Project Portfolio Management (PPM) is a dynamic process. It helps organisations to make informed decisions about their projects, align them with strategic objectives and efficiently allocate resources.
What is Project Portfolio Management?
At its core, Project Portfolio Management (PPM) is the art and science of overseeing a collection of projects. With PPM, projects a collection of projects are looked at as a unified entity, rather than handling each project separately. It's like a conductor leading an orchestra, ensuring that all the instruments harmonise to create a symphony.
PPM provides a structured framework for project management that enables organisations to achieve their desired outcomes efficiently and effectively. It involves identifying project objectives, project planning to achieve those objectives, and implementing that plan. You have to keep focus on maintaining quality and controlling risks when putting the plan into action.
Project Management vs. Project Portfolio Management
Project Management and Project Portfolio Management play distinct and vital roles in a business context. Though it may be obvious, it’s worth stating that PPM doesn’t really exist without project management.
Project management focuses on planning, executing, and completing individual projects efficiently. It ensures projects are delivered on time, within budget, and meet their objectives. This involves coordinating resources, managing risks, and maintaining clear communication with stakeholders throughout the project lifecycle.
Project Portfolio Management on the other hand, involves strategically selecting and prioritising project initiatives. It provides a high-level overview of the organisation's project portfolio, ensuring alignment with the overall business strategy and goals. This includes assessing how likely a project is to be achieved successfully, evaluating resource allocation, and maximising return on investment.
By integrating Project Management and Project Portfolio Management, businesses can optimise project delivery capabilities. Project Management focuses on efficient execution, while Project Portfolio Management aligns projects with strategic objectives. This holistic approach enables effective project portfolio management, enhances decision-making, and drives overall success.
When does project management become PPM?
Project management becomes project portfolio management (PPM) when an organisation manages its projects, programs, and operations as a portfolio.
Essentially, when a business stops looking at projects on an individual basis and steps back to look at the bigger picture. PPM is valuable in complex business environments with multiple projects taking places at the same time. It provides a holistic view of project impact, aids in prioritisation based on alignment and potential returns, and optimises resource allocation. Some of the key areas that PPM is valuable in are:
Complex resource allocation
PPM is particularly valuable in scenarios with complex resource allocation, such as multinational corporations handling cross-functional projects. It provides a unified view for effective allocation of capital, manpower, and time based on strategic importance and expected returns.
Crucial strategic alignment
The first thing to note with this one is that strategic alignment is always crucial! Something’s wrong if projects aren’t aligned to organisational goals - the point of any project is to make a business impact.
We do recognise that some projects are super-important to strategically aligned, and in these PPM is an essential instrument. For organisations launching digital transformation initiatives for example, aligning multiple projects with the strategic goal is vital. PPM enables an integrated approach to synchronise these projects towards the common objective, avoiding waste on low-priority or misaligned initiatives. PPM basically keeps everything on track to working toward achieving business goals.
High risk projects
PPM is a powerful tool for risk management, particularly useful in industries like finance or construction where projects carry significant risks. It allows organisations to assess and manage increasing risks across projects. It also allows businesses to understand how risks in one project could impact others and creating informed decision-making.
PPM delivering value
Project Portfolio Management (PPM) is a strategic alignment process wherein an organisation's projects are evaluated and prioritised to attain business objectives. There are three critical aspects of PPM: governance, transparency, and flexibility.
Governance is the framework within which the decisions related to the portfolio are made. It involves establishing clear guidelines and processes for project selection, prioritisation, and resource allocation. Effective governance ensures that each project aligns with the organisation's strategic objectives. It also provides a structure for monitoring and controlling the portfolio's progress and making necessary adjustments when required.
Transparency is essential in PPM as it promotes open communication and visibility in all stages of project management. Transparent processes help stakeholders understand how projects are selected, evaluated, and executed within the portfolio. It also allows for better decision-making by providing accurate and timely information about project progress, risks, and resource utilisation. Transparency also helps in identifying any potential conflicts or duplication of efforts within the portfolio.
Flexibility is another crucial aspect of PPM as it enables organisations to adapt to changes in the business environment quickly. With a flexible approach, organisations can adjust their project prioritisation and resource allocation based on changing market conditions or internal priorities. This allows for better resource optimisation and the ability to seize new opportunities or mitigate risks promptly. Flexibility also promotes innovation within the organisation by allowing for experimentation and exploration of new ideas.
What are the benefits to stakeholders of PPM?
There are many benefits of PPM for an organisation, and these aren’t just for project managers themselves. PPM offers unique benefits to all the different stakeholders within an organisation:
- Executives: PPM provides executives with a comprehensive overview of the project landscape. It enables Execs to prioritise projects based on strategic objectives, and make informed decisions that impact the organisation's bottom line.
- Project Managers: PPM streamlines project selection, resource allocation, and risk management for project managers. It enhances their ability to deliver projects on time and within budget, while aligning them with strategic goals.
- Team Members: PPM fosters improved collaboration among team members, helping them understand how their projects contribute to the bigger picture. It provides clarity on how their efforts contribute to the organisation's success.
- Stakeholders: PPM ensures transparency and accountability for stakeholders. They can monitor progress, understand resource allocation, and ensure projects stay on track to meet their intended objectives.
Industries benefiting from PPM
Project Portfolio Management (PPM) is an invaluable tool for a multitude of industries, and organisations of all shapes and sizes. Essentially, if you’re running multiple projects which can crossover, it’s a good idea to adopt PPM processes for effective management. Some industries where PPM is widely used are:
· IT: This sector utilises PPM to align projects with business objectives, ensuring resource allocation is optimised and risks are managed.
· Healthcare: This industry uses PPM for better project selection and execution. This can be critical in areas such as clinical trials or new facility constructions.
· Manufacturing: This industry leverages PPM to streamline processes, enhance efficiency, and reduce waste.
· Finance: This sector uses PPM for risk management, strategic planning, and governance.
· Education: This industry employs it for managing academic projects and institutional improvements.
PPM serves as a strategic compass across diverse industries, guiding them towards their ultimate business goals.
Introducing PPM software
Project Portfolio Management (PPM) software is a strategic tool that enables organisations to plan, manage, and execute their projects effectively. It provides a consolidated view of all the projects, their statuses, timelines, resources, and potential risks. This level of visibility into the project portfolio helps leaders make informed decisions, prioritise projects based on their alignment with business objectives, and optimise resource allocation. PPM software also facilitates improved collaboration and communication within teams, thereby ensuring timely completion of projects and enhancing overall organisational productivity.
While both PPM and project management software share a common goal of aiding project success, there are key differences between the two. Project Management Software primarily focuses on the execution of individual projects. It provides tools for task management, time tracking, resource allocation, and communication within a single project.
PPM Software manages a portfolio of projects, offering a broader perspective. It’s used for strategic planning and decision-making, enabling leaders to assess the collective performance of multiple projects, and prioritise projects based on their strategic value to the organisation. PPM software like Fluid provides in-depth and advanced budget planning features and financials to understand the entire project portfolio landscape.
Why is it important to use PPM software?
Project Portfolio Management software isn’t a luxury, but a necessity for businesses that want to stay ahead in the competitive landscape. While Project Management software offers basic tools to manage individual projects, key features of PPM software bring a wider view, enabling businesses to manage and evaluate the entire portfolio of projects.
- Strategic alignment: PPM software ensures that all projects align with the overarching objectives of the organisation. This feature allows businesses to prioritise projects based on their strategic value and potential ROI, ensuring resources are effectively allocated.
- Resource management: A critical feature of PPM software is its ability to manage resources across multiple projects. It allows for tracking of resource usage, identification of over-allocated resources, and redistribution to avoid bottlenecks and ensure optimal utilisation.
- Risk management: PPM software provides tools for identifying, assessing and mitigating risks at the portfolio level. This proactive approach helps prevent potential issues that could derail projects and negatively impact the business.
- Budgeting and forecasting: These tools provide a comprehensive view of the financial aspects of projects. They help in budget allocation, tracking expenses, and forecasting future costs, contributing to better financial management across the project portfolio.
- Reporting and analytics: PPM software provides robust reporting and analytics capabilities. It delivers real-time updates, performance metrics, and trend analysis, allowing data-driven decision making and continuous improvement.