How is Project Portfolio Management evolving?

by Francesco Pecoraro

Interested in finding out about Portfolio Management evolution? 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 to manage 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 where 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.

In terms of portfolio management evolution, 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 evolution supports the development of the strategies by providing companies with useful information. A portfolio has relations with its components and projects.

PPM can influence a 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).

Essentially, project and program management have the responsibility to manage resources. This is a critical aspect when implementing corporate strategy into projects.

Definition of PPM

There exist different definitions of PPM. Let’s see some of the most valuable.

The definition of a portfolio is like the definition of a program. Basically, it represents a set of projects that a company manages in a way that produces benefits for the company.

At the same time, a project portfolio is also a collection of projects. All these projects are under the management of an organization that shares and competes for limited resources.

Eskerod and Blichfeldt (2007) define PPM as the managerial practices that relate to:

  1. screening, selecting, and prioritizing project proposals;
  2. projects in a portfolio being constantly reprioritized;
  3. ranking projects according to priority;
  4. allocating and reallocating resources to the best-suited projects.

Finally, some experts consider PPM as the utilization of tools, techniques, knowledge, and skills for a set of projects that have the objective to achieve the organization’s strategy.

Keep in mind

Strategic change can only be achieved when senior management is deeply involved in project management. To reach this goal, the first step is to support strategic professionals and executives in learning the language of project management.

Project portfolio management (PPM) is a discipline that is becoming more complex over time. Portfolio Management evolution will continue to progress. For sure, PPM represents the management of a whole collection of projects as one big entity to achieve company goals and objectives.


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