Project Portfolio Management has obtained a lot of attention lately. PPM has gained momentum as companies have recognized that organizational efficiency also depends upon doing the right projects. It is more important to choose the right projects than doing the chosen project in the right way.
Project Portfolio Management processes aspire to improve companies’ success through the allocation of resources to the most profitable projects while monitoring the project portfolio and resource allocations. As companies live in dynamic environments, it is crucial to keep monitoring their portfolio of projects.
PPM is an ongoing decision-making process that supervises the execution of all projects. Many studies report that that PPM is most effective when it is tailored for each individual situation.
Project selection is very important to effectively apply Project Portfolio Management (PPM). For this reason, it is worth exploring the essential tools and techniques to choose the right projects for your portfolio. It is also useful to say that having an official process to set project priorities could not be enough for the success of a portfolio.
Many experts have been studying ways to improve performance in managing project portfolios. Professionals have focused on algorithms and management techniques to collect, prioritize, and select projects.
There are different approaches to select projects for the project portfolio. They can range from single criteria to a multi-criteria approach. An example of the single criteria approach can be the cost-benefit analysis, whereas an example of the multi-criteria can be the ranking and scoring methods. In general, project selection approaches can be categorized as financial and non-financial (Larson and Gray, 2003).
To be as effective as possible in selecting projects it is important to know that the selection criteria are useful to measurably compare each project’s contribution to the organizational strategy (Englund and Graham, 1999). Therefore, the role of the criteria is not simply to specify projects. A strong set of criteria for consideration could be market size, probability of success, resource availability, return-on-investment, goal alignment, and risk.
Methods and tools
Over the years, experts have identified the methods and tools for project portfolios selection. For instance, Taylor (2006) states that any model should have six attributes:
- ease of use
- ease of computerization
Meredith and Mantel (2009) share guidelines for choosing a selection model. In addition, they suggest using the following categories to classify the required information:
- administrative and miscellaneous factors
Moreover, some other experts talk about the importance of the techniques, tools, and methods for project selection and PPM. What they say can be summarized in three main points:
- To select projects, organizations use a combination of tools and techniques.
- Organizations usually use financial methods, and sometimes they are not able to implement the best portfolios.
- To implement portfolios with good performance, organizations prefer strategic approaches to financial methods.
Techniques and tools for project selection are also useful to evaluate quantitative and qualitative indicators for projects and programs.
Using the appropriate methods and tools for project portfolio selection is important. At the same time, it is also crucial to pay close attention to some other aspects that can influence the development of the project portfolio. For instance, organizations need to pay attention to the competitions for resources and the temporary nature of projects.
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.