If you run a business or a company, it can be hard to manage several ongoing projects simultaneously or decide which new ones to undertake. This is where project portfolio management (PPM) comes into play.
PPM is a formal approach organizations use to identify, prioritize, manage, and monitor projects that will benefit the company the most. It can help organizations manage projects effectively and efficiently and carefully coordinate resource allocation. PPM focuses on the big picture, analyzing the risk-return ratio of each project, the available budget, the expected duration, and the potential results, and aiming to maximize a portfolio’s overall value. In this article, we will discuss PPM in depth and outline the basic steps of the entire process.
What is Project Portfolio Management (PPM)?
Project portfolio management (PPM) is a strategic approach to selecting and managing projects that offer value and maximize the benefits to the company from the project. It involves analyzing the total budget for a project, the risk vs. returns ratio, and the expected turnover time to prioritize the work that a business should pursue.
PPM can help organizations prioritize projects based on their contribution to the organization’s strategy and align projects with its goals and objectives. It also helps ensure that the organization allocates personnel, budget, and technology to the most impactful initiatives.
Project portfolio management also incorporates risk management to identify and mitigate potential project risks, such as by balancing the number of high-risk vs. low-risk and long-term vs. short-term projects and establishing an optimal project mix that better positions the company to achieve its operational and financial goals.
Basic Steps to the PPM Process
Here are the basic steps that outline the PPM process:
1. Define Business Objectives
It’s essential to understand an organization’s strategic and financial goals first. This ensures you only undertake projects that align with your business’s long-term goals. As a project portfolio manager, you will have to agree with the stakeholders about the strategic objectives of the project portfolio and establish criteria for project selection.
2. Build Your Project Portfolio
After outlining your project portfolio’s strategic goals, it’s time to start building it. You need to begin collecting project ideas and gather project data and information for the portfolio; they can be projects already in progress or ideas similar to each other that you can manage simultaneously.
Analyze the strengths and weaknesses of your portfolio, and evaluate and rank projects based on their estimated ROI, planned milestones, resource allocation, and time and effort required. Select the projects that align the most with the company’s objectives and promise the maximum benefit.
3. Test Portfolio Feasibility and Allocate Resources
This step involves working with the people involved in existing projects or running proposed projects and using data analytics and other metrics to assess individual project risks, including internal limitations in skills, budget, technology, and market changes. The next step is to assign resources like materials, personnel, and funds to projects based on their priority and availability.
4. Manage and Monitor Your Portfolio
This phase requires working with project managers to coordinate the execution of the projects and programs in your portfolio simultaneously, evaluate performance, identify problems, and make the necessary adjustments to keep the projects on track.
Companies often undertake several projects simultaneously to stay ahead of their competition; however, they struggle to manage them together. PPM is a critical tool for organizations of all sizes, enabling them to make informed decisions about their project investments and maximize the value they deliver. PPM can help organizations manage their project portfolios effectively to achieve their strategic goals and objectives more efficiently.