Every company oversees loads of projects, driving them towards goals. Selection and planning of these projects, along with execution, are some of the important tasks that need expert management. With the aim to maximize capital and efficiently use the available variety of resources, along with management of all the projects and programs, Project Portfolio Management becomes a must-do endeavor. Companies aiming to achieve the above-mentioned objectives need to understand their significance and act accordingly. Review the article to grasp each concept concerning Project Portfolio Management or PPM.  

What Is a Project Portfolio?

A project portfolio comprises projects, proposals and plans to achieve an organization's tactical and economical objectives. The project portfolio requires well-defined planning, organization and deployment of workloads. 

What Is Project Portfolio Management?

Project Portfolio Management is performed under the supervision of Portfolio Managers or the Project Management Office (PMO). It involves assessing and evaluating the financial, technical, operational and material resources associated with the project. 

The management is mainly focused on the results that fit the planned aim and purpose of the company. To achieve it, the PMO performs thorough organizational research and analysis of financial structure. Additionally, they work to reduce the risk and manage collaborators. 

The data collection and analysis are performed via Project Portfolio Management Tools to ensure that planning aligns with the goal. For instance, several tools assist in project portfolio management by providing a user-specific dashboard. It lets you track and manage the projects and segregate the work among employees free of cost. 

Project Portfolio Management vs Project Management

Project portfolio management is the connecting link between enterprise and project management. Enterprise management deals with the company's long-term planning and intended objectives and results. Project management is temporary work which manages finite-period projects with defined tasks, prices, resources and goals.

Project portfolio management deals with multi-projects and active programs simultaneously. It looks into the analysis of their development, weak points, optimization and management. The ultimate ambition of Project portfolio management is the efficient operation of funding cycles, resources, and methods. It aims to meet the desired expectations. So, project management is a fragment of Project portfolio management, guiding it to the set resolutions. 

The Project Portfolio Management Process

The project portfolio management process aims to identify the returns, strategy, risks and efficiency to organize and choose projects with better returns. It selects the projects that lead the organization to its goal, increase its worth and do not lead to risks or temporary results. 

The five basic project portfolio management steps are as follows:

1. Define Business Objectives

Understand the definite result or goal of the organization. You should know the objectives and strategy that will lead to the goal. To align your project portfolio with strategic planning, you must check whether its financial objectives and customer value suit your organization.

The project's worth can be calculated using financial and scoring methods. The financial method is centered on monetary value and often misguides the managers. The scoring method anchors to projects bringing success based on technical feasibility, strategy, market position, competition and product development. 

The project valuation can be performed by combining the two methods or anyone based on suitability per the organization's goals.  

2. Collect Project Ideas for Your Portfolio

Make a directory of all the projects involving in-progress projects and new ideas. They can be obtained from regulatory requirements, initiatives from strategic planning, creative ideas from project managers, working professionals, and customer requests.

Then gather the data on each project and rate it based on the organization's criteria. The data must include maximum and high-cost resources as well as aspects of dependencies.

3. Select the Best Project for Your Portfolio

This step requires valuation criteria and cost-benefit analysis. Through portfolio maximization, find the best combination of projects that brings the most value to the company. A financial or scoring method will be used for estimation. The members' experiences and judgements are crucial at this point. They should be based on criteria, processes and gathered data. 

The tentative portfolio thus formed should be balanced for maximum profit. The balance can be done through the strategy-tactical range, distribution of time to completion or time to profit, risk versus reward and market or product-line segmentation. 

4. Validate Project Portfolio Feasibility

Choosing the project should be followed by a feasibility study and capacity planning. Feasibility study to determine financial risks and capacity planning for better work allotment. While creating the portfolio, sometimes resources in the form of skill sets might not be feasible, raising the need for validation. 

Portfolio feasibility can be assessed through budgetary constraints, expertise and skills of the executing organizations and inter-project dependencies. In addition, capacity planning helps increase productivity through the lag, lead and match strategy. 

5. Execute and Manage Your Project Portfolio

Commence the project and upload it to the project management system. The project will be directed by both the project manager and the portfolio manager. 

Both the managers gather the information and resolve the issues in addition to reallocation if required. They also perform modifications such as reconstruction and addition based on the project and organizational goals.

The Role of the Project Portfolio Manager

The project portfolio manager has to produce maximum benefit by clinging to strategy execution. They do so through direct and indirect responsibilities. 

Direct Responsibilities of the Project Portfolio Manager

  • Process owner: Being an expert in portfolio management, they ensure the correct process is followed. In addition, they are responsible for designing and developing a few or all of these competencies: ideation, work intake, phase-gate prioritization, portfolio optimization, portfolio planning and resource capacity planning. The manager should also focus on portfolio risk management and communication, portfolio reporting and analytics, value management, governance and project monitoring. The project portfolio manager should also analyze portfolio maturity and hold the staff responsible. 
  • Educator/coach: The manager should educate and coach portfolio management to staff members who may reduce the portfolio value.
  • Communicator: The Project Portfolio Manager is supposed to communicate about value, risk, performance, process and project and project portfolio-related decisions among the individuals in the organization. The manager should possess strong executive presence and soft skills depicting leadership qualities. 
  • Senior portfolio analyst: The manager must effectively analyze data and accurately represent it to the team and project management office. 

Indirect Responsibilities of a Project Portfolio Manager

The project portfolio manager should recommend improvement strategies, different priorities and optimization methods regarding the portfolio. It should be done through constant communication with the PMO director, the governance team and stakeholders. As the manager can't solely decide the mentioned points; hence, they come under indirect responsibilities. 

The Role of the Portfolio Analyst

Deemed a junior portfolio manager, a portfolio analyst collects data from various project teams. Further, they update and maintain the data in the PPM solution. Finally, they analyze and interpret the data for quality, plan future actions, and schedule the beginning of new projects.

The portfolio analyst will look into phase-gate and work intake processes to achieve the above tasks. They may also be assigned specific projects for the analysis. 

Portfolio Administrator

It is the more basic role associated with arranging meetings and notes. In addition, the duties involve collecting project status and supporting the functions of a Portfolio Analyst.

When Is Each Portfolio Management Role Needed?

Project Portfolio Manager

In large project portfolio (projects worth $50 to 100M+)

Project Portfolio Analyst

They develop new processes and act as a support to the manager or supervise in the absence of the manager in a small to a medium-sized portfolio. 

Project Portfolio Administrator

As a support to Portfolio Manager or analyst for medium to large-sized portfolio

PMO Director vs Portfolio Director

With decision-making authority, the Portfolio Director is the overall process operator. The post arises when there are multiple portfolio management roles. Also, the PMO director manages the Project Management Office and the Project Managers of different teams set up by the Portfolio Director. 

Common Portfolio Manager Fallacies

There are two myths associated with the portfolio manager. 

Myth 1: The portfolio manager is associated with choice, scheduling and strategic alignment of projects. It is impossible as the project portfolio manager can only make the decision partially. Rather, the portfolio governance team is responsible for mentioned functions. Therefore, portfolio managers only manage the processes. 

Myth 2: The candidate should act as a project and program manager before acting as a portfolio manager. The requirement of different skill sets makes the statement false. Project management is desirable but optional. 

Project and Program Management Roles

The project management roles are as follows:

Project Management-Related Roles

There are three main roles related to project management: Project Manager, Project Administrator, and Project Coordinator. 

Project Manager

The responsibility includes leading the project to help deliver a new product, service or other results. The candidate must be able to lead the team, have soft and technical skills, and can plan, manage and segregate the tasks. 

Project Coordinator

Like a junior project manager, the coordinator often deals with logistical and technical aspects. The duties include schedule updates, data entry, status tracking, coordinating meetings etc. The project coordinator is expected to lead smaller projects and coordinate with senior managers for larger, complex projects.

Project Administrator

The primary function is to oversee the operations for supporting the Project Management Office (PMO). The work is performed by scheduling governance meetings, status review meetings, and collecting status for project teams and other tasks with lesser risk. 

Program Management-Related Roles

There are two program management roles: Program Manager and Program Administrator. 

Program Manager

The program manager manages multiple projects with common objectives. The role is mainly tracking, coordinating, milestone delivery, and managing risks and issues for productive results. The person also needs to ease communication among different projects and stakeholders. 

Program Administrator

The program administrator or coordinator looks into the meetings, budget, status, reports, and more. They have to support the Program manager to facilitate the overall program management. 

5 Project Management Processes for PPM

Managers adopt the following five key management processes to make the best use of time, resources, budgets, skills, and risk mitigation without compromising quality. 

  • Change Management

The changes can be done based on capacity, operational and financial constraints, business strategy and demands. Regulatory requirements, feature requests and business strategies are generally changed.

  • Risk Management

The process evaluates the plan and projects for potential risks or recognizes the risks in ongoing projects. The risk management plan is developed to alleviate the problems. 

  • Financial Management

It involves the management of financial resources and the effectiveness of the organization's goals. 

  • Pipeline Management

The process aims to maintain the flow of project proposals and utilize valuation criteria to determine their worth. 

  • Resource Management

It involves efficiently utilizing each resource the company offers, including materials, workforce, equipment and finance. 

Project Portfolio Management Software

Project Portfolio Management Software is a tool to manage huge amounts of data associated with projects and portfolios. Portfolio managers and project management offices perform the maintenance and management using suitable project portfolio management software. The aim is to collect information, analyze it and further use the results for improvement. Mainly used to optimize financial goals, it is also used to search for methods, complementary processes, and technologies that can lead to the project's success. 

Desktop vs Online Project Portfolio Management Software

The desktop and online PPM tools offer the same features. However, the difference lies in speed, price and security. Additionally, desktop software needs a license for every individual, increasing the cost. 

Pros of Desktop PPM Software

Security is well maintained. The office intranet connection will also be secured in comparison to online tools. Independence on the internet saves time and effort.

Pros of Cloud-Based PPM Software

It provides the best connectivity, real-time data and collaboration among project members. This benefits accuracy and decision-making based on updated results. 

How to Use Portfolio Management Software

With numerous projects and hence portfolios, management becomes challenging. The software can be used for the same through the below-mentioned steps:

  • Set Goals and Objectives

The goals and objectives are crucial to understanding the direction of work and deciding the returns with minimizing risks. Therefore, label different portfolios and mention the goals and objectives concerning each project. Also, attach the related documents in the software for further ease. 

  • Group-related Project

Grouping of projects eases the reports' formation and analysis of costs and resources, thus saving time. It also facilitates the comparison of budget, status, resources etc. 

  • Create Milestones

A Gantt chart can be used for setting milestones to measure progress, which eventually increases the success rate and morale of members. 

  • Set Dependencies

The interrelated tasks may follow certain steps only after the results of another task are obtained. So mark the needful for the transparent understanding of dependent projects to not hamper production. 

  • View the Roadmap

The roadmap available in software focuses on the big picture and progress according to it. The timeline recognizes conflicts and resolves them to avoid hindrances to the objectives of the organization. 

  • Balance Resources

The workload on resources defines the efficiency of output. The software provides one window with all the employees and allocated work. Therefore, the excess burdens can be eased with the reallocation of work. 

  • Track Portfolio Progress

The software provides a dashboard with a graphical description of project metrics. It enables finding the issues, which can be real-time data on online tools. The project's progress can be tracked through mini-dashboards. The dashboard customization helps filter the projects and thus create specific reports. 

  • Analyze and Present Reports

This section measures the status and updates stakeholders along with the maximization of portfolio performance. The detailed analysis of progress and provision of filters ease data viewing as well. 

  • Collaborate With Stakeholders

Collaboration increases productivity at the team, department or executive level. Moreover, communication has become easy with the tag option, email notifications and customization.  

Project Portfolio Management Tools

Project Portfolio Management Tools are utilized to facilitate understanding the overall progress, ease of management and save time. Some of the numerous features of these tools are -

  • Real-time dashboards
  • Time tracking
  • Shared calendars
  • Dynamic reporting
  • Resource management
  • Online Gantt charts
  • Collaboration with remote teams
  • Formation of project groups

Project Portfolio Management Roles and Hierarchy

The hierarchy list of posts associated with management and execution of portfolio are:

Board Member 

They are in charge of governance and legal responsibilities. They also need to guide the employees on their skills and experience. 

Project Portfolio Manager

They have to manage the portfolio planning, execution and development and identify problems in achieving the aim.

Program Manager

Programs have related projects. So, the program manager coordinates the projects to reach the overall aim of the portfolio. 

Project Sponsor

The project sponsor holds power to make strategic decisions and link the project with business. Generally executive or manager performs this task. 

Project Owner

The project owner implements the project while working with the project sponsor. 

Project Manager

Mainly schedules, plans, observes and describes the project. Being the team lead, they manage resources and build budgets. 

Project Coordinator

Responsible for smaller tasks from the Project manager they are responsible for the administration part.

Team Member

They complete the tasks assigned to see them and update their status to senior reporting managers. 

Which Industries and Organisations Benefit from PPM?

Industries dealing with several projects simultaneously require project portfolio management. A few examples are Computer software, nonprofits, insurance, IT, telecommunications, financial services and banking, hospitals and healthcare, service, staff recruiting and more. 

Project Portfolio Management (PPM) Key Terms

  • Portfolio management: Controlling the underlying projects to ensure their alignment with the organization's strategy, aims and goals
  • Program management: Managing the related and unrelated projects in a program
  • Project management: Generate scheme, implement, monitor and describe the project from beginning to end, keeping costs, time limit and scope in mind
  • Project management Office: The project management office maintains standards and oversees program management and portfolio.
  • Change control management: Recognize, modify and implement the change in the portfolio or project.
  • Portfolio reporting: Graphical and charts demonstration of project and portfolio progress
  • Risk management: Recognition and deriving methods to remove the potential risks 
  • Resource management: Allocation and efficient utilization of resources
  • Pipeline management: Deciding and selecting the projects worthy of the organization's time and resources
  • Financial management: Identifying the risks and budget requirements of projects and further deciding their fate.
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Conclusion

Project Portfolio Management holds significance when an organization aims to achieve its goals through numerous undertaken projects. It's crucial to understand each aspect of the management and consider them to escalate the growth of the company. The Post Graduate Program in Project Management lets you gain the relevant skills and knowledge and showcase it for better opportunities to excel in your dream career. 

About the Author

Eshna VermaEshna Verma

Eshna writes on PMP, PRINCE2, ITIL, ITSM, & Ethical Hacking. She has done her Masters in Journalism and Mass Communication and is a Gold Medalist in the same. A voracious reader, she has penned several articles in leading national newspapers like TOI, HT, and The Telegraph. She loves travelling and photography.

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  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.
  • *According to Simplilearn survey conducted and subject to terms & conditions with Ernst & Young LLP (EY) as Process Advisors