Castellan Systems

Project Portfolio Management Guide

A project portfolio is a collection of projects, programs and processes that are managed together and optimized for the financial and strategic goals of an organisation. A portfolio can be managed at either the functional or the organisational level.

Unlike a project, which has a defined end goal or deliverable, a portfolio represents a more structural commitment to continuously optimizing the allocation, prioritization and scheduling of resources across many projects.

What Is a Project Portfolio?

Project portfolio management (PPM) is the analysis and optimization of the costs, resources, technologies and processes for all the projects within a portfolio. Project portfolio management is typically carried out by portfolio managers or a project management office (PMO). The key focus of PPM is to make sure that all the outcomes in the portfolio support the strategic goals of the organisation. The portfolio manager or PMO does this through business analysis, reviewing budgets and forecasting while minimizing risk and managing stakeholder expectations. Project portfolio management tools (PPM tools) are often used to collect and analyse that data to ensure that their project portfolio is aligned with the overall strategy and goals of the organisation. The Project Portfolio Management Process There are four steps in the project portfolio management process: Define the priorities and strategic concerns of the organisation. Collect portfolio data to discern insights into its management. Model and analyse data and review it carefully. Synthesize what your learned and communicate it to stakeholders. What Does a Project Portfolio Manager do? Project portfolio managers oversee the management of the project portfolio. They are responsible for getting a return on investment and meeting the goals and objectives of their organisation. The project portfolio manager can be tasked with managing one or more portfolios.

The job is done by working with various financial algorithms and models to help the project portfolio manager align the projects to strategic goals of the organisation. They are further guided by a set of standards that help when they are taking a high-level look at portfolio metrics.

Project portfolio managers are often involved with the PMO, which also sets the processes and standards for the portfolio. The project portfolio manager and PMO can also provide direction on what methodologies are used, whether traditional waterfall or an agile framework, when managing the project.

Project Portfolio Management vs Project Management

In the hierarchy of business management, project portfolio management is the link between project management, which we will define briefly below, and enterprise management, which deals with the overriding vision, mission and strategy of the organisation.

To understand where project portfolio management and project management differ, we must first define each and explore the areas where they diverge.

Project management is, quite simply, the management of a project. A project is a temporary endeavour that results in a product or service. It has a beginning and an end. Project goals are defined, and tasks are broken down into a schedule. Cost and budgets are set; resources are assigned, and stakeholders are reported to.

Project portfolio management, on the other hand, is a higher-level approach that orchestrates, prioritizes and analyses the potential value of many projects in a portfolio. The goal is to manage and leverage the life cycle of investments, initiatives, programs, projects and outcomes to best reach the overall goals and objectives of an organisation. Therefore, project management is a subset of project portfolio management. It leads to the ultimate objective, which is meeting the strategic goals of the organisation.

5 Project Portfolio Processes Project portfolio management requires a balance of time, skills, budgets, risk mitigation and running the projects in the portfolio frugally and expediently without sacrificing quality. Managers do this through the use of five key processes. Change Control Management: Identifying and prioritizing change requests. These can be feature requests, operational constraints, regulatory, etc., based on demand, financial and operational constraints. Risk Management: Identifying risks in projects that make up the portfolio, and developing contingencies and risk response plans in order to mitigate uncertainty within the project portfolio. Financial Management: Managing financial resources related to the projects in the portfolio and demonstrating financial value of the portfolio in relation to organisational strategy, goals and objectives. Pipeline Management: Ensuring project proposals are in the pipeline and determining if they’re worth executing. Resource Management: Efficiently and effectively using an organisation’s resources, from materials and equipment to people and technical skills.

5 Principles for Successful Project Portfolio Management

Project portfolio management is the practice of making informed decisions about the projects, programs and change going on within the organisation.

It provides a one-stop shop to see all the change initiatives taking place. And it gives organisations the framework to select and prioritize projects so the right changes get done at the right time.

Project portfolio management is a way to provide governance over how a company chooses to make changes and improvements through projects. It’s a holistic view of what’s going on, and portfolio managers can then provide decision makers with the information they need to run the business as well as manage ongoing change.

But how can you make sure all of that is done successfully? Here are five principles for effective project portfolio management that you can adopt in your business, even if you’re leading a portfolio in a small company.

1. Make Sure Projects Align to Strategy

Portfolio management is all about strategic alignment. Of course, you need a strategy to align to first!

Once you’ve got clarity on the organisational strategy, the portfolio team can make sure that each project has a clear link back to a strategic objective. After all, if the work doesn’t help drive the strategy forward, why are you doing it?

Knowing how each project links back to the strategic objectives means that you can better prioritize the work. You can also ensure that each area of the strategy is getting adequate attention. It’s no good to deliver on four of your strategic objectives if Objective 5 is just as critical, and isn’t being worked on at all.

There has been a lot written about strategic alignment in the past few years – it really has been a sea change in the way that organisations are approaching project management. If you want your strategy delivered, projects are the way to do it. Hopefully, the Exec team in your organisation has already got the memo about this, but if not, then start here. The principle of ensuring the company’s change portfolio is aligned to where you want the business to go is the first one you need to get right. Everything else can follow later but if you aren’t working on the right projects you should fix that first!

2. Have A Strong Process for Shutting Down Projects Early

Not all projects are going to be successful – look at some of the projects Google has started and then shut down. And that’s OK. Your business changes, the industry changes and you want to change with it. Keeping your portfolio up-to-date and aligned to where you are going is important. Sometimes, projects will stop being relevant.

However, that’s where are strong PMO comes into play.

If a project is no longer considered relevant it has to be stopped. Salvage what you can, but don’t continue to work on something just so you can say it was completed. If it’s going to deliver something that is irrelevant to the current strategy, what’s the point?

IT portfolio management is an area to pay particular attention to. As technologies move on so quickly, it’s possible that some project that are in flight or in the pipeline are no longer aligned to the tech stack and should be changed or removed from the list of current work.

Use your portfolio management team to help senior managers understand the rationale for closing projects that will no longer deliver the expected benefits. Redirect the resources to projects where you can achieve something good.

3. Lead the Change

Projects sometimes flounder when senior leadership isn’t there. As an effective portfolio team, you can be supporting project sponsors, encouraging directors to take active roles, and providing information to help leaders make the right choices.

The portfolio structure is the primary way of leading the business in the direction of achieving the strategy. The PMO and portfolio team are crucial in this – you can use the information you have to provide recommendations as well as simply reporting on facts.

The portfolio management leadership team should become trusted strategic advisors to the executive team. You can comment on what projects should be taken on next, areas where the business is not investing enough in change and more.

4. Get Comfortable with Risk

A large portfolio of changes will come with some risks. Even a small portfolio will have risky projects. Part of the portfolio management approach is to balance the risk. If you have too many risky projects, that could prove problematic. Equally, not enough risk taking might mean the company is stagnating and losing margin to more innovative competitors.

Getting the balance of risk right in a portfolio is a constant job. Projects are closed or completed. New projects start. Projects from the pipeline are reprioritized, and others jump to the top of the list. The list of things you are currently working on as a business can be extensive.

Part of the portfolio management role is to make sure that the mix of projects is appropriate for the business. There are some strategic level conversations to be had to ensure that is the case, and you’ll need to work with the enterprise risk management team as well.

5. Promote Transparency at All Levels

Finally, portfolio management needs to be done in a transparent way. That means the data you produce must be an honest representation of the truth. Regardless of how you present the facts, they are the facts.

The portfolio management team should be known for objectivity and factual reporting. You can provide narrative and context, but the performance of projects, programs and the portfolio overall should never be open to interpretation.

This quest to present data in a transparent way is part of creating an open culture. Hopefully, by leading from the top, you can ensure this approach to honest reporting cascades down and out to project managers and others involved in reporting task progress.

Enterprise portfolio management – effective portfolio management – goes far beyond tracking project progress in PMO software tools and making sure project managers have done some training. You can be truly valuable to the organisation in a portfolio management role, and portfolio management is truly valuable to the organisation.

What Is Project Portfolio Management Software?

Project portfolio management software is a tool that’s designed to centralize the management and maintenance of a portfolio. With the increasingly large amount of data now associated with a single project, let alone a portfolio, use of software has become a necessity for project managers.

Portfolio managers and project management offices (PMOs) use software to gather data, analyse information and use the results to better manage the portfolio and achieve the goals of their organisation.

Typical PPM software offerings are also used to optimize resources across the portfolio to better achieve the financial goals of the organisation. Managers or PMOs use them to find complementary processes, methods and technologies that will help each project succeed and the portfolio flourish.

Desktop vs. Online Project Portfolio Management Software

Managing a portfolio is like keeping many plates spinning at once. To keep up, you need robust project portfolio management software. The question is, what kind should you go for?

In terms of features, desktop and online software applications, at this point, are on an even playing field. It depends on the product, of course; but for the most part, both offer similar capabilities. The major differences are price, security and speed.

Online solutions are cheaper when it comes to setting-up, running, maintenance and overall support costs. Desktop, even though costs more initially but when the investment is spread across the entire lifecycle of the system, it may just amount to the same as online solutions, generally lower after 3 years of ownership.

Pros of Desktop PPM Software

Security on a desktop, even one linked to an office intranet, is likely better than many online services. Performance for a cloud-based software depends on your internet connection, and if your service goes out, you’re out of luck. This, obviously, is not a concern for desktop apps.

Pros of Cloud-Based PPM Software

Online apps are monopolizing the project management sector; they excel at connectivity, collaboration and real-time data. So long as your team has an internet connection, they can use the tool – no matter where they are. This creates a platform where even distributed teams can work together anywhere and at any time. As teams update their status, you get live data that is more accurate and timely to help make effective decisions.

Must-Have Features of Project Portfolio Management Software

Gantt Charts: See All Your Projects Together

A Gantt chart is a visual tool that helps plan and schedule a project, but it can also be used as a roadmap to view all the projects in your portfolio on a single timeline. This helps managers find synergy between projects and work to make the portfolio more effective and efficient.

Dashboards: Get Live Data Across Portfolio

Being able to monitor your project portfolio is key to keeping it on track. A portfolio dashboard collects information on all your projects, calculates that data and then displays it in easy-to-read graphs and charts that can be read at a glance.

In-depth Reports: Use Detailed Data to Make Better Decisions

Better data leads to better strategies when managing your portfolio. Managers need a tool that can mine information from their project portfolio and present them with detailed reports. Being able to share and filter those reports to target the information your stakeholders want to see is also key.

Resource Management: Keep Team’s Tasks Balanced

Project portfolios work at the task level. To get the level of performance you need, your teams have to have the right number of tasks. Balancing their workload keeps your portfolio progressing as planned, so you need a portfolio tool with a feature to track who’s working on what.

Task Management: Easy Change of Assignments

If you’re using the roadmap or dashboard, and see that there’s a need to reassign a task, the last thing you want is to have to go into another application to adjust a project in your portfolio. With a task management feature, you can stay in one tool.

Live Data: View Your Portfolio in Real Time

The sooner you know something, the faster you can act. This can make the difference between taking advantage of an opportunity and missing a deadline. With online portfolio management software, you see what’s happening as it happens and can respond quickly to take advantage.

How to Use Software to Manage a Project Portfolio

Projects are hard enough to manage, and a portfolio of them even more so. It’s many times more complex and requires robust project portfolio software.

1. Set Goals & Objectives

Having goals and objectives for your project portfolio is important, as it gives managers a target to hit when trying to increase their return on investment and keep risk at bay.

Start by writing down the goals and objectives for each project in your portfolio. There will likely be a number of detailed documents describing these projects. Attach them to our software, which has unlimited file storage.

2. Group Related Projects

Grouping projects in a portfolio and creating reports around them collectively, rather than individually, gives managers the data they need to make better business decisions about costs, resources and more.

Keep all the projects in your program together in our overview section. Compare status, budget and more of everything in your portfolio, all in one place. Now you can reallocate resources as necessary to boost one of the projects that might be underperforming.

3. Create Milestones

Milestones mark the end of one major phase and the beginning of another. They can be easily inserted on the Gantt chart, where they’re represented by a diamond symbol.

Set milestones and break up your project into more manageable parts. This boosts the team’s morale by giving them a series of successes as they work through their tasks. Managers can use milestones as a means to measure progress.

4. Set Dependencies

Tasks are not all the same. Some can’t start until another has finished, or must start or finish at the same time as another. It’s important to know which of your tasks are dependent to keep the portfolio healthy.

Link dependent tasks by dragging one to the other to avoid blocking teams. This prevents these dependent tasks from falling through the cracks during the execution of the project. Once you have set dependencies, you can filter by critical path.

5. View Roadmap

When managing a portfolio, it’s important to keep the big picture in sight. Without it you can easily get lost in the weeds and fall behind schedule.

Keep goal-minded with the roadmap tool, which places all the projects in your portfolio on one Gantt chart. See every project on a timeline and quickly discern if there are any conflicts and resolve them before they interfere with the goals and objectives of your organisation.

6. Balance Resources

Workload represents what your team has been assigned, in terms of their tasks. If you overburden one team member, they’ll not be as productive and morale will suffer.

See the planned effort for every team member working across your portfolio in a color-coded chart that shows who has too many hours assigned and who has too few. Then you can reallocate their hours right from the same page, improving efficiencies.

7. Track Portfolio Progress

A dashboard is a tool that graphically depicts various project metrics, so you can see how your project is performing. It’s a high-level view that can alert you of issues to address before they become problems.

8. Analyse & Present Reports

Status reports are a way to measure the current state of your project. They communicate important data to stakeholders, keeping them updated. They also maximize portfolio performance.

Use the built-in reporting tool for a deep dive into project data to see progress and measure performance. A portfolio status report is perfect for stakeholder presentations. If they have questions, the status report can be filtered to bring up just the information they’re interested in.

9. Collaborate with Stakeholders

Collaboration means working together to increase productivity. This can be at the task level for teams, or on an executive level. Ideally, it’s practiced throughout every department in an organisation.

Project portfolio managers have the tools they need to stay in touch with every project manager leading a project in your portfolio. Get in touch with anyone by tagging them in a comment. They’ll get an email notification. Alerts can be customized, so your inbox doesn’t get cluttered.

History of Project Portfolio Management Software

Project portfolio management started as a broad brush in which to paint the selecting major strategic initiatives. It was mostly based around cost, risk and return. These were the decision mechanisms that drove portfolio managers.

Capacity planning used to be king in project portfolio management, but it was also too narrow to act as an overall process to control portfolio management. The need for a wider lens to view project portfolio management was clearly necessary, as more senior-level management and executives wanted greater detail and focus on improving processes.

While simple software has been in play for years, it wasn’t until the advent of the internet and the personal computer revolution of the mid-to-late 1990s that software solutions were able to offer the breadth of features that gave portfolio managers the tools they needed to manage every part of the project portfolio management process.

Project Portfolio Management Tools

With software moving from the desktop to the cloud, project portfolio management grew more efficient and effective. Some of the features that serve portfolio managers are the following:

• Online Gantt Charts.
• Real-Time Dashboards.
• Shared Calendars.
• Time Tracking and Timesheets.
• Project Groups.
• Dynamic Reporting.
• Collaborate with Remote Teams.
• Resource Management.

Project Portfolio Management Roles & Hierarchy

The person in an organisation who is responsible for the management of the project portfolio is called a project portfolio manager. They can be in charge of one or more portfolios. They work with different financial algorithms and models to help guide their decisions in keeping the portfolio within the organisation’s strategic objectives. They supervise and manage a small team of project management staff and project managers, who report back to the project portfolio manager on project reporting, methodology, application and financials.

The project portfolio manager reports to the program delivery manager or a similar high-level C-suite executive. In big organisations – especially those that are structured, vertical operations – portfolios managers might work for a project management office (PMO) within the larger organisation. In some cases, the PMO is managing the portfolio, not a specific portfolio manager.

Project portfolio management doesn’t dig deep into the mechanics of each project, but must manage the overall goals and objectives of each of the projects in the portfolio in order to ensure that they’re all aligned with the overall goals and objectives of the organisation.

The following is a hierarchical listing of the roles involved in managing and executing a project portfolio.

• Board Member: Members of the board are responsible for governing an organisation and bear the legal responsibility for the organisation. Their skills and experience help guide the organisation to achieve its vision.
• Project Portfolio Manager: This individual manages the plans, development and implementation of the portfolio, keeping in mind best practices to make sure that the portfolio is performing as expected and right what is preventing that.
• Program Manager: Programs differ from portfolios in that all the projects collected under it are related. Therefore, the program manager’s role is similar to that of the portfolio manager, coordinating the projects in the program to work together to achieve their shared objective.
• Project Sponsor: This position is usually held by a manager or an executive who is tasked with being accountable for the project. They are the hub that connects the project to the business and those responsible for making large strategic decisions for the organisation.
• Project Owner: This person is the one who is usually working with the sponsor and is responsible for the project’s implementation. Therefore, they usually come from the business unit that is getting the final deliverable for the project.
• Project Manager: They are responsible for the planning, scheduling, monitoring and reporting of a project. They also assemble and lead a team hired to execute the plan. They build the budget, manage resources, etc.
• Project Coordinator: Working under the project manager, they take smaller tasks off the project manager’s desk to free them up for larger managerial responsibilities. Mostly, this means that the project coordinator is handling administrative duties.
• Team Member: Hired because of skills and experience related to the project, these individuals are assigned tasks and oversee their completion. They meet regularly with the project coordinator or project manager, to whom they update their status.

Which Industries and Organisations Benefit from PPM?

Any industry that is working on multiple projects at the same time benefits from the discipline of project portfolio management. Obviously, that’s a lot of industries and organisations.

Some of the industries and organisations that are reaping the rewards from using project portfolio management include:

• Information Technology.
• Computer software.
• Hospitals and healthcare.
• Construction, automotive.
• Non-profit.
• Financial services and banking.
• Service and staffing recruiting.
• Insurance.
• Telecommunications.
• Government administration.
• and more!

Project Portfolio Management Key Terms

The following is a mini-glossary of project portfolio terms that have been used in this guide.

• Portfolio Management: Controlling a portfolio of projects to make sure they align with the overall strategic goals and objectives of an organisation.
• Program Management: Managing a portfolio of projects with the same aim as portfolio management, only the projects in the portfolio are all similar or related.
• Project Management: Planning, executing, monitoring and reporting on one project, from start to finish, including controlling scope, costs and schedule.
• Project Management Office (PMO): Group within an organisation that’s tasked with maintaining standards for project management within that organisation, often oversells portfolio and program management.
• Change Control Management: Process to identify and successfully respond to change in a project or portfolio.
• Portfolio Reporting: Creating charts, graphs and other reporting documentation to communicate progress and other portfolio metrics.
• Risk Management: Identifying and resolving risk before it happens and after.
• Resource Management: The process of allocating resources throughout the life cycle of the portfolio.
• Pipeline Management: Making decisions for estimating and selecting which projects to fund that align with an organisation’s strategy.
• Financial Management: Understanding each project’s unique risk and using this knowledge to make decisions across the entire portfolio.

Next Steps for Managing a Project Portfolio

PPM leads to better decision-making, helps with risk management and creates a faster turnaround time for projects by streamlining processes and getting more investments.

But it’s not only that projects move faster and cheaper. Project portfolio management also increases product delivery success. PPM streamlines data and that makes for a more efficient collaboration.

All these factors and more make it clear that project portfolio management is a methodology that can serve any organisation with a portfolio of projects.

Naturally, you must answer questions, such as: when must the goal be achieved? Then get more specific, is that in six months, six weeks, six days? Without a timeframe you can’t devise a plan, and the goal will never be realized.

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