a step back and determine which projects can be sidelined in favor of those that will best serve your organization. You’ll be more able to effectively manage risks and reduce instances of project failures.
Data-Driven Decision-Making
Through PPM software, you will collect and analyze an enormous amount of data. This information informs your decision-making processes, giving you greater insight into project success rates. It also informs project metrics, such as on-time delivery and ROI. Stakeholders and team members will have greater visibility into the goings-on at your organization, too.
Alignment with Executives
One frequent pain point PMOs experience is a lack of executive buy-in and alignment. Leadership may have trouble seeing how discrete projects connect with their broader vision. But PPM helps PMOs and executives align projects with strategy, helping them see how initiatives deliver value and further their own success.
How Does PPM Software Support and Enable the Discipline?
Project portfolio management software and systems are linked to PPM success. Customizable tools like Prism PPM enhance your workflows, allowing you to centralize your processes and workflows, get real-time data and feedback to inform your decisions, and evaluate progress.
You will also get a clearer view of how you are utilizing your resources and how your projects are complementing and furthering your organizational goals. You’ll be better equipped to evaluate priorities and get a big-picture view of your portfolio.
Curious to see how we can help solidify your project portfolio management strategy and execution? Book a 30-minute consult or a 60-minute demo today to find out.