Project portfolio management 101

If you manage various initiatives across different teams and departments, you know how hard capturing and sharing results can be. 

Project management tools offer a way to organize and execute work for one initiative, but you need project portfolio management to gain clarity across teams and departments.

Your team needs structure, and your stakeholders need to see results. Project portfolio management is the brain of the operation. This organizational model helps you organize data and highlight important details during project life cycles within an entire portfolio of projects.

What is project portfolio management (PPM)?

Project portfolio management (PPM) is the centralized management of multiple projects. With project portfolio management, you gain visibility across projects and initiatives to connect your team’s daily to-dos with your company’s organizational strategy. 

In other words, it’s a method to “bridge the gap between strategy and implementation,” according to the Project Management Institute (PMI).

Project portfolio management tools help you track your business priorities and see the big picture, from strategy to execution.

The value of PPM lies in uncovering and prioritizing projects that offer the best return on investment. Then, follow up by implementing the resources necessary to take them on.

How does project portfolio management work?

Once the project selection process has concluded, the project portfolio management (PPM) group actively monitors the entire portfolio of projects to ensure alignment with the organizational goals. In larger organizations, this strategic alignment is often coordinated through a project management office (PMO) or an enterprise PMO for organizations with multiple PMOs assigned to separate projects.

Poorly performing projects require immediate attention as they can negatively impact the performance of other initiatives within the portfolio of projects. Here, the PPM group, or PMO, is tasked with assessing each project's feasibility and making tough choices about the best project to advance or pause. These decision-makers are responsible for maintaining a balance between individual project success and the collective health of the entire portfolio, making sure each contributes positively and maximizes business value.

Project portfolio management vs. project management

Both project management and portfolio management are subsets of work management, which is a systematic approach to coordinating work throughout your organization—from projects and ongoing processes to routine tasks—to drive clarity.

Project management is ideal for:

• Planning, managing, and executing one specific initiative

• Team collaboration for one project

• Assigning roles and responsibilities for the project team

• Task management

Project portfolio management is great for:

• Managing multiple projects and large-scale initiatives

• Coordinating across cross-functional teams

• Assessing the best projects for your organization and resources

• Organizing, forecasting, and tracking your team’s priorities

• Easily visualizing progress across initiatives for executive stakeholders

• Clearly defining and connecting daily work to strategic planning objectives

• Staying on top of business goals

• Risk management and mitigation

• Task management

Why is project portfolio management important?

Project portfolio management acts as a gatekeeper between your team’s time and the influx of potential projects. The goal is to assess which projects will generate the highest return on investment and which are aligned with organizational goals. 

Without the oversight of project portfolio management, your team may take on too many projects simultaneously. This can result from improper resource allocation or a disorganized project manager, leading to bottlenecks and inefficiencies in the system, which is a clear indication of poor portfolio management. 

Instead, think of PPM as your personal mission control dashboard. It keeps everything accessible, so the quality of work stays high and each team can hit their goals.

In short, project portfolio management keeps your business agile.

What industries benefit from project portfolio management?

Project portfolio management frees up time and streamlines efficiency across teams. When your company manages different projects simultaneously, staying organized is non-negotiable. Project portfolio management is not geared toward any specific industry—if your company handles a portfolio of projects, your team will benefit from PPM.

Popular industries that benefit from good project portfolio management include:

Information technology

IT teams often have large budgets with smaller teams. Keeping an eye on your team’s workflow prevents errors and over-utilization. Keep tasks on time and use data to drive profitability.

Marketing

Marketing teams often need their attention on many moving pieces. From e-commerce to websites, there is a lot to keep track of. Keeping the pulse on the company’s objectives as a whole rather than one piece of the puzzle makes project portfolio management ideal.

Construction

Project portfolio management is incredibly beneficial in the construction industry, especially in meeting regulatory requirements and executing the strategic planning of resources and timelines. Every phase of a construction project demands careful sequencing and adaptation to changes throughout the project life cycle. Project portfolio management supports the team while keeping an eye on the whole picture.

Financial services

Precision is the cornerstone of the financial services industry. There is no room for error between banks, credit unions, and credit card companies. Adapting and utilizing project portfolio management ensures that quotas are met, documents are accounted for, and teams are equipped with the tools necessary to get the job done right.

Portfolio manager responsibilities—and other PPM roles

Just like project management, there are some key PPM roles and responsibilities. With these roles, you can ensure everyone understands their responsibilities within the project team and every other team member. 

The project portfolio manager

As you might expect, the project portfolio manager is the person creating and managing the project portfolio. 

As the project portfolio manager, you may not be the project manager for the entire portfolio of projects, but it’s your job to ensure the projects within your portfolio are up-to-date and have relevant recent status updates. You are responsible for keeping tabs on each project life cycle and providing support where needed. Plan to check in frequently with individual project managers to develop a cadence for project status reporting.

The executive stakeholders

Executive stakeholders are any team members or company executives who need a high-level view of what’s happening across the portfolio’s initiatives. For example, if you’re managing a team within the marketing department, the CMO, or head of marketing, might be an executive stakeholder in your portfolio.

The program manager

A program manager has a similar role to a project portfolio manager. The main difference between the two roles and management techniques is that a program manager is in charge of related projects, while a project portfolio manager might not be. 

For example, a program manager might manage multiple projects related to a specific product marketing launch. In contrast, a project portfolio manager would manage multiple projects within the marketing department, which might not be directly connected.

The project manager

Yes, there are still project managers in project portfolio management! Project managers can own individual projects within the larger portfolio. The project portfolio manager may also own and manage some projects, depending on the size and scope of the portfolio.

The project team members

Everyone working on the projects in the portfolio is part of the project team. Your project team may be a cross-functional group of members from various departments within your company, or they could be traditional team members. The main difference between a “project team” and a “team” is that a project team is a group that works together for the duration of a project before disbanding.

The benefits of project portfolio management

Project portfolio management is part of a larger system of work: work management. When used correctly, PPM helps you and relevant decision makers get a bird’s-eye view to make better strategic planning decisions. Teams that use project portfolio management software benefit from:

• Increased visibility

• Added strategic alignment

• High-level, holistic planning and forecasting

• At-a-glance insights

• More time for creative and strategic work

• Real-time project progress

• Quicker decision-making

• Project data automation

• Gain clear reasoning for project methodology

Project portfolio management software

To get the best results from project portfolio management software, you need a tool that keeps your strategy and daily to-dos connected, provides a quick overview, and updates in real-time. 

There are three must-have project portfolio management software features:

1. Real-time project status updates

One principal value of project portfolio management is the ability to get an overview of the progress of every project within the portfolio. To do so, ensure your project portfolio management tool offers reporting features at both the project and portfolio levels. That way, executive stakeholders can get at-a-glance insight at the portfolio level, then drill down into any project-specific status updates where necessary.

2. Timeline and dependency tracking

Because a portfolio consists of many complex projects, make sure your project portfolio management software offers a way to view the timeline of each. You should be able to view any dependencies and adjust if something is off. With a Gantt chart-like view, you can identify key milestones and dates for every project and ensure things are moving smoothly.

3. Workload management

Workload management can help you develop and track your resource management plan. With workload management tools, you clearly understand your project team's responsibilities and deliverables across all of the projects within the portfolio. 

If you need to change or optimize your resource management plan, you can visualize who has the bandwidth and who is close to burnout on the team.

Best project portfolio management practices

Project portfolio management works best when you maintain an updated, real-time portfolio. As the project portfolio manager, it’s your job to check in with the individual project managers regularly and confirm their projects’ data is accurate. That way, you and any executive stakeholders can identify any at-risk or off-track projects and course-correct while ensuring on-track projects are accurately aligned with your company’s strategic objectives.

Project portfolio management processes

Many moving pieces go into the project portfolio management process. It is a continuous effort that requires careful planning to identify, track, and manage projects. The focus is to always deliver high-quality projects that are aligned with business objectives. To get started with PPM, follow these five steps:

Step 1: Align your portfolio to business objectives

PPM can help you connect daily work to strategic objectives—but for you to do that most effectively, you need to know what strategic objectives you’re connecting to. 

If your company sets yearly or quarterly goals, you may have various objectives ranging from revenue goals to churn reduction targets. Clarify which strategic goals, or OKRs, your portfolio is contributing to and how.

Key takeaway: Determine how your project portfolio will support specific company goals.

Step 2: Add projects

Your portfolio should include all relevant projects. Make sure you add the right projects and prioritize them in order of importance, if applicable. As the project portfolio manager, take some time to connect with the individual project managers to align on how each project in the portfolio connects to your strategic goals. Finally, confirm that there are no related projects that you haven’t included in your portfolio.

Key takeaway: Organize your portfolio by adding projects important to your overall business strategy. Communicate with project managers and explain how their projects contribute to the overall plan.

Step 3: Share your portfolio with executive stakeholders

A portfolio is a tool to help you align with your project managers and better prioritize project work. It also provides executive stakeholders with a dashboard of all initiatives across your department. Make sure they have easy access to your PPM software. When executives get real-time insight into project progress, they’re empowered to make better decisions.

Key takeaway: Keep stakeholders informed by sharing an overview of initiatives.

Step 4: Get real-time project updates

Make sure your project managers regularly update their individual projects. That way, your portfolio becomes your team’s mission control for all initiatives. You can see these in one place to better visualize dependencies, identify new project opportunities, and help projects at risk.

Key takeaway: Keep your team accountable for updating projects regularly, so your overview accurately represents project workflows.

Step 5: Use your portfolio for resource management

In addition to helping you and key stakeholders stay up-to-date on project progress, a portfolio is a powerful tool for resource management.

During the project planning stage of each project, you’ll likely have created a resource management plan. But if you see a project falling off track in your portfolio overview, you can redistribute available resources across projects to address that issue.

Ensure your PPM software offers workload management tools to increase resource allocation and redistribution visibility.

Key takeaway: Use project portfolio management software that monitors project timelines and dependencies. This allows you to prioritize and allocate resources effectively. 

The best tools for project portfolio management

Project portfolio management is a vital component of business planning that enables project managers to estimate a project's potential revenue before it even begins. Before making any pivotal decisions, businesses may put the pieces of a project together with the help of a PPM tool. 

Here are a few of the best:

Decision tree analysis

A decision tree is a flowchart that begins with a single central concept and branches out according to the outcomes of potential choices. The model often resembles a tree with branches, hence the term "decision tree."

These trees are employed in decision tree analysis, illustrating a difficult decision's probable results, expenses, and effects.

Cost-benefit analysis

A cost-benefit analysis enables you to assess the financial benefits of a choice, so you can evaluate whether it is worthwhile to proceed with it. It's a helpful tool when you want to prevent bias in your decision-making process, particularly when you have to make a significant choice that will affect the success of your team or project.

Priority matrix

A priority matrix classifies tasks or projects according to criteria, such as effort and urgency, and allows team members to rapidly decide what to tackle first. It takes the guesswork out of where energy should be allocated and prevents important tasks from slipping through the cracks.

See the big picture with project portfolio management

PPM is the best way to collaborate with and across your team. Get a bird’s-eye view of all your initiatives in one place to track the right metrics in the right place.