The step by step in portfolio management process
One of the main struggles of every company is managing many tasks and projects at the same while trying to achieve their goals and optimize their resources. Taking on all of the projects at the same time could result in chaos, as it is simply too much to handle.
This is why project portfolio management has become an essential solution for every company to manage their projects effectively. PPM helps companies optimize their budget and resources as well as achieve their strategic goals. The goal of project portfolio management is to improve the company’s ability to manage multiple projects at once in an efficient and strategic way. Having the right project portfolio management process in place is the key to success with PPM. A project portfolio management process helps the company organize its projects, delegate tasks, allocate resources, and manage its budget in the most optimized way.
But how does an organization create its project portfolio management process? Here is the step-by-step.
What is project portfolio management?
Before we talk about the step-by-step project portfolio management process, let’s first define what is project portfolio management. There may be some confusion between the terms “project management” and “project portfolio management”. There is a slight but very important difference between them. Project management focuses on managing a single, individual project, while project portfolio management focuses on managing many projects at once. Or rather, it focuses on choosing when and how each of these projects should be executed. Each organization has to manage many different projects. A project portfolio is simply a group of projects that align with the strategy and the goals of the organization.
The main challenge of managing multiple projects at once is that resources, employees, and financial funds are required by several projects at once. What’s more, some projects depend on the outcome of others. Having the right project portfolio management process can help the company deal with these challenges. Through the project portfolio management process, the company can decide when and how to manage each of the projects in its portfolio.
Step-by-step in project portfolio management process
To avoid having the project portfolio start to lose its value, the organizations should create a well-defined process to continuously reprioritize and analyze the projects in their portfolio. Creating the right project portfolio management process is not easy, but it can be boiled down to a few steps.
Define a long-term strategy
The first step in the project portfolio management process is to define a long-term strategy. Setting goals and defining how to achieve these goals will help the company identify which projects in its portfolio align with these goals. Having a clearly defined long-term business strategy is the basis of project portfolio management.
Define your project portfolio
Before implementing the project portfolio management process, an organization should identify the projects it has already running and those that are still waiting to be started. Then, these projects need to be evaluated based on the long-term goals and the strategy set by the company. This will ensure that the company is only dealing with projects that can help achieve the goals, rather than using its resources, budget, and employees on projects that don’t align with its strategy.
Establish evaluation criteria for your projects
The main mistake lots of companies make is focusing too much on the overall strategy while losing sight of the individual projects. Each project in the company’s portfolio should be aligned with its strategy and goals. This is why it is important to establish specific evaluation criteria for all of the company’s projects. Alignment analysis of each project will show the company whether the projects that were chosen in their portfolio align with their goals. It will also help categorize the projects based on the critical resources needed to carry them on, such as the number of employees needed, the amount of investments, the duration of the project, or the risk involved in the execution of that project.
Develop a risk management strategy
Another step in the project portfolio management process is to develop a well-structured risk management strategy. Executing multiple projects at once means that unexpected challenges and obstacles are going to arise in the process. This is why a company should be prepared to handle any risk that these challenges may bring.
Having a risk management strategy means that the company should evaluate potential risks that each of the projects in its portfolio may bring. It is also important for the company to conduct risk assessments periodically, throughout the execution phase of each of the projects. This is essential to the project portfolio management success and can help the company avoid potential losses.
Adapt the processes
A project portfolio management process will look different for every company. Creating an efficient project portfolio management process is a complex task. It naturally involves a lot of testing and adapting to create a fully optimized process. If a project doesn’t mean the company’s goals, it should be analyzed to determine the elements that can be improved. If a project performed well, it should be analyzed to see what was done well and used as an example to adjust other projects.
Invest in a project portfolio management tool
Project portfolio management can be a complex process. This is why every company should invest in the right PPM tool to help them create their project portfolio management process as well as manage all the projects in their portfolio. There are many PPM tools and software to choose from, such as Uppwise, which focuses mainly on helping companies realize strategic portfolio management.
Implementing the right project portfolio management process is essential to make sure that the projects align with the company’s goals. Having the project portfolio management process outlined in a detailed manner can help the company optimize the resources needed to complete the projects as well as the development process to achieve expected results with the chosen projects. Investing in the right PPM tool is the best solution to creating a well-structured and efficient project portfolio management process.