Introduction to Project Portfolio Management (PPM)

Category : Portfolio and Program Management, Project Management

Project Portfolio Management (PPM) is often not understood or embraced at large organizations and normally is managed quite haphazardly. It is worth reviewing exactly what is PPM, its objectives and core benefits. Below is a great introduction from Tarin Group.

Over the years many definitions for Project Portfolio Management (PPM) have emerged. Sometimes it is easier to describe something by describing what it s not. For starters Project Portfolio Management is not just Enterprise wide Project Management. It is not just the management of projects and metrics generation across various programs and projects. Project Portfolio Management is the construction and management of a portfolio of projects such that the contribution of the projects to the overall goals and objectives of the organization is maximized.

So why do organizations really need Project Portfolio Management? Some of the key reasons include:

·PPM enables organizations to choose projects that are aligned with the firms overall strategy and goals.

·PPM effectively balances resource capability and project resource requirements. This eliminates inefficiencies that result from poorly staffed or over burdened teams. It also ensures resources are not being wasted while not being utilized on projects.

·PPM brings realism and objectivity into the project planning and funding process. Projects get selected because they bring value to the organization and not because of political agendas driven by individuals.

·PPM provides visibility into projects, how they are funded and human and financial capability of the organization.

·PPM follows the same principles as financial portfolio management and allows a company to maximize its return on project investment by selecting the right mix of projects.

PPM can be in its simplest form be broken down into four main components. The first component deals with building the pipeline. The second component ensures the right projects get selected and the third components deals with correctly prioritizing the selected projects. There needs to be a structured process for building the project pipeline and for selecting the right projects. Key things to focus on should include:

·Standard process for preparing business cases

·Objectively quantified project benefits and value

·Risk and Benefit Assessment. (Risk of not doing the project vs. Benefits achieved)

·Projects should be aligned with some strategic initiative or goals

·Ranking of projects

·Maintaining inventory of resources

·Establish project scoring criteria

·Defining budgets for the portfolio

The fourth part deals with the active management of projects within the identified portfolio.

·The project portfolio will need to be periodically assessed in terms of project relevance and performance.

·Honest evaluation and reporting on projects that are no longer relevant or are not performing as required.

·Some companies employ the stage gate process to guide their decision to continue investing in projects.

In my mind PPM is an extension of the modern PMO that engages in strategic planning, managing projects and metrics reporting. Certain additional capabilities (e.g. Inventory of Resources and Project Selection and Evaluation Criteria) in addition to the Program Management Office need to be built to enable Project Portfolio Management. The key players within the organization should include the COO, CFO, CIO since these offices would own the funding decision.

At the core PPM is a process that does not necessarily require investing in new personnel if an organization already has a functioning PMO. As the number of projects increase it may become necessary to invest in a PPM tool. However that is a decision to be made once the process has been defined, implemented and has been bought in by all concerned.


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