What is Project Portfolio Management?
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Project Portfolio Management is a way of evaluating an organization’s projects. It can be compared to an individual’s portfolio of investments. The organization identifies its business goals and objectives, and then selects project “investments” that will best enable it to achieve those goals. The organization “invests” in projects by allocating scarce resources to those projects. It can “sell” its investment by removing resources and ending the project. It realizes returns on its portfolio by achieving its strategic objectives through the successful completion of projects, according to time, budget and scope estimates. The project portfolio is a dynamic entity – projects are continually being proposed and completed, and resources are continually being allocated to and re-distributed among projects. Like a stock market “ticker,” project data must be current to enable managers to make timely and effective decisions.
~ Michael Kaplan, Doug DeCarlo, Kathryn Mathias - May 1999

Building a High-Value Portfolio

Project prioritization is a key opportunity to generate value. A large percentage of budgets are devoted to maintenance and compliance, while only a small percentage is available for investment in innovation. To handle this challenge, it’s important to ensure portfolio investments reflect a balance of projects that maximize benefits for the business.

Key Questions

How do we ensure that projects selected align with business strategy?

How do we remove politics from the process of including projects into the portfolio?

How do we ensure that business cases provide accurate ROI assumptions?

How do we assess evolving risk environments during a project’s lifecycle?

What can we do to leverage our investment in complex portfolio prioritization?
Engagement and Change

Balance the Portfolio
  • Understand project value
  • Create leadership consensus
  • Stay current with evolving needs
  • Align the portfolio with priorities

Failure Points in Prioritization
  • Gaming the system by leaders
  • Disconnected operations plans
  • Misaligned strategic focus


Prioritization of the Portfolio is an Ongoing Process

Portfolio prioritization is on-going process that needs key stakeholder engagement and benefits from built in systems to react to evolving business conditions. Making sure the portfolio is filled with strategically mapped investments helps to ensure that Executives impact their organizations. To achieve this objective, leaders need to require a project prioritization approach is used that aligns to the organizations strategic goals and watches evolving changes throughout the life of the portfolio.

Keeping a Pulse on Issues

The process starts with learning about the business priorities and mapping them to the needs of the enterprise and the leaders’ investment portfolio. To synchronize the objectives, workshops are used which help to ensure bias of the portfolio is oriented towards projects that align with business strategy.

Business strategy is not always flushed out enough to create plans, so a tool is used to display goals and engage partners in making investments. Following this step priorities are converted into actionable projects. The tools help to identify the highest-value opportunities for improvement. By doing this, a pipeline of high-value projects that span the organization evolves. The organization is in a good position to leverage this information due to the the horizontal visibility of opportunities. Additionally, the Executive is well positioned with a solid understanding in the organizations priorities.

Aligning and Mapping Proposed Projects to Business Priorities

Many organizations use business cases for the project comparison process which helps to minimize politics and keeps the process objective. Depending on the strategic objectives, different tools are used to help target the portfolio toward needed project types.

The mapping techniques helps to minimize politics and maximizes communication, and engagement which results in consensus. For ensure the portfolio is accepted by a wide user base and accurate engage key stakeholders in the prioritization discussions and portfolio meetings.

Managing Change as Business Conditions Evolve

Portfolios need to be kept current as business conditions evolve. Financial cycles, internal and external business changes can alter a project’s business case. To handle this ongoing challenge, mechanisms must be setup and implement to ensure investments reflect current and future situations, not those from the beginning of the financial planning cycle. One approach to handling this, is to meet regularly and assess and evaluate the portfolio.


Portfolio Management Life-cycle

Learn about Business Priorities
  • Adjust the portfolio with the business’ needs
  • Drive the portfolio to increase strategic value
  • Secure representative business input

Standardize Selection of Projects
  • Employ and engage business leadership
  • Remove politics from project selection
  • Determine projects with best opportunity
  • Institute standardized business case criteria

Stay Current with Business Change
  • Maintain sponsorship through change and provide visibility
  • Ensure the portfolio reflects current business needs
  • Monitor and mitigate changes in project risk


Selected References:

2008 PMI. The Standard for Portfolio Management-2nd Ed.
2005 IBM Corp. IBM® Rational® Portfolio Management (for Initiatives).