Why portfolio management is important

By managing projects as part of a portfolio, the dynamic changes because you enable the portfolio to be successful — even if some of the projects in it fall short — and help drive the desired outcome for your organization. Here are a few benefits when moving to a portfolio management approach:. Portfolio Management is an inherent way to strategically align your projects with the goals of the business.

As you map out your portfolio and your resources that are to be assigned to certain projects, you make sure you they are the projects that support the needs of the business. However, we know this changes as you go along and you need to adapt. By managing a portfolio of projects, it becomes easier to identify the projects that are better suited to meet your needs, and reduce the investment or abandon projects that no longer serve the needs it intended to.

In doing this, your business benefits from investing in projects that are the highest likelihood of added value and ROI. Strategic alignment is especially strong in top-down portfolio management approaches. Projects are prioritized and resources are assigned based on those prioritized projects, and executed from there. Essentially, planning and reporting are the critical elements where goals are identified and benefits are realized. Conversely, bottom up portfolio management puts the emphasis on the execution of projects, making sure tasks are executed, and thus increasing project success through individual contribution.

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Jump to Section. What is Project Portfolio Management? Assigning project managers to the approved projects Including them in the overall portfolio. Benefits of Project Portfolio Management Benefits of project portfolio management include a holistic approach that monitors project status and health, their interdependencies, and the performance of resources assigned to the projects. Here is a rundown of the key benefits of project portfolio management. Align project goals with business strategy The ultimate mission of any firm is to meet the strategic and short-term goals.

Informed decision-making Project portfolio management provides high levels of visibility both from a strategic and a tactical perspective. Improved project selection process Often, companies have an unclear selection criterion for the new projects. This inability to focus results in: Too many small, low-impact projects. A plethora of projects for the limited resources available causing burnout. Poor project prioritization. Inadequate data on projects.

High project failure rate. Minimize risks, maximize business impact The word risk has a robust negative ring to it, but it simply happens to be inevitable at times. Optimal resource utilization across the enterprise PPM mobilizes your resources to invest their best and maximum efforts into the most feasible ventures.

Deliver projects within time and budget Most projects fall victim to overspending due to poor cost estimation, mismanaged resource allocation , or miscommunicated project scheduling. Boost productivity with enhanced team collaboration A PPM solution provides a real-time view of the progress of projects to all the stakeholders. Effective management of operations teams across the project Operations teams are responsible for overseeing, directing, and managing business operations such as accounting , manufacturing, support, etc.

There are four areas for which operations and project managers have to work cohesively: Budget Schedule Staff Management Skills Development The PPM tool helps you improve operational prowess with smart and competent resource planning and allocation. The analytics you can typically draw from a PPM tool include: Overall utilization rates of operations teams.

Skill surplus or deficit reports. Projects that are facing a resource crunch. People who are likely to be underutilized. Availability statuses across departments. Conclusion PPM applies the needed strategic planning, resource scheduling and management, and monitoring for all projects.

What does your PPM strategy look like? Saviom Solution SAVIOM has over 20 years of experience helping multinational clients manage their resources efficiently and effectively. Get resources to your inbox directly! Business Email ID. The more you can build this network of information-sharing across the portfolio, the more aligned your projects will be. There's often interaction between different projects; resources in common people, facilities, technologies, processes which require some level of coordination.

There is competition for those resources and budgets. There are dependencies. Again, having an overall vision of your portfolio helps identify these interactions. Then, you can better address duplicated effort, blockers and bottlenecks, and wastage in the portfolio.

It's this model of continuous improvement — making small, iterative steps — that'll keep your business competitive. PPM's major advantage is having a systematic way of capturing and sharing information related to projects across all departments. This means you can make timely decisions throughout various project lifecycles.

You're looking for a balanced portfolio with the capacity to smooth out the inevitable peaks and troughs of business activity. To achieve that, you must have a mix of long and short-term projects, higher risk and lower risk projects, and projects that complete at different times or require resources in phases.

By definition, projects go through phases, and all these phases need to be aligned. PPM covers work completed, work in progress, and work that has been approved for the future. Portfolio Management is a tangible way to operationalize strategy as work. Work that can be seen, measured and analyzed. It builds transparency and good governance into your organization because you can learn from past projects and predict the best opportunities for future projects; that is, what will yield the best results.

The best software automates a lot of that reporting with dashboards and data visualization. In some cases, we're seeing businesses use AI-generated analysis of their data. All that's left for you to do, then, is communicate the good news.

Imagine you launched your first start-up or small business a decade ago. In the beginning, you managed your company efficiently using something like Excel sheets. Early-stage companies have less data to analyze and far fewer, less complex cross-functional communication linkages to manage. After some expansion, acquisitions and forays into new markets, you transform into a mid-size enterprise. There's a point in the life of a company where managing complex, data-heavy business processes on disconnected spreadsheets or manually routing word documents becomes inefficient.

The PPM process assists in clarifying roles and responsibilities across functions and teams by establishing clear lines of accountability using methodical tools such as RACI charts. It helps bridge the gap between teams with different cultures, approaches and priorities — for example bringing together creative and developer populations, who typically pursue diverging agendas, around a common vision.

It ensures that everyone across the enterprise is doing the right things, at the right time. As part of this cohesion-building role, PMOs typically provide training or coaching services and strive to inspire teams at the organization level.

Project Portfolio Management also provides frameworks to ensure consistent quality of project outputs and deliverables. In addition to driving increased horizontal alignment across business lines, departments and teams, Project Portfolio Management also fosters improved vertical alignment by reconnecting project execution to the strategic goals and objectives of the organization.

Centralized management of portfolios enables leaders and managers to ensure that there is a proper plan in place for delivering real value on business opportunities and for executing on strategic goals. This involves selecting and prioritizing those projects that are most likely to deliver strategy-aligned benefits, revisiting project portfolios over the course of their life cycle to ensure adherence, and correcting the course if needed.

Effective, consistent and successful deployment of the Project Portfolio Management process across the enterprise requires the support of key enablers, among which are a formal PMO Project Management Office and a robust, industry-grade PPM tool.

For organizations who do not already have one in place, setting up a Project Management Office can facilitate the implementation of PPM methods and processes significantly. A Project Management Office is responsible for establishing and maintaining sets of consistent standards and best practices for managing projects, programs and portfolios. The PMO is traditionally in charge of overseeing project activity at the level of the company, including the selection of projects and their placement into portfolios.

Because of that central role and supervisory capacity, the PMO is in the best position to spearhead and orchestrate the introduction and dissemination of the PPM methodology. Accordingly, a PMO will engage in user training and coaching activities. It will also make sure that Project Managers and project teams have the information, resources and tools they need in order to perform their duties. For that reason, one of the first moves of newly-established PMOs is usually to acquire a professional Project Portfolio Management tool.

PPM software centralizes and consolidates project-related information in order to enable the PPM process. It provides the invaluable data that is needed to track progress, assess project and portfolio health, and run analyses and simulations.

Long story short, the support of a powerful platform is instrumental in the successful implementation of Project Portfolio Management methodology in a company. Project Portfolio Management is a discipline and process that can significantly improve the chances of success of project-oriented organizations — especially of those running large numbers of critical projects.

By bringing clarity and consistency to Project Management activities , PPM helps define and pursue clearer objectives , make planning operations more realistic, optimize the allocation of resources, improve the quality of deliverables, and most of all ensure the strategic alignment of projects. Read More. Key Takeaways:.