How to Manage a Project Portfolio
You are currently cruising at 35,000 feet, en route to your client’s office across the country. You look out the window at the patchwork of colors and patterns below and are able to discern if you are over forests, deserts, water, or mountains…but that’s about it. You’re too far away from the details to identify anything in greater detail. It’s a beautiful sight to behold.
As you approach your destination, your flight begins to descend. Gradually, the patchwork of different colors sharpens into distinct patterns. Squares and rectangles of earth begin to take shape. Some are dirt brown croplands. Others are densely covered with dark green vegetation. It’s still a beautiful sight to behold.
You descend to 500 feet and now everything comes into focus. Grids intersect with roads. Cities are rigidly defined by a network of houses, buildings, and other built structures. You are now at the altitude where even people are coming into focus. It remains a beautiful sight to behold.
You land. Reflecting on the descent, you recognize that all three views were really of the same thing, but each one just had a bit more detail than the one before. Different aspects of the terrain came into focus as you came closer to landing.
The above is a good description of project portfolio management. Project portfolio management is a 35,000 foot view of the all of the projects and related activities that are occurring at ground level. This takes a different skill set than just managing projects as well as project portfolio management tools.
Project Portfolio Management is About the Big Picture
Project portfolio management process is about managing and understanding the big picture.
It’s the high altitude view of things. Project management is about bringing the project to completion. Project portfolio management is about determining whether it is the right project to bring to completion. There are a number of things to keep in mind when making this type of decision:
- Do the Projects Support the Strategy of the Company? Every company has a strategy to execute. It is their plan for competing in the marketplace, delivering products and services that fulfill needs, and making necessary changes as the market dictates. Project portfolio management ensures the right projects are being worked on.
- Are the Skill Sets of our Employees Up to the Task? Another point for consideration when it comes to project portfolio management is to ensure employee skills are appropriate for the projects being undertaken. A company can make the decision to adopt a new strategy, which will rid them of some projects in progress and bring new projects to the table. Project portfolio management is about having the foresight to expect some retraining of employees to accommodate the new projects.
- How Long Will It Take To Realize an ROI? The 35,000 foot view of project portfolio management focuses on benefit realization and creating value. Portfolio managers understand that they won’t get their money back the day after a project goes live. There may be a substantial amount of time, resources, and cash that need to be poured into supporting a project. Project portfolio management will allow for tracking operational efficiencies due to the project being implemented.
It’s up to the project portfolio manager to ensure they have the information that addresses the above questions. How can this be done?
Monitoring Project Portfolio Performance
Monitoring and managing a project portfolio is similar to yet different than managing a project. One of the biggest similarities is that there needs to be regularly scheduled meetings to review the performance of the portfolio. These meetings do not need to be nearly as frequent as project status meetings.
Depending upon the size of the company and how many projects are involved, they can occur once every two or three months. Special preparation for these meetings is necessary, as upper management and top executives are typically in attendance. What should be considered at these meetings? The following are a few points to consider:
- Is the Portfolio of Projects Still Strategic? One of the first concerns that need to be addressed when reviewing the portfolio is whether or not it’s still relevant to the company’s strategy. Strategy can change based upon the current direction of the company.A portfolio of projects that supported one aspect of the business three months earlier may be outdated. The competition may have gone down a new path, so what was needed three months ago is no longer necessary or viable.
- Is the ROI Still Enticing? A big focus of project portfolio management is to understand the value and benefits that are being returned to the company. You will want to review the ROI of projects in the portfolio based upon where things stand currently. It could be that a return of 35% has dropped to 20% as a result of higher amounts of time spent on the portfolio and certain cost overruns.
- How are Individual Projects in the Portfolio Doing? Project portfolio management also involves understanding the particulars of each project that make up the portfolio.Think about your 401(k) statement: The first page usually includes an ROI percentage that reflects an average of all funds or stocks your money is invested in. You can then drill down into as much detail as you would like for the individual funds or stocks that are included in your 401(k).
The same principle applies with project portfolio management. You need to provide a general overview of how the suite of projects is doing. However, you will also want to include a summary of each project in the portfolio, which is where project portfolio management software comes in handy.
Include information such as: Is the project on track? Is the project on budget? How much longer until completion?
The management review board can then make certain decisions based upon this information. They can decide to kill a project in the portfolio that is not performing as expected. Or, they may decide to add resources or increase scope for a project that has taken off and is doing better than anticipated.
Isn’t That What a Project Management Office Does?
Ummm… Not really. A PMO is much more tactical in nature and project portfolio management is very strategic. A PMO does manage multiple projects at the same time. However, it doesn’t typically pick which projects are going to be managed or decide whether or not they are a good fit for the company.
What a PMO does do extremely well is provide recommendations to the project portfolio management team. The PMO will know which projects are performing well and which projects are sub-par. They have the inside scoop on the prospect of finishing on time and within budget, or if things are getting a bit out of control.
It’s the PMO’s responsibility to keep management up to speed with these necessary details.
We are all on the same trip whether we are at 35,000 feet or just about to land. The view may be different when you look out the window, but everybody working together, plus a set of project portfolio management best practices! will ensure we all arrive at our destination of profitable projects and portfolios being delivered on time!
To start reaping the benefits of project portfolio management software try ProjectManager.com. By using the group and portfolio Project Dashboards included in this project management software, you can view the progress of hundreds of different projects at the same time. These marvelous online project software features allow you to combine projects into groups and view their performance in a single place. In this way, you can manage projects, programs and portfolios easily. Sign up for a free trial today.