Why to Implement Project Portfolio Management (5 Reasons)

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+++ Why You Should Use Project Portfolio Management at Your Company +++ Important Arguments at a Glance +++

By Johann Strasser                                                                                                               Read article in German

Do you define the optimal combination of projects to implement in the portfolio? If so, you are probably juggling with the classic factors that need to be considered:

  • strategic relevance
  • costs
  • staff requirements
  • deadlines to meet

No mean feat. For project portfolio management (PPM) is not only about selecting the projects that make sense from an economic perspective.

In most cases, various projects are competing for resources, such as budgets and staff. What is more, the projects have an impact on each other. Often, they are interdependent. They may even rule each other out.

5 Arguments forProject Portfolio Management 1

Figure 1: The difference between portfolio management and project management

Hence, it is all the more important to keep track with professional project portfolio management. And to plan in accordance with corporate strategy.

But does your management agree with you on this point?

This article will provide you with 5 arguments for project portfolio management that illustrate why is so central to corporate success.

PPM Definition
To avoid any misunderstandings: Microsoft uses the acronym “PPM” for its solution “Project & Portfolio Management”, which is based on Microsoft Project Server. This platform is primarily used for operational project management. As of Version 2010, it also includes portfolio management capabilities.

But this article uses “PPM” solely as an acronym for the term “project portfolio management”.

Argument 1: Deciding on the Right Projects

An integrated PPM has a decided advantage. It supports you in selecting the “right” projects. The challenge it to select and implement feasible and economically viable projects.

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Thus, you select the projects promising the best results per Euro spent. At the same time, all selected projects must also be aligned to business strategy.

With arbitrary project selection, on the other hand, you would risk implementing the wrong projects.

The Benefit for Your Decision-Makers:
They will always have the best possible decision-making basis available. It will allow them to determine which additional projects can be started and actually carried out. The likelihood of successful project completion will increase considerably.

Argument 2: Complete Overview of the Project Portfolio

Project portfolio management enables you to find quick answers to the following questions:

  • Which projects are currently in what phase?
  • What new projects are up for decision?
  • What is the resource utilization?
  • How high is the budget depletion?
  • What dependencies are there between projects?

Find out how to Introduce a Project, Portfolio and Resource Management Solution.

In addition, you will have an overview of the states and responsibilities. And you will get an insight into the “health” of your portfolio and its projects.

The Benefit for Your Decision-Makers:
A complete overview of all planned and running projects ensures decision-makers are always up to date on the portfolio. They recognize budget and resource bottlenecks in good time. By changing the priorities and the portfolio, they can react to them according to your corporate strategy.

5 Arguments for Project Portfolio Management 2

Figure 2: Optimize your resource utilization in the project portfolio with the aid of appropriate tools (in this case TPG PortfolioPlanner)

Argument 3: Standardized Project Initiation

You want to ensure all project ideas and orders are properly considered in the portfolio selection. Nothing ought to be forgotten. Thus, you are best off with a central and standardized method of registering ideas and projects.

The best way to guarantee completeness is by:

  • A methodical approach with processes and workflows
  • Permissions and criteria for the steps of approval
  • Ensuring the planning quality of new projects

The Benefit for Your Decision-Makers:
They have a sound and transparent preparation for selecting the projects at their disposal.

Argument 4: Optimum Investment Decisions

Portfolio decisions are controlled by priorities. Project prioritization can occur in various ways, for example by:

  • A direct statement of the importance and urgency or the strategic contribution per project and calculation of the priority
  • Defining prioritized strategic criteria and determining the strategic contribution by weighting them and assigning them to the projects accordingly
  • Personal selection of the projects by decision-makers

To be able to prioritize investment decisions objectively, you should make sure the project portfolio really is aligned to corporate strategy. By setting clear priorities, you should show all stakeholders what is important and urgent.

The Benefit for Your Decision-Makers:
They decide on the right projects. And they have an optimal and well-founded budget use.

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Figure 3: The clear distinction between project and operations is an important basis for creating a project portfolio (in this case the project worthiness analysis)

Argument 5: Strategic Capacity Planning

An integrated PPM enables you to identify the actual availability of resources for projects. You can see the resource requirements for running and new projects.

Interested in Strategic Capacity Planning? Find out 4 Important Success Factors.

Scenarios can help you to optimize the temporal sequence of projects. This allows planning for optimum resource utilization.

Moreover, PPM permits the long-term adaptation of capacities to future requirements. You can deliberately regulate the provision of your capacities. Depending on the forecast, different steps could be wise. You might need to build additional capacities and skills, move them to other projects, or reduce them.

The Benefit for Your Decision-Makers:
They ensure the due availability of appropriate resources. This helps them to avoid resource conflicts when implementing projects.

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Figure 4: Capacity planning based on project prioritization will reduce resource overload or underload

Conclusion – Arguments for Project Portfolio Management

This article has introduced you to the five most important reasons for introducing PPM. With project portfolio management, you:

  • focus on feasible and economically viable projects
  • have a complete overview of your portfolio
  • benefit from a clear preparation for selecting the projects
  • make your decisions according to priorities
  • plan your capacities ahead of time

Professional project portfolio management helps you to stay on top of things. Plus, you will plan in line with corporate strategy.

Are you using project portfolio management? And how advanced are you in this respect? Do our arguments for project portfolio management ring true? Please, leave a brief comment below.

Have you won over the decision-makers already? This article explains how to introduce project portfolio management successfully.

Final tip: Subscribe to the TPG Blog Newsletter now and never miss another blog post.

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