The complexity, cost and scope of projects have grown exponentially over the past few decades. Likewise, the number of projects implemented by organizations. Overall, it’s no wonder that both effective project management and successful project completion have become critical priorities for many organizations.
In fact, project success has become so critical to a company’s success that the Project Management Institute (PMI) has labeled this era of commerce the project economy, saying it’s an era “when organizations deliver value to stakeholders through the successful completion of projects, product delivery, and alignment with value streams.”
PMI estimated project-oriented activity worldwide at $12 trillion in 2017 and has estimated that it will grow to $20 trillion by 2027.
Due to the size and value of the projects, strict monitoring of project costs and delivery is required. As a result, many organizations have adopted the discipline of project management and have increasingly adopted project portfolio management as well.
What is project portfolio management?
Project portfolio management (PPM) brings together the methodologies, processes, and technologies used by an organization’s project management office (PMO), as well as all of its project managers, project teams, and the projects themselves, into a single management structure.
This centralized management helps ensure that methodologies, processes, and technologies are used consistently and effectively across individual enterprise projects for greater overall project delivery success.
The centralized management of PPM also allows the organization to focus on continuous improvement of these methodologies, processes and technologies and to measure how effectively project managers and project teams are using them.
“It’s process management that’s used throughout the project management organization,” said Karen Willow, senior delivery consultant at PPM management consulting firm Swingtide.
PPM creates a top-down approach to project delivery rather than allowing each project manager or project team to operate autonomously with little or no oversight or coordination.
The goal of PPM is to optimize the implementation of projects in the company, making PPM synonymous with project management or even program management. Rather, it is about managing how all this work happens.
A range of software and tools are available to support PPM activities, some tools are more focused on strategic project management and others provide tactical agility.
Benefits of implementing PPM
According to several project experts, organizations that adopt PPM are more likely to have the right people working on the right things with the right resources flowing to the right projects at the right time. PPM also ensures that projects, material resources and personnel are planned in an optimal sequence.
“It’s important to have portfolio management so you can see the different projects, to make sure there’s standardization, to make sure they’re all working toward a common goal, to see if there’s synergy and to make sure they complement each other,” said Amit Grover, who, as Group Director of consultancy Guidehouse Advanced Solutions, focuses on enterprise systems implementation.
Willow said not all organizations are large enough or have the scope of projects to warrant implementing full-scale PPM practices, but she noted that those that do will see a number of benefits to the business, including:
1. Better decision making
PPM ensures consistency in how organizations qualitatively and quantitatively evaluate projects across the project delivery function, which in turn helps organizations be more objective in project evaluation and prioritization.
“PPM takes the emotion out of projects,” Willow said. “Organizations tend to attract people who are emotional about their pet projects. With PPM, someone evaluates the projects to see how much they’re going to cost, what the ROI is — it helps people who might want a particular project to go ahead. Maybe there’s no ROI.” “
2. Accelerating the delivery of new products and services, as well as transformation
With PPM, coordinated project delivery methodologies, processes and tools across all projects and programs can reduce and even eliminate time-consuming redundancies and inefficiencies.
This, in turn, allows the organization to move faster to deliver projects, said Samir Dutt, global head of technology strategy and operations at consultancy Protiviti.
“You can keep control but get rid of the slowdown,” he explained.
3. Consistency across enterprise project teams
PPM creates and enforces the same standards and strategies for all project teams, ensuring that everyone understands and works toward the same set of goals and uses the same processes to measure and report success, experts said. PPM also helps ensure consistency in the tools used, Datt added, which can prevent unauthorized use of technology – so-called shadow IT — within the project delivery function.
4. More opportunities for continuous improvement
Centralizing project management through PPM allows organizations to see what’s working and what’s not across projects. This gives PPM officials an opportunity to identify areas for improvement, Dutt said.
At the same time, he noted, these PPM officials may also see opportunities to automate processes in the project delivery function. It provides further improvements in project implementation work, increasing efficiency, saving costs and increasing productivity.
5. Optimized allocation of resources and increased efficiency
Also, Willow said, PPM can help organizations become more efficient in project delivery because project portfolio management encourages the use of repeatable processes.
Here’s why: Because teams use a set of validated approaches, they spend less time determining which approaches to use on each new project, and no time is wasted getting employees up to speed on unfamiliar processes.
In addition, Vitols noted that as project teams reuse the capabilities allowed by the PPM function, they become faster and more adept at using them, bringing even greater efficiency to the project delivery function.
6. Increased visibility of the entire project pipeline
This consistency of methodologies and processes also helps create better visibility into the project pipeline and project status. The reason? All project managers and project teams would use the same tools and techniques to measure and report, Willow explained. “Because you’re using standardized tools and templates, it’s all equivalent reporting,” she added.
Anil KrishnanandaDirector of IT Strategy and Transformation, Guidehouse
7. Increased responsibility
This increased visibility also allows business leaders to more effectively hold project managers and project teams accountable for each project, as well as their success rates across multiple projects over time.
“You can see how many projects you’re getting on time and on budget, and then you can motivate everyone across the organization as a whole to adopt the tools and processes they need to be more efficient,” Willow said.
8. Approval of project selection and business strategy
With better decision-making and greater visibility provided by PPM, organizations can more easily confirm that they are moving forward with projects that actually support their overall goals, said Anil Krishnananda, director of IT strategy and transformation at Guidehouse.
“PPM can make sure you’re doing the right projects, that the projects are delivering the right value to the organization and that they’re aligned with the strategy, goals and objectives,” he said.
9. Better risk management
Experts said PPM allows organizations to manage project risks more effectively by giving officials a picture of potential problems not just on each project, but across all projects. This broader perspective allows PMOs and/or business leaders to better manage risk by more accurately allocating resources or prioritizing projects, Grover said. For example, managers with a complete picture of the project pipeline and associated risks might decide to do a cloud migration project first if doing so would reduce security risk in another IT project.
10. Higher probability of success and increase in overall ROI
Summarizing all the benefits, Vitols said that the implementation of PPM provides a higher probability that the organization can consistently successfully complete all projects, which is the main goal of any organization that aims to grow in the market.