Project portfolio management (PPM) can be considered as a management innovation that in many companies is still to be further established and accepted.
The main objective of project portfolio management is to maximize organizational benefit by selecting project portfolios that provide the greatest opportunity to achieve strategic goals and objectives.
In fact, companies use project portfolio management (PPM) for different reasons such as maximizing the outcome of projects, balancing risks and most importantly aligning projects to the strategic objectives of the organization.
In this article we are going to analyze the PPM process phases and the PPM support tools in order to help companies to implement this methodology and take benefit from it.
Three PPM process phases
Project portfolio management has been defined as the “managerial activities that relate to the initial screening, selection and prioritization of project proposals, the concurrent reprioritization of projects in the portfolio, and the allocation and reallocation of resources to projects according to priority” (Blichfeldt & Eskerod, 2008).
By considering the definition above which describes project portfolio management as a set of managerial activities, we can identify three generic PPM process phases:
- Portfolio structuring
- Resource management
- Portfolio steering
Portfolio structuring is crucial for strategic orientation and can be conducted at recurrent intervals in alignment with the organization’s (e.g., annual) strategic planning cycles (Platje et al., 1994).
Resource management helps companies allocate project resources across the whole portfolio in an efficient and effective way.
Portfolio steering supports companies to enhance their ability to adapt to internal and external changes that appear on short notice during a planning period (Geraldi, 2008, 2009; Spillecke, 2006).
Five PPM process phases
Project portfolio management operates at a strategic level and represents a continuous process. Basically, the projects and programs that are within the portfolio start and end, but the portfolio exists until the organization decides to close it.
Let’s talk about the five phases of the project portfolio management process identified and described by Levine (2005):
- Portfolio Inventory
- Portfolio Analysis
- Portfolio Planning
- Portfolio Tracking
- Review and Re-planning
Thanks to the portfolio inventory phase companies are able to collect all information and data about all the on-going, proposed and delayed projects.
Starting from the data and information collected during the previous phase, it is possible to analyze all projects in order to select the ones that provide the greatest opportunity to achieve strategic goals and objectives.
During the planning phase, resources, time and costs are built and integrated with the portfolio planning process where the resource allocation and schedule decisions are made (Birginsson, 2012).
The portfolio tracking phase is useful to capture the metrics through earned value analysis or gates and they are used to assess each project.
Finally, the review of the portfolio helps companies evaluate the portfolios’ critical success factors.
In fact, there could be a change in the resource availability, validity of the business case, the corporate strategy or in the business, technology or market condition, which can lead to realignment of the project portfolio and replanning in resource allocation and scheduling (Levine, 2005 In: Birginsson, 2012).
PPM support tools
Companies can use project portfolio tools to select projects and allocate resources based on objective criteria, rather than on the basis of bias or for reasons that are far from the strategic objectives of the organization.
PPM support tools ensure that the planned projects are aligned to the business strategy. They provide the chance for execution of only the projects which produce best results, and also help avoid starting projects for which there are not enough resources.
On the market, there are several support tools for project portfolio management. These tools have some common features, such as a database of proposed and current projects that contains descriptions, cost estimations, resources needed, schedule of activities, expected benefits etc.
There are tools that can be used in a particular industry or project types, and others are for general use. The tools that have a specific target usually build their methodology around business processes, client segmentation and success factors.
Here are the characteristics to look for when choosing PPM support tools suggested by Levine (2008):
- The ability to build various PPM screens and reports.
- Support for PPM-specific functions, such as project selection and prioritization.
- Out-of-the-box content in the form of best-practices methodologies to help the organization get ready quickly (templates, dashboards and reports based on standards such as PMBOK, PRINCE2, Stage-Gate).
Keep in mind
PPM process phases and the PPM support tools help companies to implement Project Portfolio Management methodology in order to take advantage of it. Project portfolio management has been defined as managerial activities. PPM operates at a strategic level and represents a continuous process. Companies can use project portfolio tools to select projects and allocate resources based on objective criteria.
