Project Portfolio Management - An Introduction For Practitioners With Little Time On Their Hands

Dr. Jonas Steeger

January 25, 2024

What is this article for?

Organizations often find themselves grappling with multiple projects simultaneously - all in an attempt to realize a strategy or certain strategic goals. This is where Project Portfolio Management (PPM) comes into play. This article aims to give a broad overview, whilst offering you the opportunity to dig deeper at any time. Let’s get started.

What is Project Portfolio Management (PPM)?

Let’s start things off academically: that is with a definition before diving deeper into the topic.

Definition: Project Portfolio Management (PPM)

Project Portfolio Management (PPM) involves the centralized management of one or more project portfolios to achieve strategic objectives. It is all about managing all projects - from the idea phase to completion - as one portfolio. It connects strategy and implementation and is typically led by the Project Management Office (PMO).

As such, it is in a sense not that different from stock portfolio management - the projects are your assets/stocks, and you try to maximize your return by managing your portfolio. Managing your portfolio, however, entails much more than simply buying and selling stocks. In fact, the key aspects of Project Portfolio Management (PPM) include:

Strategic Alignment:

Objective Setting: Align projects with the organization's strategic goals and objectives. More in-depth information is available here.

Portfolio Planning:

Resource Allocation: Efficiently allocate resources, including budget, personnel, and time, across the portfolio of projects. More in-depth information is available here.

Risk Management: Identify, assess, and manage risks at the portfolio level to ensure overall project success.

Project Selection and Prioritization:

Criteria Development: Establish clear criteria for project selection based on strategic goals, potential benefits, and feasibility. More in-depth information is available here.

Scoring and Ranking: Use a systematic approach to score and rank projects, facilitating objective decision-making. More in-depth information is available here.

Performance Monitoring:

Metrics and KPIs: Define and track key performance indicators (KPIs) to measure the performance of individual projects and the overall portfolio.

Regular Reporting: Provide regular and transparent reporting on the progress, status, and performance of the projects within the portfolio. More in-depth information is available here.

Governance and Decision-making:

Decision Framework: Establish a governance framework that defines decision-making processes, roles, and responsibilities. More in-depth information is available here.

State Gates: Implement regular portfolio reviews and approvals to ensure projects remain aligned with strategic objectives. More in-depth information is available here.

Portfolio Optimization:

Adjustment and Reallocation: Periodically review the portfolio and make adjustments based on changes in strategic priorities, resource availability, or project performance.

Optimization Strategies: Identify opportunities to enhance the overall portfolio by adding, modifying, or removing projects.

Communication and Stakeholder Engagement:

Transparency: Maintain open communication with stakeholders regarding the portfolio's status, progress, and impact on strategic goals.

Engagement: Engage stakeholders in the decision-making process to ensure their input is considered and to build support for the portfolio.

Lifecycle Management:

Initiation and Closure: Ensure proper initiation and closure of projects within the portfolio.

Continuous Improvement & Debriefings: Implement a process for continuous improvement, learning from the outcomes of completed projects to refine future portfolio management practices. More in-depth information is available here.

Technology and Tools:

PPM Software: Utilize Project Portfolio Management (PPM) software to streamline processes, centralize information, and facilitate decision-making. More in-depth information is available here.

Integration: Integrate PPM tools with other organizational systems to ensure seamless data flow and reporting.

Crisis Management and Contingency Planning:

Scenario Planning: Develop contingency plans and conduct scenario analysis to address potential disruptions or unexpected challenges in the portfolio.

Adaptability: Maintain flexibility to adapt the portfolio in response to changes in the business environment.
Keep in mind: for most organizations, effective Project Portfolio Management (PPM) is crucial for aiming to optimize their project investments, manage resources efficiently, and achieve strategic goals.

What is a project in the first place?

We are talking about projects all the time here. But what exactly is a project? Let’s take a closer look. A project in a business context is a temporary and unique endeavor undertaken to achieve a specific goal or set of goals within a defined timeframe, budget, and scope. As such, projects are distinct from ongoing, day-to-day business operations and have a clear beginning and end. Here are key elements that constitute a project in a business:

Temporary Nature

Defined Duration: Projects have a specific start and end date. They are not ongoing or permanent activities.
Limited Duration: Projects are time-limited, and their teams disband upon completion of the project objectives.
Unique Objectives:

Specific Goals: Projects are initiated to achieve particular objectives, often aimed at creating a new product, service, or result.
Uniqueness: Each project is unique, with its own set of requirements, constraints, and deliverables.
Defined Scope:

Scope Statement: Projects have a well-defined scope that outlines what is included and excluded from the project.
Boundaries: The project scope sets limits on what the project will accomplish and helps manage expectations.
Resource Allocation:

Team Formation: Projects involve assembling a team with the necessary skills and expertise to achieve the project objectives.
Resource Planning: Allocation of resources, including personnel, budget, and materials, is a critical aspect of project management.
Risk and Uncertainty:

Risk Management: Projects often involve uncertainty and risks. Project managers assess and manage risks to mitigate potential negative impacts on the project.
Contingency Planning: Planning for unexpected events helps minimize disruptions and enhances the project's ability to adapt to changes.
Deliverables:

Tangible or Intangible Results: Projects produce specific deliverables or outcomes, which can be products, services, or improvements to existing processes.
Measurable Achievements: The success of a project can often be measured by the extent to which it achieves its objectives and produces the desired deliverables.

What’s the difference between Project Portfolio, Multi-Project, Program Management, and Project Management?

When entering the realm of all project-related management activities, confusingly similar terminologies are thrown around at basically all times: Project Portfolio, Multi-Project, Program, and Project Management. Essentially, these terms are closely related but take on different viewpoints.

Project Management is the discipline that focuses on planning, executing, and closing individual projects within an organization. It involves coordinating resources, tasks, timelines, and budgets to ensure that a specific project's goals are achieved within the defined constraints. The Project Management Institute (PMI) defines project management as "the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements."
Multi Project Management involves the coordinated oversight and control of multiple and unrelated projects within an organization. In a multi-project environment, various projects are executed simultaneously, and resources such as personnel, time, and budget are shared among them. The goal of multi-project management is to optimize resource utilization, prioritize projects, and ensure that each project aligns with the organization's strategic objectives.
Program Management involves the coordinated management of a set of related projects and activities to achieve strategic organizational goals. In a program, individual projects are grouped together because they contribute to a common objective that is more substantial than the sum of the individual project outcomes. Program managers oversee the interdependencies, risks, and resource allocations across these projects to ensure that the combined efforts lead to desired benefits.
Project Portfolio Management is a strategic approach to managing a collection of projects, programs, and other initiatives within an organization. PPM aims to align these endeavors with the organization's strategic goals, optimize resource allocation, and maximize the overall value delivered to the business. It involves selecting and managing a portfolio of projects that collectively contribute to the organization's success. Project portfolio management takes on a higher-level view, focusing on managing an organization's entire portfolio of projects. According to the Project Management Institute, PPM is "the centralized management of one or more portfolios that include identifying, prioritizing, authorizing, managing, and controlling projects, programs, and other related work."

A little metaphor on Project Portfolio Management (PPM)

One way to think about these related terms is the following metaphor: If you are responsible for loading a ship, that’s your project. You are managing it. The person overseeing a couple of ships getting their varying freight is engaging in multi-project management. The dockworker responsible for all ships containing fresh cargo is practicing Program Management. The person overseeing all ships, making sure the on- and offboarding is prioritized in accordance with the overall plan, is engaging in Project Portfolio Management (PPM)... and is probably part of the Project Management Office, for that matter. But more on that later.

If you would like to dig deeper into the nuances and differences between Project Management (PM) and Project Portfolio Management (PPM), feel free to check out a dedicated article here.

Who are the key stakeholders in Project Portfolio Management (PPM) and what are their roles?

In Project Portfolio Management (PPM), various stakeholders play crucial roles in ensuring the success of the overall portfolio. Here are some of the main stakeholders and their roles:

Executive Leadership:
- Role: Defines the strategic direction of the organization and aligns the project portfolio with overall business goals.
- Responsibilities: Makes high-level decisions, approves portfolio initiatives, and ensures alignment with the organization's vision.
Portfolio Manager and the Project Management Office (PMO):
- Role: Oversees the entire project portfolio, ensuring alignment with organizational strategy and optimal prioritization. This is the most important role for Project Portfolio Management (PPM). See below for more information on the Project Management Office (PMO).
- Responsibilities: Develops and maintains the portfolio, prioritizes projects, and monitors overall portfolio performance.
Project Managers & Project Sponsors:
- Role: Manage individual projects within the portfolio.
- Responsibilities: Develop project plans, manage resources, monitor project progress, and report on project performance to ensure successful delivery.
Finance & Controlling:
- Role: Manages financial aspects of the portfolio and are often involved in providing actual values for KPIs over time.
- Responsibilities: Budgeting, cost control, financial reporting, and ensuring that projects within the portfolio align with financial goals.
Project Teams:
- Role: Execute individual projects within the portfolio.
- Responsibilities: Follow project plans, collaborate with other teams, and deliver project outputs according to specifications.
Internal Stakeholders:
- Role: Individuals or groups within the organization who may be impacted by or have an interest in the portfolio.
- Responsibilities: Provide input, feedback, and support to ensure that the portfolio aligns with overall organizational objectives.
Customers/Clients:
- Role: Those receiving the end results or benefits of the projects within the portfolio.
- Responsibilities: Provide input, feedback, and validate that project outcomes meet their needs and expectations.

What is a Project Management Office (PMO) and what is its role?

PMO stands for Project Management Office. It is a centralized function within an organization that is responsible for defining and maintaining Project Portfolio Management (PPM) and project management standards and practices. The primary goal of a Project Management Office (PMO) is to ensure that projects are prioritized in accordance with the strategic goals, are planned, executed, and completed successfully. The Project Management Office (PMO) always takes on the portfolio management lens and manages the project portfolio health. The key tasks of the Project Management Office (PMO) are the following:

Strategic Alignment:
Ensure that all projects align with the organization's strategic goals and contribute to its overall vision.

Project Portfolio Management (PPM):
Prioritize and optimize project portfolios based on strategic objectives and resource availability. Find more in-depth information on project portfolio prioritization techniques for Project Management Office (PMO)s here.

Standardized Project Management Processes
Establish and enforce standardized project management methodologies and processes across the organization.

Resource Management:
Efficiently allocate and manage resources to prevent overallocation or underutilization, ensuring optimal project performance. Find more in-depth information on resource management techniques for Project Management Office (PMO)s here.

Risk Management & Escalation:
Identify, assess, and mitigate risks across projects to minimize the impact on project outcomes. Find more in-depth information on risk management techniques for Project Management Office (PMO)s here.

Project Portfolio Governance:
Provide governance and oversight to ensure projects adhere to organizational policies, standards, and regulatory requirements. Find more in-depth information on project portfolio governance for Project Management Office (PMO)s here.

Reporting and Analytics:
Generate reports and analytics to provide stakeholders with insights into project performance, milestones, and key performance indicators (KPIs). Find more in-depth information on project reporting techniques for Project Management Office (PMO)s and especially a useful Project Portfolio Management (PPM) Reporting Cycle here.

Stakeholder Communication:
Facilitate effective communication among project teams, stakeholders, and leadership to ensure transparency and collaboration.

Quality Assurance:
Implement quality assurance processes to monitor and improve the quality of project deliverables.

Change Management:
Support change management initiatives by ensuring that changes are effectively communicated, planned, and implemented within project frameworks. Find more in-depth information on Change Management for Project Management Office (PMO)s here.

Training and Development:
Provide training and development programs for project managers and teams to enhance their skills and keep them updated on industry best practices. By the way, you should think about training and development for your Project Management Office (PMO), too! If you are interested in our Project Management Office (PMO) Academy (German only), you can find more information here.

Project Evaluation and Lessons Learned:
Conduct project evaluations upon completion, capturing lessons learned to inform future projects and improve overall project management practices. If you want to learn more about debriefings and would like to have a suitable template, you can find all you need here.

Performance Metrics and Key Performance Indicators (KPIs):
Define and track performance metrics and KPIs to assess the success of both the entire project portfolio and the overall effectiveness of the Project Management Office (PMO).

Budget Management:
Monitor and manage project budgets, ensuring that financial resources are allocated appropriately and that projects stay within budget constraints.

Benefit Realization:
Monitor and measure the realization of project benefits, ensuring that projects contribute positively to the organization's objectives.

Organizational Change Support:
Support organizational change and ensure projects are aligned with evolving strategic direction and goals.

Knowledge Management:
Establish knowledge management systems to capture, share, and leverage project-related knowledge and best practices.
The structure and functions of a Project Management Office (PMO) can vary across organizations, and there are different types of Project Management Office (PMO)s depending on the level of control and influence they exert over projects. A well-functioning Project Management Office (PMO) can contribute to improved project delivery, increased efficiency, and better overall project management within an organization. With that the Project Management Office (PMO) plays the key role in keeping the project portfolio healthy.

The many terms for Project Management Office (PMO)

PMO, which stands for Project Management Office, may have various synonyms or alternative terms that are used in different contexts. Some common synonyms include:

Project Office
Program Management Office
Project Support Office
Program Office
Project Control Office
Project Management Unit (PMU)
Portfolio Management Office
Enterprise Project Management Office (EPMO)
Project Governance Office
Project Coordination Office
These terms are often used interchangeably, and the specific title or synonym used can depend on the organization's structure, industry, or preferences.

What is Project Management Office (PMO) Maturity?

If you come across the term "The Project Management Office (PMO) Maturity" people often refer to the Organizational Project Management Maturity Model (OPM3), initially brought forward by the Project Management Institute (PMI). However, you can find numerous models out there in the world of project management and Project Portfolio Management (PPM). More or less regardless of the model in question, they all tend to provide a structured framework designed to evaluate and gauge the maturity and capabilities of Project Management Office (PMO)s. They serve as a guide for organizations, offering a roadmap to advance their project (portfolio) management practices. The most commonly gauged dimensions include processes, governance, risk management, resources and capabilities, and organizational culture, to ascertain the maturity level and pinpoint areas requiring enhancement. In short, Project Management Office (PMO) Maturity Models try to offer a battle-proven way forward in advancing your organization's Project Portfolio Management (PPM) capabilities. No more guesswork. A clear roadmap. Who doesn't want that, right? But this is really just the tip of the iceberg. If you would like to learn more about Project Management Office (PMO) maturity, check out this dedicated article and deep dive here.

What about Project Portfolio Management (PPM) Software?

PPM software takes a higher-level view, helping organizations prioritize, monitor, and optimize the performance of their entire portfolio of projects. The choice between Project Management (PM) and Project Portfolio Management (PPM) software depends on the specific needs and goals of the organization, whether they are managing a single project or a portfolio of projects. Some organizations may use both types of software in conjunction to address different aspects of project and portfolio management.

The difference between Project Management (PM) and Project Portfolio Management (PPM) software is significant. You should be sure what tools you are looking for. This very condensed list offers a quick overview of the key differences. And they are significant.

Project Management (PM) Software:

Focus: PM software is designed to manage individual projects from initiation to completion.
Scope: It deals with the planning, scheduling, execution, and tracking of tasks within a single project.
Features: PM software typically includes tools for task management, scheduling, collaboration, and progress tracking.
Why PPM won't work with it: There is no aggregation to a portfolio - and hence portfolio features are missing. In addition, most PM solutions do not have suitable KPI / Benefit section.

Project Portfolio Management (PPM) Software:

Focus: PPM software focuses on managing a collection or portfolio of projects.
Scope: It involves the strategic management of multiple projects to ensure that they align with the organization's overall goals and objectives.
Features: PPM software includes tools for project prioritization, resource optimization, management of financial resources, risk assessment, and reporting across multiple projects.
Why PM won't work with it: PPM is all about the forest. PM is all about the individual tree. Features allowing for individual planning and tracking are not the focus.

This is obviously a rather short list. Find more in-depth information on what makes a useful Project Portfolio Management (PPM) software here.

When do you need Project Portfolio Management (PPM)?

Maybe you are wondering if you even need a Project Portfolio Management (PPM) at all? Probably you wouldn't read this article if that were to be the case. However, there are sure-tell signs that Project Portfolio Management (PPM) and a Project Management Office (PMO) for that matter, might be good for your organization. The most prominent is a lack of transparency in regard to your project portfolio. Academia suggests the following: If real-time visibility into the status and progress of various projects is challenging, or if optimizing resource allocation poses difficulties, a Project Management Office (PMO) may be necessary. Whether PPM is advisable for a particular company nonetheless depends on various factors, including the organization's size, complexity, industry, and strategic goals. Here are some considerations:

Size and Complexity: Larger organizations with multiple projects running concurrently are more likely to benefit from PPM. The complexity of projects and the need to balance resources across various initiatives make PPM valuable for managing the overall project portfolio.
Strategic Alignment: If an organization has a diverse set of projects and initiatives that need to align with strategic goals, PPM can help ensure that resources are allocated to projects that contribute the most to the organization's objectives.
Resource Constraints: PPM is particularly beneficial when resources are limited, and there is a need to prioritize projects based on their strategic importance. It helps in optimizing resource utilization and avoiding overallocation.
Risk Management: Companies facing significant risks or uncertainties in their projects may find PPM useful. It provides a structured approach to assess and manage risks across the entire project portfolio.
Project Interdependencies: Organizations with projects that have interdependencies may benefit from PPM. It allows for a holistic view of how changes in one project may impact others, helping in better decision-making.
Regulatory Compliance: In industries where regulatory compliance is crucial, having a PPM approach can help ensure that projects are managed in accordance with relevant regulations and standards.
Innovation and Change: Companies focusing on innovation and adapting to market changes may find PPM helpful in prioritizing and managing projects that drive innovation and support organizational change.
Cost and Resource Optimization: PPM is designed to help organizations optimize costs and resources by identifying duplication, eliminating inefficiencies, and ensuring that projects collectively contribute to organizational success.

While PPM can offer significant benefits, it may not be necessary for every organization, especially smaller ones with simpler project portfolios. Implementing PPM requires commitment, resources, and a cultural shift toward a more strategic and centralized approach to project management. Companies should carefully assess their needs, goals, and the nature of their projects before deciding whether PPM is advisable for them.

What’s a good way to start with Project Portfolio Management (PPM)?

The Project Management Office (PMO) Maturity Models offer interesting perspectives on how to implement Project Portfolio Management (PPM) and naturally Project Management Office (PMO)s, too: they show the most commonly taken path from no Project Portfolio Management (PPM) and Project Management Office (PMO) to having both. If you are just starting out, you may want to consider the following steps:

Build the Right Team:

Form a skilled Project Management Office (PMO) team of at least two members, well-versed in strategy, finance, and project management.
Designate a clear Project Management Office (PMO) Director/Head for accountability.

Empower the Project Management Office (PMO):

Let the Project Management Office (PMO) report directly to the top management regularly.
Grant decision-making authority for portfolio decisions.

Establish Steering Committee:

Create a steering committee including the CEO, Project Management Office (PMO), project managers, and possibly CFO.
Hold regular meetings, starting biweekly, then transitioning to monthly. More on that topic here.

Hold All-Hands/Kickoff:

Host a company-wide meeting to introduce the Project Management Office (PMO)'s role. More on that topic here.
Allow the Project Management Office (PMO) to present its governance model.

Invest in Training:

Provide Project Management Office (PMO)-specific training and certifications for the team. Interested in our PMO Academy? Find some more info here.

Invest in lightweight PPM Software to kickstart your way to PPM:

Equip the Project Management Office (PMO) with suitable and lightweight Project Portfolio Management (PPM) software for project portfolio oversight and communication. Setup needs to be easy and instant. More on that topic here.
Avoid reliance on spreadsheets.

The steps above describe a way that often meets less resistance than going full throttle with PPM straight away. If you would like to dig deeper into the why and how to set up Project Portfolio Management (PPM) and a Project Management Office (PMO) in your organization, you may want to consider this article here.

What are other good resources for learning about Project Portfolio Management (PPM)?

There are various resources available to educate oneself on Project Portfolio Management (PPM). Here's a list of recommended resources:

Books:

"A Guide to the Project Management Body of Knowledge (PMBOK Guide)" by Project Management Institute (PMI).
"Project Portfolio Management in Theory and Practice: Thirty Case Studies from around the World" by Jamal Moustafaev.
"The Standard for Portfolio Management" by Project Management Institute (PMI).

Online Courses and Certifications:

Coursera: Offers courses on PPM, such as "Strategic Portfolio Management" and "Advanced Project Management and Project Risk Management."
edX: Provides courses like "Project Portfolio Management" and "Strategic Management of Projects."
PMI's PMP Certification: Project Management Institute's Project Management Professional (PMP) certification covers PPM concepts.

Websites and Blogs:

nordantech.com You are here already. But feel free to dig around. Next to the blog, you may want to check out our several checklists, templates and resources here.
PMO Academy Webinars free of charge and full of content - feel to check them out here.
PMI.org: The Project Management Institute's website provides articles, webinars, and resources on PPM.
ProjectManagement.com: Offers a variety of articles, webinars, and discussions on project management, including PPM.

YouTube Channels:

ProjectManagement.com: Features video content on various project management topics, including PPM.
PMIglobal: Official YouTube channel of PMI, offering insights into project management practices.

Whitepapers and Research Papers:

Our #SHIFTHAPPENS Studies: an annual study on Project Portfolio Management (PPM), transformation, trends, problems, and opportunities. Check it out here.
Gartner Research: Gartner often publishes insightful research papers on PPM trends and best practices.
PMI's Knowledge Shelf: Provides access to whitepapers and research papers on various project management topics.

LinkedIn Learning:

Offers courses like "Project Portfolio Management Foundations" and "Strategic Planning Foundations."

Professional Associations and Conferences:

Project Management Institute (PMI): Attend PMI events and explore their resources for PPM professionals.
Association for Project Management (APM): APM provides resources and events related to project management, including PPM.

Podcasts:

SHIFTHAPPENS: Currently only available for German speakers, but full of interesting content and perspectives - and people. Check it out here.
The Project Management Podcast: Covers a range of project management topics, including PPM.

Remember to combine various types of resources, such as books, courses, and practical experience, for a well-rounded understanding of Project Portfolio Management.