Project Portfolio Management

Project Portfolio Management

What is project portfolio management? Virtually every organization or enterprise faces a growing need to manage several projects at the same time. For each individual project, the importance of project management is almost self-explanatory and the benefits of project management are obvious. So, we only have to train our human resources in the discipline of project management in order to improve our ability - as an organization - to work on a higher number of projects more successfully. Is that right? We don't think so.

Resources - especially the well trained - are significantly limited so that we cannot undertake all projects we would like to have. Usually, several projects have to share the same resources. This is like an internal competition that – in most cases we have seen – does more damage than good.

We reflect on the following questions.

1. Which projects shall we carry out and which ones drop or postpone? How are we prioritizing projects?
2. How can we structure our organization to optimize the management of resources and thus enable us to work on a higher number of projects?
3. What processes support the management of a portfolio of projects?
4. How can we measure our organizational ability for managing multiple projects?
5. What can we do to make sure that we have the right people in the right positions in order to achieve successful projects?

(1) Project Selection

The leading question in project portfolio management is: "How can we make sure that we are doing the right projects?" This question leads us into the area of strategy development. More precisely: How can we identify the right projects, i.e. those which are supporting our strategy or are in-line with our strategy? How can we evaluate and prioritize, initiate, and monitor them?

In sub-section Project Selection, we follow up on these questions and present some possible answers.

(2) Project Prioritization

Any medium to large organization usually has a clear strategy in place that tells us which of its divisions acquire and undertake what kind of projects. Thus, the selection of the right projects is given by the strategy. For example, a large construction company could have divisions like private housing, office buildings, manufacturing buildings, etc. For each of these divisions it is clear what contracts, i.e. projects they pursue.

They need to prioritize their projects on division level. This, we follow up in our sub-section on Project Prioritization.

(3) Multi Project Management

There are different potential organizational setups of our resources to optimize project portfolio management. Since resources are limited we need to find the best one for each project under a given set of criteria. In this context, we introduce the concept of a project management office.

We discuss these aspects in sub-section Multi Project Management.

(4) Program Management

In case we have to deal with a number of similar projects we can pool or combine these projects into a program of projects. In that sense, program management is a special application of multi project management.

In sub-section Program Management, we present the characteristics of managing programs of projects.

(5) Knowledge Management

Emphasis here lies on the aspects of a learning organization. Primarily, the organization's members, the people do the learning. The organization learns through constantly re-organizing itself (including merging with or acquiring other organizations) and its processes in order to adapt to the changing needs of continuous learning of its individual members. This permanent change of organizational structures and processes has to be managed and facilitated.

This we explore in sub-section Knowledge Management.

(6) Project Management Information System

Usually integrated into knowledge management, we discuss the IT aspects of project portfolio management separately. An information system that is supposed to support the management of multiple projects comprises a software environment for planning and controlling projects, collecting and filing data relevant for effort estimation and risk evaluation as well as a data base of templates for the most important project reports.

Sub-section Project Management Information System we present the most important elements of such a system.

The protection of computer data itself requires a choice of tools and policies. Visit TakeBackYourData.com for a discussion of issues involved.

(7) Project Management Maturity Model

Getting an organization ready for project portfolio management is a project itself that needs a goal that is SMART. Here, we emphasize the fact that this goal shall be measurable: How can we measure to what extent an organization is prepared to manage multiple projects? Before answering this question we need to look into methods how to assess individual projects.

The sub-section Project Management Maturity Model summarizes the basics of project assessments and an organizations ability to manage multiple projects.

(8) Project Management Career Model

Ultimately, real people manage and carry out all our projects and the related work. Thus, in best practice project portfolio management, we need to care about how we want to hire and retain good project managers. One key element is a project management career model, combined with a corresponding salary and incentive system, keeping in mind that it is not only money that motivates us: sometimes it is publicly expressed recognition or just a small gift - check out this one: Business Gifts or go directly to that page Incentives.

Another key element is a comprehensive development system for all our project managers. Important part of that is a project management training system.

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