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Managing one project can be tough, but what if it is your job to schedule and track multiple projects? Applying effective project portfolio management techniques is the way to go. Want to know more about aligning multiple timelines and resources while keeping true to the overall business goals? Then you are in the right place.
Project portfolio management is an approach used to manage several projects executed by the same company – keeping them aligned to the business goals and not in conflict with each other.
Most mid to large-sized companies handle several projects at once. In some cases they are connected, in others, they are completely separate. However, being completed by the same company, they share the same resources and employees. This means, there are conflicts in dividing those resources up and it is what project portfolio management aims to solve.
By evaluating risks, goals, priorities, and deadlines, the portfolio manager chooses new projects and structures the company portfolio in a way that the best possible outcome can be achieved. And a good project portfolio helps judge the possible outcomes and goals against the risks and limitations faced by the company, making it easier to know what and when should be done.
Portfolio management is usually done by the company executives. In larger organizations, this responsibility could be given to the project management office (PMO) for more effectiveness, however, the final decisions on which projects should be added to the portfolio and what takes priority still lie in the hands of the executive suite.
Implementing a project portfolio helps a company in two distinct ways – deciding which projects should be taken on and steering the ongoing projects in the right direction.
For a company that uses a project portfolio, picking new projects is all about evaluating the current situation. By seeing the big-picture of everything that is currently going on, they can objectively judge the risks and limitations that each possible new addition is going to face. At the same time, they can also easily see what additional value each new project can bring to the company. This minimizes personal bias and favoritism, thus pushing forth a more objective decision-making process.
The other big reason to start using a project portfolio is to keep all of the various company projects on track. When the work gets going it becomes very easy to get lost in the day-to-day activities and steer away from the overall company goals. The project portfolio prevents this by visualizing all the ongoing activities, prioritizing efforts, and dividing up resources in a way that serves the company agenda best. Thus, keeping each project team on track.
Here are the main benefits of using a project portfolio within your company:
1 – Alignment between company objectives and projects. By seeing all the company projects in one place, the manager can reschedule and plan team tasks in a way that serves company objectives the best.
2 – Eliminating personal bias. By seeing all projects in your portfolio, there is less chance to favor one of them over another. Which means personal opinions and preferences are less prevalent in the decision making process.
3 – Simplifies decision making in project conflicts. When two or more projects require the same resources, it becomes easier to prioritize which of them should get it. It also allows to allocate employees in an effective way so the noone is overworked and the priority tasks get finished on time.
4 – Helps turn down projects. By having a portfolio manager or a PMO, it becomes easier to see which of the potential projects align with the company goals and which shoudn’t be taken on.
5 – Builds governance and oversight. By emphasizing the long-term focus, the project portfolio implements new work habits and promotes self-governance.
The project portfolio management process is a continuous cycle of planning, authorizing, monitoring, and controlling. Each of the projects in the portfolio has to go through this cycle and as a result, this forms the overall process.
To give you a simple example, let’s say we have a new company with a clean slate and no projects going on. In this case, the first thing to do is plan which projects should be taken on. By picking from several proposals and evaluating resources, the portfolio manager lines up a few projects that the company could commit to. Then, the documents similar to a project charter are delivered to the executive suite. It is up to them to consider various aspects and authorize which projects will go through. Lastly, as the projects get going, it is up to the portfolio manager to monitor and control them. This is done by allocating resources and employees, solving conflicts, and monitoring if they are following the original plan as well as being aligned with the company vision.
In reality, however, most of the projects in a company’s portfolio start at different times, which means they might all be going through a different part of the cycle and it is the portfolio managers job to take control of them all.
If the cycle seems too extensive, the portfolio management process could also be defined by two distinct phases – Aligning and Monitoring/Controlling.
The Aligning phase is when new projects are introduced into the current portfolio. Before this can be done, the portfolio manager gathers information about the new projects and sees how they will align with the overall company goals. Depending on the company, this phase can be scheduled (monthly, quarterly, yearly) or happen on demand, as the company has space for a new project.
The Monitoring and Controlling phase begins as a project starts and continues until it is finished. In this phase, the portfolio manager monitors the health of the whole portfolio as well as individual projects on predetermined metrics. By seeing the overall picture, the portfolio manager can intervene and adjust the course of each project as needed.
To make sure your project portfolio is balanced and each project team is working towards a common goal, there are 5 steps you should keep in mind.
1 – Determine and communicate the overall business objectives. Before you even start thinking about the project portfolio, it is important to crystalize and communicate the business objectives to your employees. It is even better if these goals are prioritized so that the employees know what takes precedent in a case of conflict. While it is the portfolio manager’s job to keep track of the business goals, having teams that are aware of what you are trying to achieve will be of great help.
2 – Keep track of potential projects and suggested project ideas. While a request for a new project will most likely not come out of the blue, keeping a list of possible ventures will help you be sure of what should be done next. Once the time comes to evaluate possibilities and pick your company’s next project, you will be able to consult this list and see which ideas truly make the most sense.
3 – Take some time to evaluate potential. Before you go ahead and choose the next project for your portfolio, it is always a good idea to evaluate it. Do your research and see what possible benefits each project can bring to your portfolio and how it will support the overall goals. You may be surprised to find out that a project you thought to be great, turns out to be a mediocre option.
4 – Validate your project. List out the resources and team members needed for this project to become a reality and weigh the cost against the possible risks and predicted benefits. This last step before a project begins will let you see if this new addition is financially viable and does make sense for your goals and finances.
5 – Monitor the progress. As the project is added to the portfolio, there is no more need for proving its worth, but it is here that the hard work of the portfolio manager actually begins. Each project in your portfolio will have to be closely monitored to see if everything is still on track or in need of intervention. It is up to you as the portfolio manager to see when a project needs help and source people from other projects to work on the most important aspects at all times.
Taking the role of a portfolio manager is no easy task, whether you are working alone or in a PMO, good tools will allow you to balance the work more effectively and reach better results. There is no saying in which project portfolio tool will be the best for you, but here are some aspects a good solution will offer.
The key role of portfolio management is overseeing the big picture, thus, this first one should be a no-brainer. When looking for a tool, pick something that will let you create an overview of everything that is happening and at the same time would allow you to get into even the smallest details. Having both – a birds-eye view and a grip on the current events, will allow you to make the best decisions.
Communication is key in any project and it is made even more important by having several projects to manage at once. A good portfolio management solution will ease communication between teams and management, by being the one channel for all project-related discussions and questions.
Another important aspect to consider when choosing your tool is whether it can hold and collect all of the important project data. Choose one that can do both and you will save a lot of valuable time for both you and your team that used to be spent searching for important information.
Lastly, any good project portfolio management tool has to come with built in reporting. Reports are crucial for performance tracking and having to use another tool for this purpose will waste your valuable time. Instead pick something with built in live reports and always keep the hand on the pulse of your projects.