What is a Project Portfolio?
A project portfolio is a set of project proposals, projects, programs, sub-portfolios, and operations managed together to achieve an organization's strategic objectives.
For instance, a company in the energy sector might have a business objective to "reduce carbon emissions". The corresponding project portfolio would only include projects aligned with this objective. It could consist of sub-portfolios such as "improving the efficiency of solar energy production" or "streamlining transport routes".
Defining portfolios allows project-rich organizations to gain an overall perspective on their current and future projects. It also enables them to prioritize allocating resources to projects most likely to help them achieve their strategic objectives.
What is the Difference Between a Project and a Project Portfolio?
In simple terms, a project is a single series of tasks carried out over a predefined timeline with a clear, intentional goal (or goals). Projects within organizations can be limited to one team or department, but they usually require skillsets from multiple teams to complete.
A project portfolio is a group of projects selected for their strategic value to an organization. The projects will have a clear link that connects them and will be managed together. Taking this approach maximizes their efficiency and ROI. A project portfolio might be grouped around:
- Geographical location of the projects
- Specific business objectives
- Specific capabilities (IT, HR, Engineering, Manufacturing)
- Target audience (employees, customer segments, suppliers)
Project proposals, programs, sub-portfolios, and the operations needed to run them are also included in a project portfolio.
A project portfolio helps focus investment and resources where they have the most impact. So, this top-down, strategic approach to project management is necessary for most large enterprises due to the volume of projects running simultaneously. But it can also benefit medium-sized organizations with ambitious growth objectives.
For example, a domestic energy sector challenger may have an objective to grow their market share. The organization might set up a project portfolio that aligns with this goal, including “optimizing the digital customer journey” and “creating a referral program.”
What Should You Include in a Project Portfolio?
The focus of a project portfolio will determine the projects that are included. If you develop a project portfolio for new product innovation, you would only have projects with new products as an outcome. To decide which projects to include in a project portfolio, follow these initial steps.
- Understand the overall business objectives.
- Define the role of this project portfolio, aligned with business objectives.
- Create a set of inclusion criteria for the project portfolio.
- Speak to project managers (PMs) and stakeholders to source current projects and ideas.
- Analyze the strategic value of relevant projects and compare the results to inclusion criteria.
How Many Projects Are in a Project Portfolio?
There is no magic number of projects to include in a project portfolio. The size of a project portfolio will depend on several factors that are unique to every organization:
- How Many Resources Do You Have? Successful project portfolios require excellent management, and individual projects need teams to deliver them. Resource requirements need to be scoped and agreed upon upfront with department or business unit leaders.
- How Much Risk Can Your Organization Take On? The more projects in a portfolio, the higher the potential for risks. Scheduling, dependencies, and communication are just some risks that need to be analyzed before adding more projects to a portfolio.
- What Are the Current Business Priorities? Not all projects contribute equally to an organization’s strategic goals. Before projects are added to a project portfolio, they need a strong business case, including predicted outcomes and associated costs.
- What Are Your Project Management Capabilities? Has your organization already adopted a Project Portfolio Management mindset? If you are in the early stages of securing buy-in for project management transformation or building the capabilities of your PMO, consider how ready your PMs are to transition to this new approach.
What is a Project Portfolio Matrix?
A project portfolio matrix is a visual framework used by PMs or PMOs. It can be used to map out the potential value of projects compared to the technical complexity (and, therefore, level of investment) required to complete them. A project portfolio matrix can also be an effective way to visually communicate the status of projects within a portfolio to executive stakeholders.
How Do You Prioritize Your Project Portfolio?
A project portfolio should always be prioritized based on an organization’s strategic objectives. Think of it like buying property in Monopoly. If your strategic objective is earning the most money before the game ends, you will want to prioritize locations with higher rent. Questions that can help prioritize a project portfolio include:
- If this project is delivered successfully, what is its minimum impact on KPIs?
- Do competitors’ projects threaten the organization’s strategic objectives?
- How much risk is associated with the project, and what is the current tolerance for risk?
- Are enough resources available to deliver the maximum value of the project?
Planisware Enterprise can simplify this prioritization process. With Scenario Comparison & Optimization, you can streamline decision-making by creating comparisons between varying, complex projects using quantitative data from previous projects.
What is Project Portfolio and Program Management?
Project portfolio management (PPM) and program management describe different management approaches for different types of PMO activity.
Project Portfolio Management
Project Portfolio Management (PPM) refers to the ongoing processes involved in analyzing and optimizing the strategic value of a project portfolio. It includes best practices for project management and the technology needed to facilitate delivery and reporting. The PPM technology stack often centers around a powerful project and portfolio management tool that can provide visibility and access to all key stakeholders.
Program Management
Unlike a project, a program doesn’t always have clearly defined goals or a timeline. A program might include projects that contribute to its intended outcome, but the program itself may not have an end date or a fixed scope. One example could be a program to “improve internal net promoter score (NPS),” which includes a project to “migrate to a new intranet provider” but also involves internal communication campaigns and regular NPS surveys.
Program management focuses on coordinating and managing a group of projects and other activities with an intended outcome but not necessarily a final delivery.
If you’re ready to unlock strategic value for your organization through PPM, Planisware has the key.
see also: program(me), project portfolio management, enterprise project portfolio management