Taking on new projects doesn't always help you achieve your business goals. When you want to grow in the direction of your goals without detours, you need to prioritize the projects that align with the path. Prioritizing begins with getting a holistic view of your business activities and objectives. Using project portfolio management (PPM), your team can focus on the big picture and align your goals with every move you make.
Keep reading as we explain what PPM is, its benefits and the five-step process you can take to implement it.
What is project portfolio management?
Project portfolio management is the process of managing a group of related projects together with the goal of improving overall business performance. Instead of focusing on projects one at a time, this centralized management process considers how prioritizing specific projects affects your ability to meet broader business objectives.
In a project management office (PMO), project portfolio managers are in charge of developing high-level strategies that help you make the most of all the resources you have. However, unlike individual project managers, project portfolio managers aren't involved with executing projects once they're selected.
Three benefits of project portfolio management
Much like stars in a constellation, individual projects and goals shine their brightest when you see how they're all connected. That's where the PPM process comes in handy. When you start practicing project portfolio management, you can experience these three benefits:
1. Improve your decision-making
PPM challenges your team to evaluate each project based on how well they align with your strategic goals. Instead of solely aiming to take on more projects — which can quickly lead to project overload — teams that use the PPM process focus on forecasting the benefits and risks of each opportunity. This way, you only commit to projects that suit your company's needs.
Whereas taking on too many irrelevant projects can lead to lots of work with little return, using the PPM process to make better decisions can help you choose high-impact projects that propel your team toward its goals. 🚀
2. Reduce your project failure rate
A lack of centralized planning can leave a lot of room for project failure. Your resources might be spread too thinly, or inefficient workflows may riddle your projects. When your organization includes project portfolio managers who look at the big picture in addition to individual project teams that focus on the details, you can better spot potential agile planning mistakes before they occur. Risks like overspending and poor scheduling are less likely to be an issue if you're considering the broader organizational strategies, budgets, and timelines that tie all of your projects together.
For your stakeholders, a lower project failure rate means more value is delivered over time. A software company, for instance, can reduce the gaps between new product or feature launches by ensuring they’re only working on projects they’ll complete.
3. Increase your team productivity
PPM allows you to see a broad overview of what your team members are working on across projects. As a result, you can better designate tasks based on which team members are best fit for each role and allocate resources based on your priorities. This optimization can help you improve your return on investment (ROI). Plus, optimizing helps avoid team member burn out by eliminating excess work.
The 5-step project portfolio management process
With project portfolio management tools projected to be a $3.2 billion market in 2021, it's clear that many agile teams are implementing PPM in their organizations. Regardless of what PPM tool you use, these five steps are key to successful centralized management.
1. Identify your business strategy
The first step in effective project portfolio management is identifying your company's strategic objectives. When you clarify what your organization wants to achieve — including key performance indicators (KPIs), which are metrics that measure success, and objectives and key results (OKRs) — your team can work toward a shared vision.
Afterwards, establish a project prioritization process. Decide what steps you’ll take to determine how well a project aligns with your goals. For example, some businesses may use a scoring model, giving projects numerical scores in key categories until they find the highest averages. Others may simply weigh the costs and benefits of each project with overall business objectives in mind.
2. Make lists of your current and potential projects
To start optimizing your project portfolio, take inventory of your current projects, as well as projects you've been considering. Take note of your project statuses, categories, and other details that can help you gauge each project's relevance to your business goals. You can also estimate the resources you need to execute each project. This estimation can further help you measure costs and feasibility, so you can effectively perform resource management.
3. Evaluate your project portfolio
Once you finish compiling your list, you can begin using your project prioritization methodology to evaluate projects. As you determine if each project is beneficial for your business, don't forget to consider feasibility. If a project isn't feasible, then it's a no-go for your team. By the end of your evaluation, you should have a list of projects that align with your goals and provide the most value to your business.
Ideally, your portfolio should include a mix of projects that help fulfill short-term and long-term objectives. This way, you can secure the returns you need to maintain your current growth rate while leaving room for innovation that leads to exponential growth in the future.
4. Allocate available resources
As soon as you narrow down the number of projects you want to take, start with resource allocation. Divide your budget, team members, and other resources between each of your priority projects. You'll also need to create a timeline for your project portfolio that includes each project's deadline. You can include key milestones to make your timelines more detailed, too.
Risk management is another crucial aspect of this step. If you notice that you don't have enough resources to complete all the projects you’ve selected, reassess your priority projects until you build a portfolio that doesn't stretch your team too thinly. (And if you can't afford to give everyone a car like Oprah, don't. 🚗)
5. Adjust your portfolio and resources as you go
A critical component of project portfolio management is tracking your projects throughout their life cycles. Keep a close eye on your project performance, including your ROI, project failure rate, and other KPIs as you begin executing the projects you chose. If your project portfolio doesn't perform as desired, you can adjust your resource allocation in real-time, instead of addressing issues when it's too late.
Tracking key metrics can also help you improve your PPM process as you go. For example, if your project prioritization methods aren't helping you reach your financial goals, brainstorm more effective ways to evaluate each of your projects.
Zoom in on the details with Easy Agile Programs
Project portfolio management is a useful process that can help your agile team make decisions with a bigger picture in mind. Instead of hyper-focusing on individual projects, the PPM process enables you to remove roadblocks from your broader workflows and maximize resources across an entire portfolio. This way, you can keep driving a straight path toward your business goals.
Of course, the big picture isn't everything. To be a well-rounded agile team, you need to zoom in on the details every so often, too. With Easy Agile Programs, you can get more context on your projects, so you can continue maximizing your organizational growth.