Project portfolio management is the overall classification and organization of a company’s entire list of projects. While these different projects might not have anything to do with each other and might completely lack any relevance to each other, they are all managed under the same umbrella called a portfolio.
Portfolio management that relates to project management concerns itself with the intake of projects, including, but not limited to, identifying potential prospects, authorizing present projects, assigning different project managers different tasks, and including their details under the overall umbrella of the portfolio.
It also includes manipulating and controlling all projects at once so that you can direct an entire lot of projects towards achieving the overall goals of the business. These interests are generally kept in mind while formulating a portfolio management strategy.
Why Project Portfolio Management is Important?
Project Portfolio management is the key to bridging the gap between strategizing and implementing. In other words, the portfolio manager is responsible for getting the right projects done on time to maximize the company’s revenues. It is very pertinent for companies who deal with a lot of internal projects relating to inside affairs.
Inspiration for projects can come from anywhere and at any time, and it is logical to have a real-time list to track them all at the same place. Many a time, there are not enough resources to complete all these projects right away. Here is where project portfolio management for project management comes into play. The portfolio managing software or the portfolio managers will point out the projects that are the highest priority and will generate the highest profits for the company. These incoming profits can further help your company with the capital it needs to complete the next project on the priority list.
Project Portfolio management offers alignment and a direct line of communication between the company’s executives and the objectives of all projects it currently has. It takes personal bias and the potential for human error out of the project management strategy so that you can trust the results and choices completely.
Project management assisted by project portfolio management also makes deciding for prioritizing projects easier because it takes the load off the shoulders of the planners and the analysts and conducts research and produces data on its own. It is reliable, too, with little to no scope of error.
It helps the project manager turn down the projects that are of little help to the company’s goals or future strategies, letting go of what’s weighing the company down. By doing so, it emphasizes effectively that the big picture or the future plan is more important than short-term revenue. It builds the creative thinking abilities of employees acting as managers of projects to train them in a better and insightful manner. It also builds valuable governance and oversight into the management of projects.
The steps towards proper project portfolio management
There are certain essential steps that you need to follow if you hope to create an effective and long-term portfolio management strategy for your business. The first is to identify the guiding objectives and long-term goals that guide your business or organization. It depends on business to business and owner to owner.
For instance, if you have a grocery store, your main objective is probably to provide the best quality items for the lowest price to your customers and save a little something for yourself. It is important that you realize these goals early on and clearly outline them so that you know what exactly you’re looking to get out of the project portfolio management strategy.
You must identify a potentially benefitting project idea when you see one. The ability to identify and capture these project ideas will be one of the main functions of the portfolio management software, focusing primarily on the intake of projects and their ability to generate revenue for your firm.
These projects are also selected and analyzed according to the long-term goals that you set for your company in the previous step, carefully analyzing whether they’ll further your cause or not. You may get this done on a simple spreadsheet by the project manager, or it could be an accessible online database that anyone in the company could log on to, and share their ideas on the same.
Once you have captured the potential ideas, it’s time to ask the big questions. Questions relating to cost, time consumption, returns and revenue, available resources, potential risks, and the project’s alignment towards achieving your company’s long term goals have to come up. These decisions are the most important part of the strategy as they help you determine what project you should take up. The smart intake of the projects is key to increasing the revenue of the company.
You also need to consider that multiple projects are being analyzed at the same time, and this complicates things a bit. You can analyze this data simply by creating a list of criteria by which you will judge the projects, like return on investments and the cost of the project.
Once you have determined what projects you’re going ahead with, it is important to make sure that the mix of projects isn’t too large, risky, expensive, or too interdependent. The portfolio must be properly balanced and aligned with your strategies.
It is also important to note that projects change frequently, and they evolve with time. It may mean that a host of newer ideas might be on their way to your portfolio umbrella, and you might have to accommodate them all.
It is the reason why it’s important to manage the ongoing portfolio and the intake process simultaneously regularly. You can do this by working with project managers to identify and resolve any conflicts that may have arisen, making the portfolio flexible by making frequent changes to accommodate new ideas. Lastly, ensure that you align all the projects perfectly to your business objectives.
Portfolio management helps you to boost your business by focusing on your long-term goals better and more effectively. It also ensures that you don’t run off-track with a project that causes you and your company harm instead of creating valuable capital and revenue. Thus, getting software that manages your projects and portfolios for you is very crucial to the effective management of the future of your company.