Every company seeks to deliver as many projects as they can, as fast as they can and with the best quality. However, resource limitations do not always make this goal achievable. Project Portfolio Management is the right principle to solve this problem. Project Portfolio Management assures that the organization executes the right projects at the right time and in a consistent way to deliver the best results. According to the Project Management Institute (PMI), this process is the key to gain a competitive advantage, allowing the board of directors to make informed and fast decisions about the ongoing projects. But how do you effectively accomplish project portfolio management? Keep reading to check the best practices according to PMI!
The Importance of Project Portfolio Management
Aligning the company’s investments with the constantly changing business objectives remains one of the major challenges faced by managers in the area. Even with the best efforts, a number of initiatives continue without reaching the intended target. There are countless factors that contribute to the success or failure of a project. That is why companies have invested resources to predict the productivity and quality of each project over the years. While some techniques really improve project execution, they still sometimes fail to determine the return on the investment that each initiative could bring. Project Portfolio Management solves that problem. According to PMI, it should be split into 9 distinctive steps. Let’s talk a little bit more about each of these steps.
The 9 Steps of Effective Project Portfolio Management
Your projects are an investment, so it is crucial to manage any possible risks while also guaranteeing a positive return. That is the objective of efficient and effective portfolio management. PMI splits Project Portfolio Management into 9 main steps, divided into 2 process groups:
- Alignment: In this group you’ll find the processes that will establish how the portfolio will be managed and which elements will be used to evaluate each project
- Monitoring & Control: In this group you’ll find the periodical reviewing process for the accepted projects and pre-establish performance indicators.
The 9 steps for project portfolio management are described below, separated by the two process groups:
Alignment
1. Identification: This step requires documentation and assembling a list for decision making, with all components, proposed and in progress, including key information for each project.
2. Categorization: This is where categories are established in a group of similar criteria to be applied and facilitate evaluation. Categories must be defined according to the company’s strategic planning.
3. Evaluation: In this step, you must combine all important information to strategically evaluate the projects. This information must be collected and synthesized, either being quantitative or qualitative. Graphs, sheets, and documents can be produced to support this step.
4. Selection: This is the decision making step of the projects that will move forward, based on the process of evaluation and resources available in the company.
5. Prioritization: The objective of this step is to rank the projects according to the company’s strategic categories (such as innovation, cost reduction, maintenance, etc).
6. Portfolio Balancing: This is the moment to organize the prioritized projects into a mix of projects that have the best potential to achieve the company’s strategic goals.
7. Authorization: This requires communicating the approval of each project in the mix of the previous step and formally allocating the resources for each project.
Monitoring & Control
8. Portfolio Periodic Reporting and Review: This is the moment to collect and gather indicators to follow up with the project’s performances and provide reports of their status to review the portfolio periodically. This step must be performed regularly during the entire life cycle of the portfolio.
9. Strategic Change: This is when changes are made to ensure the portfolio remains aligned with the organization’s strategic goals. The changes must be evaluated and performed continuously, whenever needed.
That’s why functional tools that support Project Portfolio Management, such as Teams Ideas, are being utilized around the world by companies who understand the value and importance of effectively managing their project portfolios. These tools are becoming more and more popular since they allow us to gather all information in one place, giving the manager a complete dashboard full of important data to help their decision-making process. Get to know the Teams Ideas portfolio selection and prioritization tool now and see how it can help you select the most valuable initiatives for your company!