How PPM is expanding beyond project-based business

by Francesco Pecoraro

The relevance of Project Portfolio Management is growing beyond the project-based business. As many of us know, projects have become the main way of executing the strategy of an organization. In fact, companies that execute projects that align their objectives with organizational strategy are more likely to be successful over time. In fact, it has been proven that companies that had in place effective PPM practices have a better Return On Investment (ROI) and better business planning than companies that have ineffective PPM practices in place.

The challenge of PPM

Considering that the world of business is becoming increasingly complex, the strategic essence of PPM can be considered a powerful tool for prioritizing, evaluating, and selecting projects with the final goal of aligning them with the overall objectives of the organization. There are many benefits for a company that implements PPM, such as greater business returns and project success. On the other hand, implementing PPM effectively in an organization can be challenging. In the past, many organizations have failed in their attempts to successfully manage their portfolio of projects because of the uncertainty in project relationships, continuous changes in company strategy, and struggles in measuring success factors.

Another factor to consider is that the way PPM is implemented depends on the nature of the company. PPM has been principally used in large, project-based businesses. At the same time, PPM can be seen as an integrated business function that can benefit more than just project-based businesses (Kaplan and Norton, 2008). Every business is unique, and to implement and execute PPM successfully, it is important to consider the dynamics of the industry in which the business operates. It is also important that companies have the knowledge to develop PPM practices that are specific to them.

By establishing a formal process for managing project portfolios, companies can also benefit from formal routines for making decisions. In a fast-paced and competitive environment, relying on a systematic process for making decisions on how resources should be allocated may seem inflexible, but it can definitely improve process implementation speed and management quality, two factors that can determine project portfolio success.

PPM and resource allocation

Project portfolio management is defined as the coordination and management of one or more portfolios of projects, programs, and operations to achieve organizational objectives (PMI, 2013).

PPM provides companies with a process that allows project portfolio managers and executives to react to the business environment. It is a tool that allows companies to act promptly in a dynamic environment. While a single project can be evaluated based on traditional measures of being completed on time, on budget, and in scope, PPM helps with connecting how single projects affect the project portfolio and measured against the strategic goals of the organization.

When companies do not have a formal practice for allocating resources that support the business strategy, what often happens is that resource allocation is influenced by senior managers who want to speed up their own projects; by doing so, these managers use resources that could have been used to reach the goals and the strategy of the company. In addition, it is important to underline that the process of resource allocation is one of the most controversial practices in an organization. Luckily, PPM helps companies to understand how to allocate resources and, most importantly, enhances trust and collaboration across the organization. In fact, it allows companies to allocate resources at a higher level by not only considering projects but also considering the organizational environment.

Keep in mind

Organizations that are able to align the deliverables of projects with the objectives of the organization will have a greater chance of achieving business success. Even if implementing PPM effectively in an organization is challenging, there are many benefits for a company that implements PPM, such as providing companies with a process that allows senior managers to react to the business changes in a timely manner.


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