Portfolio Management is the selection and control of all of the projects within an organisation. I’ve recently talked about projectification, and how a Project Management Office (PMO) can help coordinate the benefits of those many projects. I’ve also clearly defined Projects, Programmes, and Portfolios to set those in context of the work that the PMO performs.
Portfolio Management has a wider definition than I have used in previous blogs. Project Portfolio Management is often referred to as PPM.
What is PPM?
The Association for Project Management (APM) defines Portfolio Management as:
A collection of projects and/or programmes used to structure and manage investments at an organisational or functional level to optimise strategic benefits or operational efficiency. (APM Body of Knowledge version 7, May 2019).
The Association for Project Management (APM) have a collection of information and a publication regarding Portfolio Management.
PPM is about evaluating, selecting, prioritising, and resourcing projects to achieve the organisations vision, mission, and values.
How does PPM Help a Business
A collection of projects and programmes (a portfolio) that is well managed will realise many benefits for an organisation:
- A focal point for the organisation strategy
- Prioritisation of projects to meet the organisations aims
- Alignment of all of the senior management team to champion the projects within the business
- Consistency and fairness of governance across all projects within the portfolio
- Identification of performance problems
- (Limited) Resources distributed as priorities require
- Better decisions made to limit risks, maximise resources, leading to repeatable success
Having a clear and common portfolio management strategy will help empower the staff to deliver projects:
- A clear strategy and fair governance builds trust within project teams
- There will be one message regarding the overall strategy for the organisation
- Clarity and transparency of messages regarding projects and programmes within the organisation
- Clear communication on (changing) business priorities
- Increased motivation due to an understanding of priorities
Communication and trust are key parts of teamwork.
When do you Need PPM?
It might be clear that an organisation needs to move to portfolio management when:
- Projects are not fully aligned to the business strategy
- Projects and Programmes are delivering overlapping benefits (which is a duplication of effort)
- Ineffective communication on priorities to project team members
- Lack of trust between workers and management regarding project work
- Management are slow to react to external disruption and slower to change or re-prioritise internal projects
- Too many ‘Pet’ or ‘Under-the-Table’ Projects are stealing resources
Don’t wait for a crisis inside your organisation. Set up PPM before the problems put you out of business!
What makes for a Good Project Portfolio?
One approach to PPM helps ensure that an organisation has a diversity of projects:
- Growth and Enhancement Projects: To develop new products, services, and systems
- Transformation Projects: Projects that may be high risk, but are also high return. These type of projects allow an organisation to diversify and break new ground. These projects could be experimental in nature
- Maintenance Projects: Perhaps low payback, but essential for continued operations. These will be low risk projects
Each organisation will have its own appetite for risk with the portfolio. One suggestion is to use the above categories with a 60%, 10%, 30% allocation.
Today’s project is tomorrows ‘Business-As-Usual’. To ensure a smooth running of the organisation tomorrow, there needs to be a firm grip on the projects and programmes withing the organisation today. The portfolio of projects needs clear and fair governance.
PPM ensures that risks are spread across the projects within the organisation.