A project portfolio is a set of projects or programs and other elements combined to manage these elements effectively to achieve strategic goals. A project portfolio is also a set of components (for example, projects, programs, and portfolios) that are grouped to achieve effective management to achieve strategic results. Projects and programs that are jointly managed in a portfolio may not have an explicit direct relationship.
Project Portfolio Elements
Elements (components) of the project portfolio are the components of the portfolio: projects, programs, sub-portfolios (sub-portfolios). Elements can be independent of each other, unlike the projects included in the program, and the portfolio itself may include sub-portfolios of projects. All portfolio components should have the following characteristics:
- Reflect existing or potential company investments
- Meet the goals and objectives of the company
- Have such distinctive features that would allow them to be grouped for better management
- Quantifiable
Comparison of Projects and Portfolios
Project Portfolio Management
Portfolio management refers to the centralized management of one or more portfolios, which includes the identification, prioritization, authorization, management, and control of projects, programs, and other related activities to achieve certain strategic goals. Project portfolio management is an ongoing process of identifying, setting priorities, and investing in assignments in accordance with the strategy.
The goal is to get the most out of the implementation of a set of projects according to the company’s strategy. The main task of managing projects is the selection and implementation of those projects that bring the greatest profit with the least cost and minimal risk.
The tasks of organizing a portfolio include the creation of a set of projects that would satisfy the following criteria:
- Compliance with the organization’s strategy and focus on achieving its strategic goals;
- The possibility of rational distribution of limited resources;
- Ensuring the necessary level of profitability at a given level of risk.
Project Portfolio Management Processes
Generally, the process of managing a portfolio of projects differs significantly from managing a single project; it is a procedure of a higher level and has other goals and means to achieve them. Project portfolio management processes are divided into two groups: the Aligning Process Group or portfolio formation and the Monitoring Process Group.
Aligning Process Group:
- Project identification
- Categorization of projects
- Project Evaluation
- Project selection
- Prioritization
- Portfolio Balancing
- Authorization of projects (Authorization).
Monitoring Process Group:
- Portfolio Reporting and Review
- Strategic change
Five Principles to Build a Successful Portfolio
You’ve got a lot of projects. You’ve not got a lot of money or a lot of people to do them. How do you get a grip on what stays and what goes? Portfolio analysis is the answer.
Here are five principles to help you organize your portfolio:
Define who you are
What’s your corporate remit? What’s the mission of the PMO? Do you focus on IT projects, or deliver all projects across the organization? Do you do resource allocation, or do you have to beg the rest of the business for staff? Think about what your current reason for being is and what you are tasked to deliver.
Get control of the data
You can’t start cutting or prioritizing projects until you know what they are. You need to have control of all the data in the portfolio. Start with the list of projects. Don’t forget that the PM report might not be a true reflection of what’s happening, so do a governance check on the data to verify what the portfolio office is being told.
Relate projects to business strategy
Work out how the projects on the list tie back to the business strategy. If any of them don’t, why are you doing them? Prioritization methods differ between companies, and in the end, it doesn’t matter what you choose, as long as the method you use makes sense to you, and everyone understands how the priorities are worked out.
Define portfolio office processes
The portfolio office processes are your rules of engagement. What approvals do you need before a project manager starts work on a new initiative? What reports are required, who will produce them, and how frequently? Establish the escalation processes, too, as well as the tolerances above which things will be escalated.
Define success
Once all that is in place, you need to know what success looks like. Use something to record all the metrics, measures, and key performance indicators that you could use. Then work out which ones are the most meaningful to you.
Establish how you are going to track and record them, and then do it! These are measures that your portfolio office is doing a quality job, although you will also need measures around the successful delivery of projects.