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The benefits of using PPM to manage the complexity of project portfolios

Companies can obtain many benefits by adopting Project Portfolio Management. In general, PPM helps companies flourish by allowing them to focus on the most important and strategic projects and programs. 

In a world that is becoming more and more complex, companies can use Project Portfolio Management to manage the complexity of their portfolios. As projects increase in number and size, the complexities and management challenges rise exponentially. Every day, new markets and strategic opportunities can arise; as a result, companies need to make fast decisions such as deciding which projects to include and which to exclude from the project portfolio.

How can PPM help companies?

PPM is able to deliver many benefits to an organization other than time, quality, and budget. A survey aimed at exploring the benefits of PPM technique in the manufacturing industry showed the following benefits of PPM:

  1. Increased profits
  2. Increased cost savings
  3. Optimal allocation of resources
  4. Investment of funds in appropriate business areas
  5. Contribution to reduce time to market
  6. Alignment levels of products/projects with business strategy
  7. Identifying appropriate technology to align with market dynamics
  8. Identifying and managing gaps in the product portfolio
  9. Elimination of efforts on product/project redundancies
  10. Elimination plans of unyielding projects

Moreover, companies use PPM to recover from poor financial performance. Studies indicate that PPM helps companies improve their market positions significantly relative to their competitors. In fact, there are other benefits that could be expected when adopting PPM methods:

  1. Maximizing the value of investments while reducing the risks
  2. Enhancing communications and business leaders alignment
  3. Improving resource distribution and terminating some projects

Disadvantages of not using PPM

So far, we have analyzed all benefits a company can obtain from using Project Portfolio Management. At the same time, it can be interesting to know what the disadvantages are of not using PPM. Generally speaking, organizations deal with the following problems when there is a lack of PPM practices (Kendall and Rollins, 2003):

  1. Unbalanced portfolio
  2. Projects are not linked to the strategic goals
  3. Projects that do not add value are in the portfolio
  4. Too many active projects in the portfolio

In addition, companies that do not use PPM methods can encounter some other problems (Payne, 1995):

  1. Lack of coordination between projects
  2. Late delivery on projects
  3. Unexpected resource bottlenecks
  4. Conflicting project objectives
  5. Disappointment with final project benefits
  6. Resistance to organizational changes

The factors that impact the complexity

Complexity has different meanings, and it depends on the context. The definition of the portfolio processes depends on the size of the company and portfolio. Generally speaking, the larger the portfolio, the more difficult it becomes to manage the steps of the process efficiently.

Studies show that most organizations struggle to allocate resources on multiple projects. Usually, they are not able to find the best balance between the two conditions: underutilized and overworked. It seems that resources are always limited. To effectively utilize and manage these scarce resources, it is extremely important to have good tools for resource forecasting and planning.

It is not as simple as it may seem at first glance. In theory, it is possible to move resources from one project to another to optimize the portfolio’s performance. In reality, people cannot be moved without reducing productivity.

Using PM to manage complexity

Project Portfolio Management helps a company deal with complexity by:

  1. Strategically planning initiatives
  2. Managing new ideas
  3. Scoring and balancing new ideas
  4. Planning according to resource availability
  5. Managing resources

By doing so, PPM keeps all organization departments aligned, especially when change happens and complexity increases. PPM represents a powerful tool that provides companies with the confidence that resources will efficiently support the business.

Keep in mind

Project Portfolio Management is a practice that combines organizational focus by selecting the projects aligned with the strategy and Project Management, which focuses on delivering projects effectively and according to plan. 

To manage complexity, it is important to use PPM practices. Unfortunately, it might not be enough in the case of big companies and organizations. To efficiently manage complexity, this type of company also needs structured PPM software. At the same time, companies and their executives should be aware of the fact that without effective management and communication practices, software alone is useless.

 

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