Project portfolio management is a set of business practices that brings the world of projects into tight integration with other business operations. It brings projects into harmony with the strategies, resources, and executive oversight of the enterprise and provides the structure and processes for project portfolio governance.
Don’t confuse PPM recent popular concepts, such as enterprise project management and professional services automation. These are an expansion of project management, but in a totally different direction. And neither addresses the alignment of projects with strategies or the science of selecting the right projects. Neither of these provides for project portfolio governance. Another key misconception is to think of PPM as the management of multiple projects. Yes, PPM does address this. But the primary and unique aspect of PPM is what it does to formalize and assist in the selection of projects.
PPM is a set of business practices that brings the world of projects into tight integration with other business operations. In the past, the absence of this integration has resulted in a large disconnect between the projects’ function and the rest of the operations of the enterprise. Without this essential connectivity, a lot of effort goes into doing projects right—even if they are not the right projects. We have projects proposed and approved that do not deliver the promised benefits. We have projects that are wrong; they are not in sync with the goals of the enterprise. We have projects that have excessive risk, yet the risk is set aside when the project is considered for approval. We have projects that get approved solely because of the political power of the project sponsor. These projects drain valuable and scarce resources from more beneficial projects. We have projects that are failing at an early stage. Yet they are continued until total failure is recognized and the team admits that the product cannot be delivered. We have projects that are designed to generate income (or cost savings), but because of various kinds of failures, they become a burden instead. We have projects that slip so badly in time that they miss the window of opportunity. Yet they are continued when they should be terminated.
So what we have here are two distinct and costly problems:
• Projects that should not have been selected to be in the pipeline
• Projects that remain in the pipeline even after they no longer serve the company’s best interests
The result is that many projects are not delivering on their promises or are not supporting the goals of the enterprise.
Moving to a PPM culture will require a top-level commitment and a mature and cooperative environment for the project and governance teams. For this small investment, you can have a significant impact on the way that the organization deals with projects and business initiatives. PPM will push the corporate culture in a new direction—one in which it really wants to go if it could only articulate it.
The PPM process starts with a rational prioritization and selection procedure. By evaluating a proposed project against a set of selection criteria, bad projects get weeded out (or modified to meet the criteria). If a proposed project can’t pass the minimal criteria, there is no need even to rank it for selection.
PPM is about having the right information so you can make the right decisions to select the right projects. It’s about bridging the gap between projects and operations. It’s about communicating and connecting the business strategy to the project selection process. It’s about making sure that intended opportunities are real opportunities. By evaluating value and benefits, by modifying benefit calculations on the basis of risk, and by forcing such analyses to take place under structured and consistent procedures, we prevent problem projects from sneaking in with real opportunities.
By evaluating benefits, risks, alignment, and other business and project factors, we can prioritize candidate projects and select the higher-ranking ones to get first crack at the organization’s limited economic and human resources.
By monitoring performance of active projects against both the project goals and the selection criteria, we can adjust the portfolio to maximize return. This means being willing to restructure, delay, or even terminate projects with performance deficiencies. The ability to monitor such performance exists in all traditional project management systems. All we add in PPM is the routine to do so and the ability to feed these data into the PPM system. This is the set of practices associated with maintaining the project pipeline.
Below are the critical question to be asked….
· What mix of potential projects will provide the best utilization of human and cash resources to maximize long-range growth and return on investment for the firm?
· How do the projects support strategic initiatives?
· How will the projects affect the value of corporate shares (stock)?
Two Strategic approach organization can adopt
1. First reviewed their current portfolio, eliminating a significant portion of their project load (due to redundancy, nonalignment with strategies, poor value, or inefficient use of resources), thus making room to add more valuable projects.
2. Build portfolio from start in align with organization mission and goals.
Quick way to implement PPM.
· Selecting Projects for Pipeline
· Maintaining the Pipeline
· Executing the Portfolio
· Tools for PPM