Project Portfolio Management is a critical aspect of strategic success.
Navigating through it can be quite challenging, especially for those unfamiliar with its intricacies.
If you’ve ever felt overwhelmed by managing numerous projects simultaneously or have faced difficulties aligning your project goals with your organization’s objectives, then understanding Project Portfolio Management’s nuances could be game-changing.
This article provides some insights based on a conversation between our Founder, John McIntyre, and Stuart Taylor from the YouTube channel, Influential PMO.
Decoding Project Portfolio Management
In the intricate world of project management, one aspect that often slips under the radar is project portfolio management (PPM). This strategy involves orchestrating a collection of projects to achieve overarching business objectives. Project Methods and Agile models such as Scrum focus on getting teams delivering successfully, but that delivery does not happen in a vacuum. Ideas, projects, and people require careful coordination if organizations are to reap the rewards promised by new initiatives.
The power of PPM lies in its ability to provide an eagle-eye view over all ongoing and potential projects. Doing so allows for strategic alignment with organizational goals while also managing interdependencies between different initiatives within the portfolio.
A Closer Look at Project Portfolio Management
Portfolios are groups of projects or programmes that are grouped together both for efficiency to deliver one or more strategic objectives. Organizations may have a single portfolio encompassing all initiatives or may have portfolios at the department level, such as an IT Projects Portfolio.
Project portfolio management plays a pivotal role in organizations juggling multiple projects simultaneously. This need stems from the inherent competition among various initiatives vying for resources and precedence within an organization. In general terms, there are always more ideas that there is the capacity to deliver on them, and certain individuals or teams are in demand for every single project!
At its core, PPM revolves around making effective strategic decisions and optimizing delivery, communication, and decision-making processes.
Effective Project Portfolio Management enables organizations to prioritize their portfolios more effectively and leverage synergies among related complex projects, thereby minimizing any overlaps due to competing resources or timelines.
“Let’s make sure the things we’re starting are the right things and the best things”
An integral part of successful portfolio management involves strategically prioritizing different endeavors within the company’s pool of ongoing activities. This goes beyond simply ranking initiatives based on projected ROI or other financial metrics alone.
Strategic prioritization considers factors such as alignment with business objectives, such as achieving strategic goals through aligning projects accordingly, regulatory compliance requirements, market demands, and trends. A well-managed project portfolio helps prevent clashes between competing Project Managers while ensuring all efforts dovetail seamlessly with broader organizational targets.
“Let’s make sure that if we are starting things, we know we have the capacity to get those things done”
In any business setting, resource constraints are inevitable. These can range from human capital to time, finances, or even equipment. Without effective project portfolio management tools in place, there’s a risk of misallocation or overutilization of these valuable assets.
Before starting any initiative, it is important to take a moment and establish whether the organization has the capacity, ability, and competency to actually get the work done.
A well-structured project portfolio management process ensures optimal use of available resources by allocating them to projects based on their strategic value and potential return on investment (ROI). It also aids PMOs in identifying underperforming projects that may consume precious assets without delivering adequate results.
“Let’s align activity across the portfolio”
Once projects have started, it is common for them to run into difficulties. They may change course several times along the way as they uncover unexpected blockers, or discover smarter ways of working. This creates challenges for the business because projects that were not expected to compete for resources or release windows may suddenly clash and disrupt each other. Careful monitoring and coordination is required to make sure plans continue to align, and dependencies are clearly understood.
“Let’s be prepared to handle strategic and externally influenced change”
Major changes in government policy or environmental challenges such as war or pandemics can put delivery teams into turmoil. During the early days of the Covid Pandemic, the need for a coordinated approach at the portfolio level was apparent as priorities changed overnight, and projects were replanned or shelved altogether in favour of new and urgent projects, such as enabling home working.
How do you know if a Portfolio is being well managed or not?
It is easy to tell when a portfolio is not being managed well:
- You end up with a whole load of projects that are RED
- You end up with everything gummed up like a big plate of spaghetti
- People are tripping over each other
- You aren’t actually delivering anything!
The challenge is to identify whether a portfolio is on a bad track BEFORE getting to that point, which requires careful management and good leading indicators. Examples of things that would indicate a project portfolio is being well managed include:
- Dependency management processes running well
- Projects clearly mapped to strategic objectives
- Templates are in place to spin up standard project types
- Emphasis on finishing projects rather than on starting new ones
Stop Starting, Start Finishing
The best way to avoid delivery bottlenecks is simply to reduce the number of initiatives running simultaneously. Rather than pushing more and more projects into the delivery factory, portfolios need to be diligent about limiting the amount of work in progress. It is tempting to start everything. This is difficult to do because everyone in the organization will have strong opinions on which initiatives should be prioritized and when they should start. An effectively run portfolio needs good control of the funnel, ensuring new projects are only started when there is space to deliver them effectively.
Portfolio Metrics
A balance of metrics and measurements is needed to run a Project Portfolio effectively. These will typically include a mix of leading indicators (warning of potential issues), and lagging indicators (learning from the past).
The metrics and measures used will vary from portfolio to portfolio, but they usually fall into four main categories:
- Flow Metrics: Are we delivering efficiently and predictably within agreed constraints?
- Capability Metrics: Do we have the practices, skills, experience, and bandwidth to enable delivery?
- Outcomes: Do our outputs meet the needs of the organization/ customer?
- Governance and Ethics: Are we delivering the right way, and to the right standards?
