Project portfolio management is the practice of making informed decisions about the projects, programs and change going on within the organization.
It provides a one-stop shop to see all the change initiatives taking place. And it gives organizations the framework to select and prioritize projects so the right changes get done at the right time.
Project portfolio management is a way to provide governance over how a company chooses to make changes and improvements through projects. It’s a holistic view of what’s going on, and portfolio managers can then provide decision makers with the information they need to run the business as well as manage ongoing change.
But how can you make sure all of that is done successfully? Here are five principles for effective project portfolio management that you can adopt in your business, even if you’re leading a portfolio in a small company.
1. Make Sure Projects Align to Strategy
Portfolio management is all about strategic alignment. Of course, you need a strategy to align to first!
Once you’ve got clarity on the organizational strategy, the portfolio team can make sure that each project has a clear link back to a strategic objective. After all, if the work doesn’t help drive the strategy forward, why are you doing it?
Knowing how each project links back to the strategic objectives means that you can better prioritize the work. You can also ensure that each area of the strategy is getting adequate attention. It’s no good to deliver on four of your strategic objectives if Objective 5 is just as critical, and isn’t being worked on at all.
There has been a lot written about strategic alignment in the past few years – it really has been a sea change in the way that organizations are approaching project management. If you want your strategy delivered, projects are the way to do it. Hopefully, the Exec team in your organization has already got the memo about this, but if not, then start here. The principle of ensuring the company’s change portfolio is aligned to where you want the business to go is the first one you need to get right. Everything else can follow later but if you aren’t working on the right projects you should fix that first!
2. Have a Strong Process for Shutting Down Projects Early
Not all projects are going to be successful – look at some of the projects Google has started and then shut down. And that’s OK. Your business changes, the industry changes and you want to change with it. Keeping your portfolio up-to-date and aligned to where you are going is important. Sometimes, projects will stop being relevant.
However, that’s where are strong PMO comes into play.
If a project is no longer considered relevant it has to be stopped. Salvage what you can, but don’t continue to work on something just so you can say it was completed. If it’s going to deliver something that is irrelevant to the current strategy, what’s the point?
IT portfolio management is an area to pay particular attention to. As technologies move on so quickly, it’s possible that some project that are in flight or in the pipeline are no longer aligned to the tech stack and should be changed or removed from the list of current work.
Use your portfolio management team to help senior managers understand the rationale for closing projects that will no longer deliver the expected benefits. Redirect the resources to projects where you can achieve something good.
3. Lead the Change
Projects sometimes flounder when senior leadership isn’t there. As an effective portfolio team, you can be supporting project sponsors, encouraging directors to take active roles, and providing information to help leaders make the right choices.
The portfolio structure is the primary way of leading the business in the direction of achieving the strategy. The PMO and portfolio team are crucial in this – you can use the information you have to provide recommendations as well as simply reporting on facts.
The portfolio management leadership team should become trusted strategic advisors to the executive team. You can comment on what projects should be taken on next, areas where the business is not investing enough in change and more.
4. Get Comfortable with Risk
A large portfolio of changes will come with some risks. Even a small portfolio will have risky projects. Part of the portfolio management approach is to balance the risk. If you have too many risky projects, that could prove problematic. Equally, not enough risk taking might mean the company is stagnating and losing margin to more innovative competitors.
Getting the balance of risk right in a portfolio is a constant job. Projects are closed or completed. New projects start. Projects from the pipeline are reprioritized, and others jump to the top of the list. The list of things you are currently working on as a business can be extensive.
Part of the portfolio management role is to make sure that the mix of projects is appropriate for the business. There are some strategic level conversations to be had to ensure that is the case, and you’ll need to work with the enterprise risk management team as well.
5. Promote Transparency at All Levels
Finally, portfolio management needs to be done in a transparent way. That means the data you produce must be an honest representation of the truth. Regardless of how you present the facts, they are the facts.
The portfolio management team should be known for objectivity and factual reporting. You can provide narrative and context, but the performance of projects, programs and the portfolio overall should never be open to interpretation.
This quest to present data in a transparent way is part of creating an open culture. Hopefully, by leading from the top, you can ensure this approach to honest reporting cascades down and out to project managers and others involved in reporting task progress.
Enterprise portfolio management – effective portfolio management – goes far beyond tracking project progress in PMO software tools and making sure project managers have done some training. You can be truly valuable to the organization in a portfolio management role, and portfolio management is truly valuable to the organization.