Project portfolio management encompasses several sub-disciplines, and how they are implemented varies from one organization to another. While some may prioritize resource management, others may prefer continual project visibility. Every organization’s capacity to deliver on strategy is strengthened by effective project portfolio management.
Organizations over the years have used the traditional portfolio management approach to balance portfolios with different assets, such as stocks and bonds, in order to reduce the portfolio’s overall risk. But this approach is no longer favorable as organizations are seeking modern ways to deliver value and remain relevant in this ever-changing digital economy.
Many enterprises using traditional portfolio management often find themselves at glitches and caught between a volatile, competitive landscape that demands dynamism and practices that maintain stability at the expense of agility. Consequently, modern approaches have emerged, derived from the development of agile principles and practices in project management.
Agile and Lean are two separate project portfolio methodologies but are interlinked in their practices. We shall be discussing the Lean-Agile approach further down this article and find out how the practices take precedence over traditional portfolio management. For now, let’s have a look at the 7 best practices for project portfolio management.
1. Align business objectives
The first practice to be considered when managing a portfolio concerns the definition of the company’s objectives. This may seem a little basic, but it is very important. Companies that effectively define objectives are able to better target their actions and, consequently, tend to be more assertive in project selection. In this context, it is important that the objective is specific, realistic (must be), and measured against an objective deadline. An example of this would be a company that wants to double its number of sales in three years.
2. Establish a PMO
Create a business unit to supervise portfolio management procedures and coordinate organizational activities. This corporate unit is frequently referred to as a project management office (PMO). It’s possible that your company already has an informal team that aids with project management and management activities; after all, if the quantity and complexity of your projects didn’t call for the backing of a committed team, you wouldn’t be looking to establish portfolio management techniques.
3. Categorize projects selection
The demand for many projects at the same time is very common, especially in large companies. This is due to a large number of departments and also the different profiles of people. Given this wide variety, it is very important to know how to prioritize and select the projects that most contribute to the company’s business objectives.
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As projects are passed back and forth for evaluation, it is essential to create common criteria and a checklist of metrics against which to compare them. This is the only way to make a comparison between equivalents and choose projects which align according to the corporate strategy criteria for efficient portfolio management and, consequently, sustainable growth.
Read also: Why your organization should adopt portfolio management
4. Formulate risk management strategy
Portfolio managers can reduce risk by performing a risk versus reward analysis using project portfolio management models such as cost-benefit analysis and investing in projects that yield maximum returns.
5. Formulate change management strategy
Change is the only constant. Markets change, technologies evolve, and customers revise their requirements. A change management strategy anticipates all of these. When carefully selected, metrics can trigger notifications that drive appropriate and timely responses to unforeseen changes.
6. Use project portfolio management tools
The complexities of project portfolio management can be simplified through software that helps integrate tactical project controls into strategic project selection. Some of them serve a variety of tasks, while others are more specific to PPM work, but all of them can help you gain time and efficiency in managing your project portfolio.
7. Communicate at the right times
There is no benefit to having a plan or documenting everything if no one knows nor is there any benefit in communicating information to the wrong people or at the wrong time. Make sure you communicate the necessary information to involved parties in a timely manner. Ask the right questions and send the right messages.
