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As organizations expand and tackle increasingly complex projects, it's not uncommon for leaders to discover that their current project management practices don't seem as effective as they once were.
If this sounds familiar, it's time to explore the world of project portfolio management (PPM)—a valuable tool for businesses striving for greater success.
In this guide, we'll dive into the world of PPM and help you understand what it entails and why it's crucial for strategic success. So let's get started on the journey toward improved project management!
What is project portfolio management (PPM)?
Project portfolio management (PPM) is a strategic approach to managing multiple projects simultaneously to ensure alignment with business objectives and optimize the use of resources.
PPM considers the bigger picture, focusing on how the entire portfolio of projects can contribute to the organization's overall success. The primary aims of PPM are to prioritize projects, allocate resources effectively, and balance risk and reward.
Specifically, PPM offers:
What | How | Benefits |
|---|---|---|
Greater visibility of resource allocation across a company | Shows who is staffed on which projects and at what percentage of time, so you can understand who is underutilized and who is overallocated | Increases the likelihood that you’ll be able to effectively staff high-priority projects |
Improved cross-functional communication | Reports on project health across an organization so stakeholders can understand how their project work impacts the broader portfolio and the status of a given effort | Improves employee engagement; increased visibility simplifies project execution |
Flexibility for application to both agile and waterfall projects | Rolls up projects into high-level reporting views regardless of project type | Ensures that projects of any type adhere to relevant organizational standards to improve work quality and efficiency and strengthen strategic alignment |
How PPM works across the project life cycle
Here's how an organization can implement strategic PPM practices at each phase of the project life cycle:
- Project initiation: Start by refining your project selection process to prioritize those efforts that align best with your company's strategic objectives. This way, you can ensure that your organization is working on the most valuable and impactful projects right from the get-go.
- Project planning: Look at your projects as a whole rather than individually. By reviewing them collectively, you can effectively allocate resources across the organization, ensuring each project gets the attention and support it needs to succeed.
- Execution: Be agile and responsive to the needs of your portfolio. Make real-time adjustments to resource allocation and expenditures based on the progress of the entire portfolio rather than focusing on just one project in isolation. This way, you can maintain a well-balanced approach that benefits all your projects.
- Monitoring & controlling: Keep a close eye on the health of your portfolio by tracking progress and measuring performance against strategic objectives. This will help you identify any potential issues early on and take corrective action to ensure that your projects stay on track and continue to contribute to your organization's success.
- Closing: Remember to learn from your experiences! Share the lessons learned from each project with your team, and use that knowledge to improve the execution of future projects organization-wide. This will help create a culture of continuous improvement and drive long-term success for your organization.
How do you begin to implement PPM?
As organizations grow and take on more complex projects, it becomes increasingly important to have a more structured approach to managing these initiatives. One way to achieve this is by hiring a project portfolio manager, who can either be a new hire or promoted from within the company. This person will oversee the entire collection of projects, ensuring they align with the organization's strategic goals and objectives.
Another option to consider is setting up a project management office (PMO), which serves as a centralized function within the organization. The PMO is responsible for managing the projects within the portfolio and promoting project management best practices throughout the company. By establishing a PMO, organizations can create a standardized approach to managing projects and ensure that they consistently adhere to best practices and guidelines.
Once you have a portfolio manager or PMO in place, they should:
- Inventory existing projects: Compile a comprehensive list of all ongoing projects within the organization, along with their key details, objectives, and current status.
- Develop a company strategy: Work with the leadership team to create or refine your organization's strategic goals and objectives if they don't exist.
- Align projects with the company strategy: Analyze your existing projects to determine if they align with your organization's plan, and deprioritize or eliminate any that don't contribute to your strategic objectives.
- Identify operational efficiencies: Look for opportunities to gain efficiencies by managing your projects together, such as through portfolio tracking, reporting, and staffing.
- Prioritize and implement efficiencies: Implement the identified operational efficiencies to streamline your project management processes and optimize resource allocation.
- Continuously improve: Keep an eye on any emerging pain points and seek to refine and enhance your existing ways of doing business. This will help your organization adapt and grow while maintaining a strong focus on your strategic goals.
Portfolio management vs. project management vs. program management
Before diving into PPM best practices, let's clarify the differences between project, portfolio, and program management. Understanding these distinctions will help ensure we're all on the same page.
1. Project management
This classic approach focuses on managing a single, one-off initiative or endeavor with a defined beginning and end. The aim is to deliver the project's goals within the specified time, budget, and quality parameters.
2. Portfolio management
This is all about managing a group of projects, which can be related or unrelated. The primary goal of portfolio management is to ensure that these projects align with the organization's strategic objectives and to optimize the allocation of resources across the entire portfolio.
3. Program management
This term can have two different meanings, depending on the context:
- Option 1 - In some cases, program management is used interchangeably with project management. Specific industries might prefer one term over the other (for example, the tech sector often favors program management), but there's no real difference in meaning when used this way.
- Option 2 - In other situations, program management refers to managing a collection of related projects. This implies a higher degree of complexity than project management. The projects within a program are typically interconnected, with the overall aim being to achieve a standard set of strategic goals or benefits.
Best practices for managing project portfolios effectively
Effectively managing project portfolios is crucial for organizations that want to stay agile and achieve their strategic objectives. To make the most of your project portfolio, consider implementing these best practices:
- Project evaluation and prioritization: Develop a clear and transparent set of criteria for selecting and prioritizing projects within your organization. This ensures everyone is on the same page and stakeholders are held accountable for their decisions. By prioritizing projects that align with your organization's broader business strategy, you can avoid wasting resources on "pet projects" that don't contribute to your overall goals.
- Project tracking and reporting: Establish a centralized system for tracking and reporting the progress of ongoing projects to stakeholders from various organizational functions. Determine the most relevant reporting views for different audiences, such as staff, leaders, and external stakeholders, to ensure everyone can access the information they need.
- Risk management: Implement a structured approach to documenting, categorizing, and periodically reviewing risks across your project portfolio. This will help you maintain a healthy portfolio and identify potential issues before they become critical. Use the insights gained from these risk assessments to find operational efficiencies that can be applied across the entire portfolio, ultimately improving your organization's project management processes.
How Float helps with PPM
Portfolio management software like Float can be a game-changer when handling critical PPM tasks. By leveraging Float's features, you can streamline various aspects of project portfolio management, including:
1. Resource allocation: Float enables you to manage capacity across your portfolio by providing visibility into which team members are dedicated to specific projects and who can support upcoming initiatives. This helps ensure that resources are allocated efficiently and effectively.
2. Forecasting: With Float, you can schedule upcoming projects based on the availability of resources within your portfolio. This allows for better planning and helps to avoid conflicts and over-commitments.
3. Financial management: Float helps you keep an eye on actual versus estimated costs, enabling you to gain a portfolio-wide view of expenditures. This insight allows for better budget management and financial control.
4. Risk management: Float assists in managing team workloads and financial expenditures, reducing the risk of cost overruns or schedule bottlenecks that could impede portfolio progress. This proactive approach to risk management helps ensure the overall health of your project portfolio.
5. Reporting: Float makes it easy to share schedule and budget forecasts with executive leadership, fostering alignment, buy-in, and informed decision-making. Clear and concise reporting enables stakeholders to stay updated on project progress and make adjustments as needed.
By incorporating Float into your PPM process, you can more effectively manage your project portfolio, ensuring that your organization remains on track and continues to achieve its strategic goals.
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