Focusing on the Big Picture. How to Implement Project Portfolio Management in 5 Steps and Reap Incalculable Benefits
In this article we will explain the importance of Project Portfolio Management (PPM): key benefits, risks and PPM the processes to implement.
Project management is a task full of challenges by itself. If you work on a software product, you must organize the collaboration and communication of multiple specialists with different areas of expertise. In manufacturing, you must consider things outside your control, such as supply chains and international trade issues. Imagine that companies have to deal with dozens of different projects, and here you go, another challenge appears on the horizon.
In addition to managing each specific project, you must deal with many of them. However, you don't have to worry since there's a solution to help you overcome the described problem. Today, we'll consider the main features of Project Portfolio Management (PPM) and see how you can implement it in a few easy steps.
It’s All About the Risks
The main objective of applying project portfolio management in organizations is to make better decisions about where and when to invest the available assets to achieve the best possible results. Here, instead of focusing on the specifics of a given project, the management team analyzes the whole set of current and potential projects for implementation. They may not be related to each other, but if you gather them together, they form a portfolio that reflects the risks and benefits the company may incur by working on them. Projects from the portfolio must invest in reaching global company goals. The management team can apply business analysis techniques, review budgets, and build data-based forecasting models to find those that have the required potential.
The importance of using project portfolio management in business is evident. The resources that the organization has in its possession are limited. In manufacturing, for example, you need raw materials. In construction, you need concrete and iron, and despite the industry you're in, there are only 24 hours in a day, and one must spend them wisely. Taking risks is an inseparable part of any business and keeping the projects included in the portfolio in focus gives you a good chance of downgrading them.
The first step of portfolio analysis can be performed without any sophisticated techniques. For example, the management team members can ask themselves if the company has enough resources to start a new project or if there's a project with similar features whose outcomes can be used as a data source. However, more advanced approaches to project portfolio management imply monitoring specific KPIs.
For example, Project Completion Rates is an example of one of the most fundamental indicators you can use. It shows the percentage of completed projects from all presented in the portfolio. Analyzing how this indicator changes over time, the management team can conclude the increase or decrease in the number of projects completed from start to finish. Among them, the team can find those whose implementation has gone beyond the budget or time frame. Such easy-to-perform measurements provide tons of helpful information regarding company productivity and efficiency.
Another example is Project Success Rate. This indicator goes further than the previous one and shows how many projects were successfully completed. Here, the company itself can determine the criteria according to which a specific project can be considered successful. For example, when customers come to custom software development companies, they have business issues that the new app should help with. Business analysts form an array of features that solve different parts of this puzzle and, working as a whole, improve the business processes of the customer's company. In this case, timely implementation of all these features and positive feedback from the customer can be considered a sign of successfully completing the project. These and other KPIs can turn a project portfolio into a vivid picture that gives a comprehensive view of the company's possible risks and potential successes.
Speaking of tools that help you to implement project portfolio management, despite the complexity of this approach, you don’t have to adopt a large set of applications. There are some solutions such as GanttPRO, for example, that help you both track specific projects and ensure they align with the global goals of your company.
Benefits of Applying Project Portfolio Management in Your Company
If you decide to start using project portfolio management in your company, be prepared to spend some time and effort on it. You must monitor many indicators for each project continuously, and the market landscape is not frozen in time, which brings some constantly changing variables in this equation. However, if you are brave enough to build your project portfolio, there are some benefits you can count on:
- Data-driven project selection process. In business, you must balance your desire to build one more project to help you grow and the need to conserve your resources. Suppose you have a small seafood restaurant. Investing in a delivery app creation and an online marketing campaign seem equally essential options. Unfortunately, you can only pick one, and choosing blindly is not the best decision. Project portfolio management allows you to rely on accurate data and scoring models to ensure you focus only on those projects that invest in reaching your company's goals the most;
- Better communication between employees involved in different projects can be achieved thanks to the very nature of PPM. Here, all stakeholders must be brought together to weigh all strong and weak points of shifting priorities towards a particular project;
- Clarified connections between projects and global company goals are a by-product of improved communication between stakeholders. Open discussion regarding projects included in the portfolio will help to understand what long-term benefits they may bring;
- More straightforward project prioritization process. In the portfolio, you can easily arrange all the projects in order of their priority. If the most valuable of them require too many resources, you can pick second or third in the list if the estimated outcomes look good for you;
- The big picture is easier to understand. Finishing projects on time and according to the requirements is essential. However, sometimes when you focus on the execution too much, you can miss what place the project takes in the complex mechanism of your company. Project portfolio management is a solution that helps to consolidate the skills and knowledge of executives, employees, project managers, and business analysts to outline better strategic goals and understand how to achieve them.
Project Portfolio Management Implementation in Five Steps
1. Clarify Your Business Goals
Before you start moving forward, you must clarify what you mean by success. Do you want to deliver luxury products or make them affordable for as broad an audience as possible? Is your goal to impress the end-users with innovative design, or do you want your product to become intuitive and user-friendly? By answering these questions, you can determine which metrics to monitor to assess your business's proximity to your goals.
2. Find Project Ideas
It's hard to say where the best project ideas come from. Sometimes, the concept of a service that will make your life easier just pops into your head. In some cases, the products you already use may lack tiny details only you can see, and their implementation will change the world. Customer feedback is also a valuable source of new ideas. In any case, it's better to be prepared for sudden enlightenment and be ready to capture and track them. All the projects you're currently working on must be included as well. The specter of tracking options is quite broad and depends on the size of your company, your tech-savvy, and your financial possibilities. It may be any tool, from a simple spreadsheet to an online database, where everybody can share their ideas.
3. Choose the Best Projects From those You Have
If you have a project list and metrics determining your success, you're halfway to your project portfolio management system up and running. The next step is to weed out those projects you'll have to abandon. You already have the criteria you can use for determining the project that will affect the overall success of your business the most. Those with the lowest value, in their turn, are unworthy of becoming a part of your project portfolio management program.
4. Initiate Projects
Before including the selected projects into your business plan, you must validate the portfolio to ensure that it works as a whole and is perfectly balanced. In terms of portfolio management it means that there are no projects that will drain all your resources or cause bottlenecks. Say if multiple software projects are estimated to enter the testing stage simultaneously, make sure that the QA team will be able to handle the workload or decide which of them should be postponed or rejected.
5. Ensure The Portfolio is Not Abandoned
If you want to avoid all efforts spent on making project portfolio management an integral part of your business being wasted, keep it from going by itself. The portfolio should be constantly monitored and measured. Ideas may become obsolete over time, and what is a project, if not the embodiment of specific ideas? Therefore, if some of them have not been implemented for quite some time, the chances are quite high that they need to be revised. Here, you can rely on the opinion of your project managers and/or advanced project management software that can provide comprehensive information about the current state of affairs in a couple of clicks.
Project portfolio management is an approach that allows you to plan the future of your organization as efficiently as possible. You can attract new customers with a regular portfolio that reflects your previous experience. Employees with broad experience can handle all the business issues here and now. But in case you wonder what tomorrow can bring, you can rely on features that project portfolio management has to offer. Here, even the wildest ideas will turn into guiding lights, and vague expectations will manifest in indicators reflecting expected profits.
Technical writer and content creator. Passionate about delivering reader-friendly tech-related content. Love Linux, FOSS, and horror movies.