Project Portfolio Management is concerned with the process of selecting projects and programs with an objective to optimize ‘business value.’ In general, organizations need sophisticated Project Portfolio Management Tools to manage the associated complexity.
Let us consider three scenarios of your organization undertaking projects.
Your company maybe –
- Delivering professional services (engineering, software, consulting, etc.) and pursuing multiple customer RFPs.
- Focused on developing new products
- Undertaking internal projects to automate processes, improve productivity and efficiency, or develop internal tools.
Have you ever wondered how your organization either approves or rejects projects that it could undertake?
Before we delve deeper, let us get our basics right about three terms – project, program, and portfolio.
A project could be –
- To develop a Mobile App for a Banking Customer
- Automate the procurement processes
A program is a set of two or more related projects and could be –
- Implementing an ERP for a customer but at five global locations (a project for each customer location)
- Design and deploy five stretches of Metro Transport System for a large city (a project for each Metro stretch)
Where does a Portfolio fit?
Projects and Programs are about ‘Delivering Products/Services Right.’
Portfolios are about ‘Deciding Right Products/Services!’
We observe that portfolios are ‘externally focused’ – keeping a close watch on industry trends, technology changes, customer preferences, competition, regulatory norms, etc.
The below image captures the salient information and decision-flows within a portfolio life cycle.
Source: The Standard for Portfolio Management, 4th Edition published by PMI, USA
You would observe that the skills needed to manage portfolios are way different than managing projects and programs!
So, how are decisions about portfolios or the choice of right products and services made?
While the selection of projects and programs varies by industry, there are a host of parameters to be considered such as strategic alignment, organizational goals and objectives, competition, complexity, technical competence, resource availability, risks involved, revenue and profits, funding available, timelines, and others.
Organizations should not rely on ‘project management software’ to decide their portfolios! Instead, they should focus on the right Project Portfolio Management Tool / Software.
Now, an all-important question!
How are project management and project portfolio management tools different?
Project management tools need to address dimensions of planning, execution, controlling, and closure – of scope, schedule, costs, risks, issues, and dashboards associated with just a project! However, project portfolio management software needs to consider business case parameters such as –
- Evaluation and ranking criteria
- Prioritization of projects (by assigning weights)
- Contribution to business objectives and goals
- Map business demand with organizational capacity
- Assumptions, Constraints, & Risks
- Assumptions made
- Constraints that exist
- Risks perceived
- Investments required over time
- Revenue and profit projections over time
- Currency fluctuations
- Cashflow analysis
- Payback Period, ROI, and Net Present Value (NPV) metrics
- Competitor actions
- Industry trends
- Economic patterns
- Advancements in technology and processes
- Vendor capabilities
- Ability to simulate profitability under different business scenarios
- Perform Sensitivity Analysis on specific objectives based on project/program variables
A ‘typical’ project management tool does not address the above business dimensions.
The next obvious question that you may have is – what should an ideal Project Portfolio Management Tool offer?
In addition to the parameters indicated above, Project Portfolio Management Software should be capable of:
- Creating unique ‘templates’ for project and program types
- Defining business processes, workflows, business rules, and controls based on the project/program importance, value, complexity, etc.
- Supporting seamless collaboration by relevant stakeholders from business case definition to management review and approval.
- Configuring predictive alerts and notifications based on the importance of the portfolio and its components – projects and programs.
- Enabling automatic escalations based on business-rules defined
- Designing dashboards and analytics specific to the stakeholder role in the organization hierarchy.
We at ProductDossier were very clear about these dimensional differences between projects, programs, and portfolios.
We have incorporated the above insights into our product strategy to create “TouchBase” – a flagship Project Portfolio Management Software solution to manage projects, programs, and portfolios .
Beyond all, the chosen solution should help you build a project management culture for your enterprise.
The question is – are you ready to start a dialogue?