The Beginner’s Guide To Project Portfolio Management (PPM)

Project Portfolio Management (PPM) is a fancy term to describe how we manage the often-confusing mix of interrelated, dependent, and connected projects. PPM considers the big picture of all projects grouped together; past, present and future — and calculates the optimal prioritization and sequencing of projects to maximize return on investment.

While we often theorize projects as discrete, independent units — the truth is that we rarely manage projects in isolation. The reality is that they’re inextricably interconnected. The question is by how much. Projects are always connected whether that’s by budget, timeline, or resources. How we manage and prioritize the mix of projects to ensure success across all the projects is what Project Portfolio Management is all about.

You know the score — your agency has got 50 projects on the go, and they’re all overlapping, some of them for the same client, all using the same resources, some of them you’re doing to keep the lights on — others for the prospect of awards, and others just for pure innovation.

But as an Agency Owner, Program Manager or Project Director, how do you know if you’re making good decisions? How do you know if you’re focusing your teams and their projects on the right things? We’re all asking the same questions — Is this really a good idea? What should we really be doing? What projects should we be prioritizing right now? How can we focus our resources most efficiently? How can we run these projects concurrently, and profitably?

These are the kinds of questions that project portfolio management (PPM) enables us to answer, and in this post, we’ll discuss how to successfully implement PPM to achieve maximum returns from projects. With many competing projects and priorities stretching resources in different directions, good PPM is the only thing standing between us and bad project decisions which offer nothing but the poor return on investment. In order to get a clear understanding of how a successful implementation of PPM facilitates maximum returns on projects, we first set the context that helps us understand:

• What is Project Portfolio Management (PPM)?
• The difference between PPM and project management
• The objectives of PPM
• The role of the portfolio project manager
• The project portfolio management process
• Project portfolio management software

We then take a look at the critical steps involved in effective Portfolio Project Management as well as tools that are available to make the process more efficient and effective. As with anything worth investing in, PPM has benefits if successfully implemented, so we conclude with an overview of the benefits of PPM.

What Is Project Portfolio Management (PPM)?

Project portfolio management refers to the centralized management of one or more project portfolios to achieve strategic objectives. It is a way to bridge the gap between strategy and implementation, and ensures that an organization can leverage its project selection and execution success.

PPM is generally used by organizations to identify the potential returns on a project. It makes it possible for companies that want to invest in new (and often competing) projects to forecast risks inherent in each and make an informed decision. Its value extends beyond that though. It also facilitates team communication and ensures that all parties involved in projects are on the same page.

When done properly, PPM is a valuable tool for obtaining the buy-in of all stakeholders in an organization. By enabling various stakeholders — including clients and company executives — to see the bigger picture, obtain consistent feedback, understand, manage and mitigate risks, there’s much less likely to be discord, which can often be the bane of successful project management. PPM also enhances transparency, governance, and accountability.

What Is The Difference Between Project Management And Portfolio Management?

Despite their similar-sounding names, project management and portfolio management are actually quite different, especially in their purposes. Project management, as you know, is the application of knowledge, skills, tools, and techniques to project activities in order to meet project requirements and its importance cannot be over-emphasized. The operative word in Project Portfolio Management on the other hand, is portfolio. PPM is not primarily concerned with running projects, rather its focus is on choosing which projects to be involved in and how to fund them, based on whether or not they support the goals and objectives of the company. Projects that do not fall within the scope of the company’s objectives are removed from contention.

If you were managing a technology company’s portfolio for example, you would most likely reject a proposed building project, because it doesn’t align with the company’s stated strategy of focusing only on some predefined type of tech projects.

What Are The Objectives Of Portfolio Management?

The primary objective of PPM is to maximize the benefits a company accrues from the projects it undertakes. This necessarily involves selecting only those projects that offer the right amount of value, taking into consideration the resources that need to be allocated as well as the strategic fit with the company’s goals. Other objectives include achieving balance in the project portfolio by ensuring an appropriate mix of high and low risk and long term and short-term projects. By establishing an optimal mix of projects, PPM ensures a company is better placed to achieve its operational and financial goals.

What Is The Role Of The Project Portfolio Manager?

As the person with oversight of an organization’s project portfolio, the portfolio project manager is integral to successful execution of the organization’s strategy. Often, the role of a project portfolio manager revolves around managing one or more portfolios and working with different financial algorithms and financial models to align projects to the company’s strategic objectives. Portfolio Managers often develop often develop management standards to guide the portfolio and they keep a high level over view of everything within the portfolio.

Read the full article to learn more:
- Step-by-step guide on the project portfolio management process
- How to achieve project portfolio management success
- Best project portfolio management software tools
- Benefits of project portfolio management

Originally published at www.thedigitalprojectmanager.com on January 29, 2018.