Even small businesses have multiple projects all swirling around at once. Sometimes this cocktail of proposals, products, and processes can get a little unfocused if it’s not managed from one central place.
This is where project portfolio management (or PPM for short) comes in. But what is it? And do you really need it?
In this article, we’ll walk you through everything you need to know, including why it’s useful, how it can help you get more out of projects, and how to get started yourself. Let’s go!
What is a project portfolio?
A project portfolio is a collection of products, project proposals, programs, and processes that work together to help the organization meet its objectives.
For example, a business in the cake-making industry might have an objective to ‘be more environmentally friendly.’ Its project portfolio might include a variety of projects that all feed into this goal. That could include ‘transitioning to electric delivery vehicles,’ ‘ reducing plastic packaging,’ and ‘finding more sustainable ingredients.’
In a nutshell, the project portfolio includes different projects in much the same way that a property developer’s portfolio will include a mixture of houses, apartments, and building sites.
What is a PPM?
A project portfolio manager (PPM) is someone who manages one or more portfolios. The role involves overseeing the intake of projects, identifying a need for initiatives, authorizing them, and assigning project managers. A PPM carefully considers projects both on an individual basis and the bigger picture, then organizes them to help the company achieve its goals.
9 reasons why product portfolio management is important
- It facilitates team and organizational communication, helping ensure everyone is on the same page.
- It can help managers forecast risks and identify potential profits and losses associated with a project.
- You see a bigger picture view, which can be helpful when getting buy-in from managers and stakeholders.
- It helps managers ensure projects are in-line with the company’s wider objectives.
- It helps maximize the benefits of any project undertaken.
- It’ll ensure there’s balance in the project portfolio. For example, ensuring there’s a good mix of long- and short-term projects.
- It increases the chance of project success because each one is considered as part of a whole.
- It makes it easier to recognize and prioritize valuable projects.
- Managers manage change more effectively.
Project manager vs. portfolio manager: what’s the difference?
Project management is about applying knowledge, tools, and techniques to ensure project success. Portfolio management, on the other hand, is a role focused on choosing which project a business should be involved in, as well as how to find the funds and resources for them.
Portfolio managers accept or reject projects based on how well they align with company objectives and whether or not they’re feasible. Project managers drive those accepted projects through to the finish line.
5 steps of portfolio management
There are 6 key steps that make up the portfolio management process.
1. Define guiding objectives and create a strategy
A big part of the portfolio manager’s job is making sure every portfolio feeds into the business’s goals. For example, if the business’ main goal is sustainability, and the secondary goal is cost, then any projects that promote sustainability will be given precedence over cost initiatives.
2. Gather project ideas
There’s no portfolio without a project, and it’s the manager’s job to assemble a well-rounded collection of initiatives. Project proposals and ideas can come from anywhere — from team members to customers. So it’s important to keep these well organized and stored together. A cloud-based spreadsheet or project management tool are good options here: The wider team can add ideas for the portfolio manager to review later.
3. Manage ideas and choose the best
It’s the portfolio manager’s job to select the cream of the crop when it comes to projects. After all, there’s only so much in the way of resources and budget. They’ll need to make sure the one they pick will bring maximum value to the company.
The portfolio manager needs to assess the strengths and weaknesses of their portfolio. To do that, they’ll take into account things like ROI, milestone dates, and schedules. If there are similar projects already in play, they must assess whether or not they might be better combined or stopped.
Besides cost and resources, portfolio managers also need to run a risk assessment to make sure the project is feasible. When doing this across multiple projects, they should choose a common ranking factor (such as ‘cost’) and measure every project against that to ensure an objective assessment.
4. Validate choices
Once the portfolio manager has chosen their projects on an individual basis, they’ll need to look at the bigger picture — i.e., see how well balanced the portfolio is as a whole. This includes making sure the projects aren’t collectively too expensive, risky, or at odds with each other’s scheduling.
It’s important to know how tasks are dependent on other tasks. Working out the project’s critical path can help managers avoid bottlenecks, schedule clashes, or delays.
5. Manage the portfolio
Projects and businesses evolve, and portfolio managers need to keep on top of these developments to ensure the project mix is working as it should. Typically, it’s the portfolio manager’s job to manage and assess incoming project proposals and work closely with PMs to monitor existing projects’ performance. They’ll also need to put projects on hold or cancel if they fall out of alignment with business objectives. The three areas of focus here include change management, risk management, and resource management.
If you’re using project management software, track progress using Gantt charts with set milestones. This breaks the project(s) into more manageable parts. As a result, it’ll be easier for you to plan the team to work through without feeling overwhelmed.
An example of a simple Gantt chart
Portfolio management best practice
Ready to try it out for yourself? Here are some key things to bear in mind.
- Don’t hesitate to cancel or revisit projects if they no longer align with company goals.
- When it comes to project ideas, involve others from the wider business to get a fuller picture.
- Use project management software to simplify admin and task management, giving workers and stakeholders the freedom to record task data themselves and track projects remotely.
- Collect accurate data to help ensure you base your decisions on evidence that’s both reliable and compliant.
PPM can be a tricky process to master, but there are tools to make the job a little easier. With Backlog, our own project management platform, you can analyze data and present reports, balance resources at the click of a button, and take advantage of dynamic reporting, allowing teams and stakeholders to follow project progress as it happens.
With the right tools, your team can keep track of multiple projects and tasks, while you can take a more hands-off approach to portfolio management — something that’s good for fostering trust, saving time, and cutting your project admin down to size.