Just what is portfolio management?
It’s not "The art and science of making decisions about investment mix and policy." At least not in the project and portfolio management arena. The best definition I’ve found describes it as an umbrella for all project based work associated with a specific business unit or a specific technology.
Why is it important? Beyond the obvious need for an organization to have insight into the numerous projects in progress, it gives management a way to organize and prioritize projects based on predetermined criteria, including overall value, financial and human resource implications, and other strategic initiatives determined by company leaders. So the definition of financial portfolio management might not be so far off after all – getting visibility on the current and proposed mix of projects in order to optimize the company’s "big picture" overview of investment, cost, and benefit against strategic goals and available resources. This allows the organization to focus on the projects that should be done, and cancel or shelve any that can wait or should be dropped altogether.
PPM (Project Portfolio Management) also makes resource allocation easier to manage, as overall visibility into organizational needs helps managers avoid the problem of over-committing key employees. It asks the questions: What projects are we doing? Are they the right projects? Are we doing them correctly? Are they providing the best ROI?
This results in a lot of information to process and evaluate.
PPM software can help make sense of all the data. By grouping all projects into a manageable portfolio, projects and tasks are linked to measurable metrics, including milestone paths, groups, objectives, and etc. This can also include proposed or future projects and impact their timing. A good PPM software program will provide the ability to search, group, chart, aggregate, and display project data in user-defined dashboards and reports that will aid management in decision-making. Capacity planning and realistic resource allocation is now possible, as well as visibility into any negative impact one project may be having on another.
It’s important to do projects well. It’s also important to do the right projects, insuring an organization focuses its resources on initiatives that will create the greatest return. Portfolio management is critical to an organization that engages in project based work and wants to maximize their project portfolio success rate.
