There’s so much to do and so little time. Undoubtedly that resonates with you as an individual, but did you know that organizations struggle with the same problem?
There's a gazillion projects that a company could be focused on at any given time, but to try to take on all of them would result in overburdened staff and poor results.
The solution? It’s called project portfolio management (PPM). It deals with prioritizing individual projects rather than just trying to figure out how to get through as many of them as quickly as possible. You might even think of it as product portfolio management, because at the end of the day, it’s going to improve the things that you produce.
It’s a process that could totally change how you approach project management basics as an organization.
Overview: What is project portfolio management?
Project portfolio management may sound like just a fancy way of saying project management, but the focus is quite different. While project management is focused more on the execution of an individual project, project portfolio management is more about the timing of when those projects are done.
Under PPM, projects are managed under a portfolio that aligns with the strategy of an organization, allowing that organization to conduct an analysis of whether it’s better to take on a project right now or if it should be bumped in favor of another one.
What are the key objectives of project portfolio management?
The problem is that organizations have a lot of projects they could be working on but a limited amount of resources. Instead of just piling projects onto overworked staff, an organization uses PPM to prioritize those projects. And that business portfolio has four key objectives.
1. Identify the best project for investment
The primary objective of PPM is to identify where current investments and resources should go. Every organization is going to determine this differently based on whether they’re trying to go for maximum profit in the short term or for a longer-term objective.
Either way, PPM clarifies what an organization should be focusing their resources on next, which provides clear direction to everyone involved and increases the overall portfolio value.
2. Set a priority list to enable future planning
In addition to helping select the next project, PPM also creates a priority list that enables an organization to plan and prepare for their next projects. This sets these follow-on projects up for success, and if planned correctly, they will build on previous projects to maximize their effectiveness.
3. Provide a benchmark for future investment
Past projects managed under PPM will help provide a benchmark that will guide future organizational decisions on where to invest resources. If one type of project did not perform up to expectations, that allows an organization to revisit the priority list and bump similar projects down, and conversely, bump successful projects up.
4. Keep the organization focused
Taking on every single project that comes along will cause an organization to become unfocused and reactive.
By prioritizing projects through PPM, an organization is acting according to a carefully thought-out strategy. This long-term focus prevents short-term decisions that may harm the future of the organization.
How does project portfolio management work?
It’s a complicated process, but the basics of PPM can be boiled down to the following steps.
Step 1: Create an organizational strategy
Before PPM can be implemented, an organization needs to define a long-term strategy. This strategy should answer some basic questions about what the organization wants to achieve, and then drill down into the projects it needs to undertake to get there.
By laying out this strategy, it will make the PPM process much clearer rather than guesswork.
Step 2: Determine how the project will be judged
What is most important about a project? What aspects of the project life cycle should be monitored? What criteria should be used to evaluate it? You will need to answer these questions beforehand.
Your new organizational strategy should help you draft criteria to use to determine if the project is a success or not. With this in place, you can refine and perfect the PPM process.
Step 3: Select someone to manage the projects
Now that you have the framework in place to start creating a priority list of projects, you’re going to need someone to manage it. That could be you, or it could be someone else in the organization. That person should be responsible for adjusting the priority list and monitoring how projects are performing.
Step 4: Make adjustments
The PPM project manager’s work should result in data and insight that you can use to make adjustments to future projects.
If a project underperforms, you should conduct an analysis to determine why, and either scrap future similar projects or improve your processes. Similarly, take successful projects and see if you can apply lessons learned to other projects, and move similar projects up the priority list.
Step 5: Come together as an organization
Every so often — perhaps every quarter or so — your organization needs to come together to reassess your PPM strategy. As you churn through some of these projects, you will see the impact they have on your organization and how they are driving your strategy.
Perhaps a large number of door-to-door fundraisers you’ve organized for your charity have been flops, while one or two bake sales were roaring successes. The actual performance in the last few months should provide some critical insights into whether your strategy needs a major adjustment.
Get together with all key stakeholders to go over how your projects performed and whether your organization is on the right path.
Should you use project management software for PPM?
Project management software (PM) can be helpful if it has ways to track the outcome of a project in terms of expected versus actual results. These project management tools can help create a benchmark that would allow you to make decisions about future projects.
Look for software that can provide a work breakdown structure (WBS), which can help you divide up projects and allow you to examine their parts more closely.
It’s also possible to just use PM software and leverage project management skills to manage projects themselves as part of a PPM strategy. That means you could use the software to create a project management plan for your PPM strategy, essentially treating all of these projects as one big project that you manage.
Use PPM to chart a course forward for your organization
It’s important to map out a long-term plan for your organization, and implementing PPM is a great chance to do that because it forces you to think along those lines.
This strategy requires you to think deeply about what you and your colleagues or employees are trying to accomplish, and you can then figure out how you’re going to get there by what projects you choose to prioritize.
Set aside a few days within the next quarter to sit down with all the key stakeholders in your organization to map out the strategy that will determine how you prioritize projects going forward, and you will reap the rewards in the coming years.