Project Portfolio Management (PPM) is becoming the main tool for managing projects in a complex environment. Many companies are using this methodology to achieve a better strategic alignment, decrease project complexity, increase project success rates, and last but not least, use company’s resources better.
Thanks to PPM, companies can achieve business results by maximizing performance, value, and alignment. It’s extremely important not to confuse project performance indicators, such as delivering a project on time, on budget, and so on, with business outcomes. In fact, performance represents just one of the factors that contribute to producing business outcomes.
Doing the right projects
Lots of companies in the past have used project management approaches and tools to manage their business operations. Project management has evolved into an advanced science over the years. Today, project management can help organizations change in several ways in order to meet business objectives. For example, in some cases, a permanent project office can be established to support a company in implementing its strategy; or in other cases, temporary project teams can be created to work on specific organizational goals and objectives.
During the same period, Project Portfolio Management (PPM) has emerged as an approach to manage complex project environments in today’s organizations. As many of us know, project management methods are concerned with “doing the projects right,” whereas project portfolio management is concerned with a more complex issue which is related to “doing the right projects.” For example, PPM is mainly about prioritizing, evaluating, and selecting projects with the final goal of aligning them with the overall objectives of the organization.
Having said that, modern PPM is not only limited to the initial selection and prioritization of projects but should also be aligned with the company’s goals, strategic objectives, and culture.
Business strategy and project strategy
The alignment of company strategic priorities has lately become a central topic in the project management field. In fact, the alignment of the project portfolio with the company’s business strategy is the most critical task of PPM. Levine (2005) says that PPM is meant to bring the projects into tight integration with other business operations, and specifically – with the strategies, resources, and executive oversight of the organization.
Most studies connect project management to business strategy through project selection. At the same time, Cooper et al. (1998) stated that there is often no link between strategy and project selection. Scholten et al. (2010) have analyzed the difference in strategic alignment between two types of roles involved in projects: project manager and executives. Basically, both roles confirmed the existence of the gap (strategic misalignment), which negatively influences the rate of project success. In fact, there are many executives and project management professionals who report that the spending on projects does not often reflect the stated strategy and priorities.
Simultaneously, companies that want to use projects to implement their business strategies should continue to research the strategic alignment between strategy and project management. They have to be aware of the fact that misalignment between the business strategy and project strategy may prevent them from seizing new business opportunities and facing competitive pressures.
Keep in mind
In the past, project management approaches and tools were used to manage companies’ business operations. Today, more than in the past, PPM is helping companies create value and improve strategic alignment. Modern PPM should be aligned with the company’s goals, strategic objectives, and culture. The strategic fit of projects with the overall direction of the organization is extremely important to achieving the desired business outcomes. To achieve business results through an integrated portfolio of projects, companies need to research the strategic alignment between strategy and project management.