Project Portfolio Management, also known as PPM, is a term used to describe how the – often confused – mix of dependent and connected projects within an organization is managed.
Projects are often seen as independent units, but in reality individual projects are rarely isolated.
The reality is that the projects within an organization are extremely interconnected, so the question is: to which extent are they connected.
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The way projects are managed and prioritized in order to ensure their success is precisely the task of Project Portfolio Management.
What is Project Portfolio Management?
Project portfolio management refers to the centralized management of one or more projects in order to achieve the strategic goals of an organization.
In essence, project portfolio management ensures that all approved and ongoing projects meet strategic goals and are efficiently managed in order to obtain optimal results.
It’s a way to bridge the gap between strategy and implementation. It guarantees, in fact, that an organization can exploit more projects to guarantee the global success of a business.
PPM is also generally used by organizations to identify the potential return of a project.
It also makes it possible for companies that want to invest in new projects to see in advance the risks in each of them in order to make careful decisions.
However, the goal of project portfolio management goes much further. Just think of how much Portfolio Management facilitates group communication and ensure that all stakeholders are coordinated.
The correct management of the project portfolio
If done correctly, the PPM is a valuable tool to get the buy-in of all interested parties in an organization.
Portfolio management allows various stakeholders to get a broader picture of what is happening. It also allows for consistent feedback, understanding, managing and mitigating risks, thus giving less space to possible discrepancies that can often have negative inflences on the success of a project.
Good project portfolio management therefore improves transparency, governance, and responsibilities.
If managed effectively, Portfolio Management helps improve project management processes and methods, reducing failures and improving customer satisfaction.
The PMI reports that organizations with mature PPM processes have successfully completed 35% more of their projects, wasting less time and money.
The advantages and key elements of project portfolio management
In summary, the PPM helps to:
- Support the management of project requests
- Improve visibility
- Improve collaboration
- Introduce risk management processes
- Involve stakeholders
- Improve transparency, governance and responsibility
- Ensure the realization of benefits
- Manage resources efficiently
- Offer a competitive advantage
- Improve decision-making and problem solving
- Ensure continuous improvement and evolution of project management processes
- Attract, recruit, maintain and develop the right talents
The PPM therefore covers a series of areas and practices, here are the three key elements that characterize it:
The key elements of the PPM: Business Strategy
The business strategy is the basis for managing the portfolio of successful projects.
The strategy refers to the long-term direction and scope of an organization. Thanks to the strategy, it is possible for a company to grow and to be competitive.
Obviously, a strategy must be supported by the implementation plans. These plans take into account the capabilities and resources of the organization, external threats, as well as metrics to measure success.
In essence, you can have the best strategy in the world, but if there are no means to achieve it, that strategy has no value.
It is true that projects are fundamental for achieving the agreed strategy, but only when this is clearly defined and communicated.
The key elements of the PPM: Software
Choosing the right software solution is essential for the success of Portfolio Management.
Very often, the absence of integrated software, which combines data from various sources into a single framework, prevents organizations from fully realizing the advantages of the PPM.
When evaluating software solutions, you need to look for a system that is easy to implement and use. It is essential to do this in order to ensure that it is adopted easily and correctly used by end users.
An effective PPM solution provides a unique view of the situation. A unique source of truth about the project that promotes collaboration and tracking of activities.
This is particularly important for team members and project managers working on multiple projects at the same time.
In fact, teams and project managers need optimal levels of knowledge and visibility to fulfill their obligations and take corrective action where necessary.
The key elements of the PPM: Ask the right questions
The connection between business strategy and project portfolio management has been mentioned several times, but how is this relationship managed?
Project portfolio managers need to ask some fundamental questions about all the projects in an organization. Here are some of them:
- Does each project contribute to the overall achievement of the portfolio?
- Are the projects dependent on each other?
- Can any project have a negative impact on other projects?
- Will successful delivery of all projects produce the desired goal or benefit?
- Are resources / budgets available to start a new project?
- Is there a similar project in the portfolio to use as a model?
- Are stakeholder expectations realistic?
- Are all members of the organization familiar with strategic goals?
- Are the available resources used effectively?
- Is it easy to get the right information about the project to optimize the decision making process?
In an increasingly competitive and stimulating operating environment, companies are required to perform more and more in order to stay competitive in the market.
Projects are clearly the basic tools to provide the solutions and innovations that organizations require to move forward.
Without a general structure, however, and without an overall strategic vision such as that provided by the centralized management of multiple projects, the projects themselves will tend to consume precious resources, like budget and time, often ineffectively.
With an emphasis on long-term strategic goals, organizational requirements and governance, project portfolio management ensures the success of the entire company project.
