Portfolio Management is evolving over time. Today, Portfolio Management goes over the evaluation techniques. It is going towards a more comprehensive managerial approach that explains how to use Project Portfolio Management (PPM).
The trend of interest in the field of PPM and strategy topics has increased regularly in the last decade. It is expected to continue to increase in the future. Project portfolio management helps companies achieve their organizational strategies and objectives. Organizations can use PPM to identify projects and portfolios that best align with their objectives.
The link with strategy
Business strategy has a relation to PPM and its success. The alignment of the portfolio with the organization’s strategic direction depends on the ability people have in managing the project portfolio. The strategy relies on the PPM approach, and at the same time, the PPM practices depend on the organizational strategy.
In many companies, it happens that corporate strategy gets filtered to the portfolio level, and sometimes to the project level. In these cases, it is important to make the links between the levels stronger.
Project portfolio management describes the investment strategies of an organization. In addition, it uses synergies to produce greater benefits for the organization. These benefits would be difficult to deliver in cases were the projects are managed independently.
As a consequence, it is crucial to identify the goals and benefits of a portfolio before selecting projects. To meet the objectives of the company, the definition of these goals has to be determined before the selection of projects takes place.
Senior management involvement
To implement corporate strategy successfully it is important to involve senior management in project management. Today, unfortunately, most executives have not learned the language of project management yet. To implement good governance practices, it is key to have several things in place, such as the formal alignment among project plans, programs, portfolios, and business.
Lastly, but not least, it is crucial to provide executives with clear reporting of risks and the status of projects. In addition, there are also operational issues that may require senior management involvement. Even in this case, it is important to have upward flows of information in order to allow executives to stay up-to-date.
Development of the strategies
Project portfolio management supports the development of the strategies by providing companies with useful information. A portfolio has relations with its components and projects.
PPM can influence company’s strategy in mainly five areas: measuring portfolio component performance and risk management, allocating financial resources, allocating human resources, allocating material or equipment resources, maintaining alignment to the strategic objectives (PMI, 2013).
Francesco Pecoraro, PMP, PSM, PSPO, SSYB, SSGB, SSBB, CL, CC is the founder of francescopecoraro.com where he shares useful and practical information about project management, program management, project portfolio management, and agile methodology. Francesco has extensive experience as a project, program and portfolio manager, project management officer (PMO), digital transformation and strategic consultant. He is also considered a communication, public speaking, and leadership expert. Francesco writes about project methodologies, program, and portfolio management.