How to Manage Project Portfolio: Best Practices for Success

Raman Nambiar
Raman Nambiar
May 20, 2024
How to Manage Project Portfolio: Best Practices for Success

Ever feel like you're drowning in projects, with deadlines looming and resources stretched to the breaking point? It's a nightmare scenario for any project portfolio manager. But there's a solution...

Project Portfolio Management (PPM) offers a methodology for you to consider and gain back control. It helps you put a framework around prioritization of projects that truly align with your company's goals and ensures you have the resources to drive them to success.

Let's explore how PPM can bring order to your project landscape. We'll cover its definition, proven best practices, the powerful benefits it offers, and even the challenges you'll need to overcome.

A photo of a city landscape undergoing capital programs.

What is Project Portfolio Management?

Project Portfolio Management, or PPM, is a way to strategically manage a bunch of projects so they all work towards your company's big goals. Manage projects in a portfolio takes advantage of managing many capital projects together, making trade-offs and synergies impossible if managed individually.  It helps you pick the projects that really matter to your business, making sure you have the resources to make them successful. Think of it as the key to making every project count and avoiding wasted effort.

Best Practices in Project Portfolio Management

Strategic Alignment  

Strategic alignment involves clearly defining organizational goals and translating these into actionable project objectives. Projects should be prioritized based on their strategic value, which involves assessing them against criteria like potential impact, resource requirements, and alignment with long-term goals. A robust prioritization process ensures that resources are allocated to projects with the greatest potential return.

Governance Structure  

A strong governance structure is crucial for defining clear roles, responsibilities, and decision-making criteria within the PPM framework. This structure should facilitate transparent and consistent decision-making across the portfolio, including project approval and resource distribution. Accountability mechanisms are also vital to ensure that team members are responsible for their contributions to the portfolio's success.

A screenshot of Mastt software showing a dashboard with a map, charts and visualizations for project progress and health across project portfolio.
With Mastt, you can create standard review reports across many projects in your portfolio.

Standardization

Developing and implementing consistent project management standards and practices across projects to improve efficiency and effectiveness for the entire program of work. This includes "templatizing" work such as cost trackers, risk registers, management plans, and reporting. 

Balancing the Project Portfolio  

A balanced portfolio reduces overall risk through diversification, mixing high-risk and high-reward projects with more stable ventures. This balance should reflect the organization's strategic objectives and risk tolerance, ensuring a healthy mix of innovative and core business projects.

Regular Portfolio Reviews  

Regular reviews of the portfolio are necessary for ongoing success. Continuous monitoring helps track project alignment with strategic goals, facilitating timely adjustments. Periodic health checks assess the portfolio's overall performance, helping to pinpoint trends and emerging risks that could impact project outcomes.

Optimizing Resources

Resource optimization ensures that resources are used efficiently across the portfolio. Advanced allocation techniques help manage capacity and skill distribution, while resource forecasting tools predict future needs to prevent shortages and optimize project staffing.

Performance Metrics and Measurement  

Developing KPIs and utilizing dashboards that reflect the portfolio's health and alignment with strategic objectives is important. These metrics should be understandable, relevant, and capable of driving decision-making. Benchmarking these metrics against past performance and industry standards can highlight areas needing improvement.

Engaging Stakeholders

Maintaining a clear communication plan to keep all stakeholders informed about project progress and decisions is crucial. This openness fosters trust and minimizes resistance, making it easier to implement strategic changes. Additionally, establishing a feedback loop ensures that stakeholder insights are integrated into the decision-making process.

Risk Management Across the Portfolio  

It is essential to identify potential risks at the portfolio level and develop mitigation strategies that address them before they become critical issues. Regular updates to these plans ensure they remain effective as project conditions and external environments change.

A screenshot of risk management software showing a dashboard with risk charts, a risk table for a project portfolio.
Look for a Project Portfolio Management system or software that can create risk registers and matrices to prevent or mitigate risks and issues portfolio-wide.

Benefits of Project Portfolio Management

  • Enhanced Decision-Making: Clear overview of all projects allows for better prioritization and resource allocation.
  • Improved Resource Utilization: Efficient allocation according to strategic priorities reduces waste and increases project success rates.
  • Increased Strategic Flexibility: Regular portfolio reviews enable quick adaptation to changes in strategy or market conditions.
  • Greater Visibility and Control: Higher level of insight into project performance and resource allocation.

Challenges in Project Portfolio Management

  • Complex Coordination: Managing multiple projects requires robust communication and coordination efforts.
  • Aligning Diverse Objectives: Balancing varying project goals with overarching business strategies is challenging.
  • Adapting to Change: The dynamic nature of business necessitates frequent adjustments in project prioritization and resource allocation.

Conclusion

Project Portfolio Management is critical for organizations that aim to execute strategically aligned projects effectively. By adhering to established best practices in PPM, businesses can ensure that they implement projects correctly and undertake suitable projects. This strategic approach significantly enhances the ability to achieve desired outcomes and thrive in competitive markets.

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