3 Key Components of Successful Project Portfolio Management
Project Portfolio Management (PPM) is about more than running multiple projects. Each portfolio of projects needs to be assessed on its business value and adherence to business strategy.
Key Components of Successful Project Portfolio Management: Project Selection
To be successful with project portfolio management, you should select and initiate projects based on your organizational capabilities and goals. To do this, you should have a systematic method and decision process.
A good way to start is with your current projects by gathering a Project Inventory. Examples of information you will want to capture are the goal of the project, project dates, resources being allocated to the project by role and other criteria, the risk of the project (may be as simple as High, Medium, or Low); the expected return of the project, and who benefits from the project (alignment to strategy or customer).
You will also want to Score and Categorize Your Projects. To do this, identify logical criterion for scoring and categorizing projects (e.g. strategy alignment, limiting risk, increasing efficiency, increasing sales, reducing expenses or process steps, Benefits/Feasibility, legal, regulatory, security, etc.). Set up a scoring mechanism for each project based on the criteria (Note: The scoring range will be agreed on for each criterion and each person can score projects based on their biases). Aggregate or average the scores from all individuals to come up with a score for each criterion for each project.
Once completed, you will now gather your project inventory including the scores along with current and forecast costs (for new projects, use expected costs). List your projects by rank order based on scores and put a line under the project sum equaling your total available portfolio budget (Note: Rank may not be based on score alone and modify your total budget based on any contingency funds you are holding). Projects above the line can be initiated or are already in progress. Projects below the line are held in reserve should you kill or cancel other projects or come up with more money.
Key Components of Successful Project Portfolio Management: Resources
No company has the resources to meet all its business needs in the best of times and even more importantly when times are tough. Having the view of your resources across your project portfolio and being able to prioritize where to apply those limited resources is a key aspect of a PPM solution. The company with the ability to see where the resources are being applied (allocated) and apply project ranking to resource allocation will ensure the right projects are being done.
To be successful with project portfolio management, you should know where your people are working and what more can be done with available capacity. You don’t have to have sophisticated tools to track your resources but you do need common methods for definition of resource information (location, department, division, etc.); competencies (skills and levels), where the resource is currently being allocated (both project and non-project); and resource development opportunities.
To start, you will define your resources by the information identified above and more if needed. Each resource will have a basic capacity to work based on their project focus and a resource calendar. You will then inventory your Total Resource Capacity (TRC) by resource and aggregate individual resource capacity by role (Note: If a resource has multiple roles, you will have to define how to split out their TRC by role or use a PPM solution providing the capability to manage the allocation of your resources).
Example: Joe works for the company 5 days a week for 8 hours of scheduled work per day so his TRC is 40 hours per week.
Next, sum up the total allocation to current projects for each resource. This is their Project Allocated Capacity (PAC). You can do the same for each role across all active or proposed projects.
Example: During this time period, Joe is allocated to 2 projects as an analyst. The Allocation to Project #1 is 30% and the Allocation to Project #2 is 70%. Joe’s total PAC is 100% for this time period.
Finally, you can compute the Total Available Capacity (TAC) by computing TAC = TRC – PAC. Do for both resources and roles over time. This will give you a good idea of what capacity you are currently using and what is available. It is key to do this by role to ensure you have key roles available for projects when needed.
Key Components of Successful Project Portfolio Management: Information
To be successful with project portfolio management, you should have common procedures, applications, and training for the effective sharing of relevant information for portfolio analysis, decision making, goal setting, project status, project prioritization/ranking, and consumed and available resource capacity.
This holds true no matter what methodology you are using for your projects. Throughout the project lifecycle, from intake to closeout; be sure to communicate risks, issues, decisions, changes, lessons learned, and actions taken and document the reasoning for each. Set up logs for each project to track the information and make the information available to all stakeholders.
Manage Change at both the organization and project levels. A corporate change management (organizational change) discussion may be a great way to introduce a PPM solution and get everyone on board.
For additional tips and insights about project, program and portfolio maturity, consider these additional resources:
- Eclipse Video: An Introduction to Project Portfolios
- PMO Toolkit, our guide to help you identify the strategies, processes, and software needed to establish and mature a successful PMO.