Leveraging PPM to choose the right projects

by Francesco Pecoraro

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.

PPM processes

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 PPM is most effective when it is tailored for each individual situation.

Project selection

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 selecting 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:

  1. flexibility
  2. realism
  3. ease of use
  4. capability
  5. cost-effectiveness
  6. 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:

  1. production
  2. marketing
  3. financial
  4. personnel
  5. 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 for evaluating quantitative and qualitative indicators for projects and programs.

Assessment tools

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 competition for resources and the temporary nature of projects.

The following are the results of a study aimed at determining the most popular assessment tools to achieve the three main objectives of PPM (Cooper, 1997):

  • Value Maximization: Expected Commercial Value (ECV); Scoring Models; Productivity Index (PI).
  • Balance: Bubble diagrams; Visual Models; Most Popular Dimensions: Risk vs. Reward, Ease vs. Attractiveness, and Breakdown by Market, Project Type, and Product Line.
  • Strategic Direction: Scoring Model, Strategic Buckets, Strategic Check.

Keep in mind

Even though there is no single best practice, there are success factors across the PPM applications that companies can study to improve their processes. To become more efficient, companies could invest time and money in learning the PPM best practices. The majority of those practices are cross-industry practices because of the common PPM elements.

To choose the right projects, organizations need to use a combination of tools and techniques. Many are the methods and tools that companies can use for project portfolio selection. To create high-performance portfolios, companies should prefer strategic approaches to financial methods.


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