The Benefits of Portfolio Management
Many organizations use portfolio management to ensure the right projects get selected and implemented. However, portfolio management can do a lot more than that, and it’s a useful approach for your PMO.
Whether you work on client-based construction projects, in oil and gas, defense, technology or another field, active portfolio management ensures you get value from your investment. Our clients have proven that over the years.
Here are 7 benefits of driving decisions through a portfolio management approach.
1. Improved communication
Investment decisions and the resulting budgets can be shared with the rest of the organization to ensure everyone is on the same page about priorities. The right teams can quickly get up to speed. Monitoring and tracking can be set up to ensure the right people are involved at the right time.
Teams also have access to a single source of data so you avoid miscommunication or people working from outdated information.
2. Improved consistency
Portfolio management approaches ensure that there is consistency between the budgeting process, the strategic plan and the action being taken. You can easily align overall corporate goals with progress and allocate funding to the right initiatives.
Consistency is something that, in our experience, clients value the most. It’s the same for staff: watch morale improve as confidence grows in the leadership team’s ability to make decisions that are reliable. No more chopping and changing priorities as quickly as the weather changes because someone forgot about a different part of the business and what they need. Everyone will be able to see that the process is clear and being followed so that individual processes within the organization work together.
This consistent approach can also help with resource planning and capacity planning because teams have a single way to request and assign resources to work. It should be easier to see who is assigned to what and when resources are available, so upcoming work can be scheduled.
3. Single view of current projects
One of the biggest benefits of portfolio management is simply having a single view of all the ongoing or planned projects. That comprehensive list provides the prioritization for all effort across the business. It can be shared widely so that everyone understands current priorities and how they should be spending their time.
Having work set out like this in a single location also allows teams to spot overlaps and synergies between initiatives. For example, maybe it would be beneficial to have a couple of projects run at the same time because of scope overlaps or dependencies, and that would make more efficient use of the resources. When work is scattered between several systems and is not managed in a joined-up way, you may miss those opportunities.
The project list can also include the associated key indicators or metrics. These can be pulled from your project management software. Consolidating them into a single portfolio view is a powerful tool for executive decision makers. If nothing else, it serves to highlight where data is missing so project managers and teams can be held accountable for missing information.
Relevant performance measurements can be aggregated and summarized, and a single view of the truth can be shared onwards to clients to build trust in the process.
4. Alignment with strategy
A huge competitive advantage for businesses using portfolio management is being able to align ongoing work with strategy – and notice where initiatives are pulling teams away from that focus.
If you want to achieve your strategy, you need to work to eliminate high-risk projects with low ROI that are not aligned to delivering the strategy. Spot these projects early before they affect profitability so your resources are not tied up delivering work that does not get you closer to corporate objectives.
5. Criteria-based decision-making
A portfolio way of working encourages decisions to be made based on considered, useful criteria. Arbitrate between projects using criteria like:
- Risk exposure
- Contribution to business goals
- Alignment to strategy
- Profitability or returns.
Overall, considering all projects in the portfolio against the same criteria can help ensure there is balance and that activity is aligned with ambition.
6. An optimized workforce
There are only so many hours in the day and you want to make sure that project teams are spending their time on the work that matters.
Visibility of the project portfolio and the associated data that goes with it, like timesheets and progress reports, helps leaders see where time is being spent. You can then optimize the use of human resources to ensure they are focused on priorities.
Portfolio planning helps make the most of the available funding as well as spotting areas where resources may not be adequately skilled – before it becomes a problem for delivery.
7. Faster decision-making
Finally, another benefit of using portfolio management is that you can make decisions more quickly. When all the relevant data is centralized and available within project management software tools, it’s easy to access what you need.
You can cut the time taken to make decisions by streamlining the way data is accessed by various committees and key stakeholders. Speed up decision-making by reducing the time it takes to prepare papers for consideration.
The good news is that portfolio management can be straightforward. Tools like Oracle Primavera P6 give you the underlying data and the ability to feed information to decision-making tools like dashboards and consolidated reporting. These days, you don’t have to spend a lot of time or money setting up complicated processes.
The common objective for your leaders should be to focus on investments that generate maximum value, however you define value, and whatever resources or funds you have to invest. Think about the project management process from selection to execution and make sure that everything is aligned. Create the environment for your teams to do great things and successful project delivery will follow.