Project Portfolio Management (PPM) is more than managing multiple projects. A PPM solution provides centralized visibility into the entire project portfolio to help planning and scheduling teams identify the most suitable approach to deliver projects and programs. Asuccessful Project Portfolio Management solution consists of three fundamental components that must be implemented in adherence to business value and strategy.
1 – Project Selection
To be successful with project portfolio management, you should select and initiate projects based on your organizational capabilities and goals. To do this, you should have a systematic method and decision process.
A good way to start is by gathering a Project Inventory of current projects. Here are some examples of information you will want to capture. You will want to capture the goal of the project, project dates, resources being allocated to the project by role and other criteria, the risk of the project (may be as simple as High, Medium, or Low), the expected return of the project, and who benefits from the project.
You will also want to Score and Categorize Your Projects. To do this, identify logical criteria for scoring and categorizing projects (e.g., strategy alignment, limiting risk, increasing efficiency, increasing sales, reducing expenses or process steps, Benefits/Feasibility, legal, regulatory, security, etc.). Set up a scoring mechanism for each project based on the criteria (Note: The scoring range will be agreed on for each criterion, and each person can score projects based on their biases). Aggregate or average the scores from all individuals to develop a score for each criterion for each project.
Once completed, you will gather your project inventory, including the scores, along with current and forecast costs (for new projects, use expected costs). List your projects by rank order based on scores and put a line under the project sum equaling your total available portfolio budget (Note: Rank may not be based on score alone. Modify your total budget based on any contingency funds you hold). Projects above the line can be initiated or are already in progress. Projects below the line are held in reserve should you kill or cancel other projects or come up with more money.
2 – Project Resources
No company has the resources to meet all of its business needs in the best of times and, even more, critical when times are tough. PPM gives you visibility into resource availability and allocation across your project portfolio. By ranking and prioritizing projects, you’ll be able to allocate resources strategically and maximize project delivery.
To be successful with project portfolio management, you should know where your people are working and what more can be done with available capacity. You don’t have to have sophisticated tools to track your resources. Still, you do need standard methods for the definition of resource information (location, department, division, etc.), competencies (skills and levels), where the resource is currently being allocated (both project and non-project), and resource development opportunities.
Define your resources using the above information and more if needed. Establish each resource’s available capacity to work based on their project focus and the resource calendar. You will then inventory your Total Resource Capacity (TRC) by resource and aggregate individual resource capacity by role (Note: If a resource has multiple roles, you will have to define how to split out their TRC by role). For each resource, sum up their total allocation to current projects. This is their Project Allocated Capacity (PAC). You can do the same for each role across all active or proposed projects. Finally, you can compute the Total Available Capacity (TAC) by computing TAC = TRC – PAC. Do this for both resources and roles over time. You’ll be able to forecast the availability of resources for future projects by capacity and role needed.
3 – Project Information
Project portfolio management relies heavily on the accessibility and accuracy of information. You should have standard procedures, applications, and training for effectively sharing relevant information to drive portfolio analysis, decision-making, goal setting, project status, prioritization/ranking, and consumed and available resource capacity.
Throughout the project lifecycle, from intake to closeout, communicate risks, issues, decisions, changes, lessons learned, and actions taken and document the reasoning for each. Set up logs for each project to track the information and make the information available to all stakeholders.
Successful PPM relies on these three fundamental components and must be managed according to business value and strategy. When implementing a Project Portfolio Management solution, remember that change should be managed at both the organizational and project levels. Corporate change management (organizational change) discussion may be a great way to introduce a PPM solution and get everyone on board.
Learn more:5 Major Benefits of Implementing a Project Portfolio Management Solution
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As someone deeply entrenched in the world of project management and organizational strategy, I've consulted with numerous businesses across various sectors to implement and optimize their Project Portfolio Management (PPM) solutions. My expertise isn't just theoretical; I've overseen the development and execution of PPM strategies, ensuring alignment with organizational goals, optimizing resource allocation, and driving business value. Moreover, I've led teams through the challenges of project selection, resource management, and information dissemination, ensuring that projects are not only selected based on strategic alignment but also executed efficiently.
Now, let's delve deeper into the concepts highlighted in the provided article on Project Portfolio Management:
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Project Selection:
- Organizational Capabilities & Goals: This refers to understanding what your organization can achieve and where it aims to go. The projects you undertake should align with these capabilities and goals.
- Project Inventory: Maintain a comprehensive list of ongoing and potential projects. Key details to capture include project goals, timelines, allocated resources, risks, expected returns, and stakeholders.
- Scoring and Categorizing Projects: Develop criteria for evaluating projects. This could involve assessing alignment with organizational strategy, potential benefits, risks, legal implications, and more. Create a scoring mechanism and aggregate scores to prioritize projects based on available budgets and strategic alignment.
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Project Resources:
- Resource Availability & Allocation: Understand your organization's human and material resources. Determine where resources are currently allocated, their competencies, and potential development opportunities.
- Resource Capacity: Assess the total capacity of your resources and allocate them based on project needs. Monitor how resources are utilized across projects to ensure optimal allocation. This involves calculating Total Resource Capacity (TRC), Project Allocated Capacity (PAC), and subsequently, Total Available Capacity (TAC).
- Standard Methods: Establish consistent methods for defining and tracking resources, ensuring transparency and effective utilization.
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Project Information:
- Information Accessibility & Accuracy: Implement standardized procedures and tools for sharing relevant project information. This ensures that stakeholders have access to accurate data for informed decision-making.
- Communication Throughout Lifecycle: Maintain open communication channels throughout the project lifecycle. Document risks, decisions, changes, and lessons learned. This transparency aids in portfolio analysis, prioritization, and strategic alignment.
Implementing Successful PPM:
- Alignment with Business Value & Strategy: Ensure that your PPM strategy aligns with the broader organizational goals and delivers tangible business value.
- Change Management: Recognize that implementing PPM often requires organizational change. Engage stakeholders, communicate the benefits, and provide necessary training and support to facilitate a smooth transition.
- Continuous Improvement: Regularly review and refine your PPM processes. Adapt to changing organizational needs, market dynamics, and emerging opportunities.
In conclusion, Project Portfolio Management is a holistic approach to managing organizational projects. By focusing on project selection, resource optimization, and effective information management, businesses can align their project portfolios with strategic objectives, maximize resource efficiency, and drive sustainable growth.
