Wondering What Makes a Successful Project Portfolio Management?Nancy
Basically, Project Portfolio Management (PPM) is a type of process and approach used for analyzing and managing ongoing projects with a number of important factors. Project managers aim to use project portfolio management to achieve the optimal resource and the financial goals of an organization. Such goals have constraints from business partners, customers, or some other unseen cases.
Project Portfolio Management – Key Factors
Project portfolio management offers project managers and large-scale project-driven owners the necessary capabilities to manage business timescale, resources, and budgets for all sub-tasks. Generally, project portfolio management provides a good structure for managers to solve issues and risk mitigation. Therefore, project managers and related team members can quickly identify the most suitable method to finish their projects.
This process decides how a set of portfolio projects will be managed within an organization based on a specific time period. Pipeline management involves the decision-making process for checking and choosing new capital investment projects.
Managing Business Resource and Assets
This factor is about the effective deployment of an organization’s business resources, which involves financial resources, product stock, human resources and so on. The long-term mix of assets is also key to project portfolio management. The main purpose of asset management is to optimize risk by investing in different types of assets. Features of the investor profile determine different types of investment.
Controlling Changes and Re-balancing
This factor may include the changes in new requirements, constraints, regulatory demands, or technical enhancements. Project managers can explore and match available business resources to improve demand to a certain level. Re-balancing is about returning a portfolio to its original target allocation annually. The process of re-balancing is to ensure all the business resources and assets are at a safe level.
Managing Financial Data
Financial managers can improve the accuracy of organizational data by estimating and managing the financial resources of a project. Strategic planning, the progress through the overall business value and other project financial techniques are also important.
Project managers also use project portfolio management for analyzing organizational risk sensitivities within an individual project. Such a step is the basis for deciding confidence levels for the overall project. Managers can view uncertainties in a project through the integration of financial cost and risk management. In reality, it is very difficult to predict the most suitable management approach at the very beginning. Therefore, a good idea is to generate a basket of different types of investments. This can also be called as risk diversification.
Practical Business Uses
Project portfolio management has many useful and popular practical uses. Enterprise Project Portfolio Management (EPPM), for example, is one of them. Managers use EPPM principles for all project-intensive tasks and business resources across an organization. In general, PPM has a number of practical benefits as following:
- Prioritizing the most suitable project: Decision-makers can strategically prioritize, plan, and control organizational portfolios so as to continually improve productivity.
- Identifying problems at the early stage: Project managers can monitor and solve any potential problems at the early stage of the project life cycle in order to avoid financial losses.
- Setting up good project framework: Managers can easily access to a single project with adequate flexibility. Therefore, organizations can have a clear idea about how, when and why to allocate business resources, especially during a crisis.
- Project Overview and governance: Project leaders can combine all the project resources and financial data in a single and integrated solution. Governance and related policies are to ensure all projects consistently toward business final goals.
- Knowing about the future business resource: Organization owners ensure the suitable resources are assigned to the right projects at the right time and are fully used.
Project Portfolio Management vs. Project Management
In most cases, project portfolio management and project management have different focuses and uses. Project management aims to focus on the development and achievement of the single project. In contrast, project portfolio management is mainly about the viability of individual project so as to meet overall business goals. Sometimes, in reality, both of these two approaches can be used for better outcomes. Below you can see some good outcomes when combing project portfolio management and project management:
- Avoiding possible risks and losses by identifying the rate of return and earned value for the single project.
- Proving a clear channel for project managers to quickly create flexible plans.
- Listing and distributing available human resources, such as team members or project managers, for higher productivity.
- Assigning monetary value
- Setting firm project budgets.