Portfolio Project Management (PPM)
Updated at: 24 January 2025
(aka PPM or PPM) is a strategic approach to centrally managing a number of projects, programs, and other initiatives of an organization to achieve business objectives while making optimal use of resources.
PPM requires assembling a project portfolio, which is a set of projects that are organized within a single management unit. Typically, projects are united by a common goal that aligns with the company's strategy. The individual elements or components of the portfolio are linked together by a single theme.
If a company has several goals, project portfolios should be formed together for each of them. That is, one goal - one portfolio project.
The application of a portfolio allows:
- more effectively allocate the organization's capabilities and resources when there is a process of working on already created and launched projects;
- to focus on specific projects and achieve better results.
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Unlike project management (PM), which focuses on the realization of one specific project, PPM is related to larger initiatives within a company.
Benefits of Portfolio Project Management
Portfolio project management has several advantages:
- the company implements several projects simultaneously, which allows it to come to results faster;
- it becomes possible to properly prioritize and assess project risks;
- after analyzing projects and organizational goals, the company can make more objective strategic decisions;
- the risk of conflicts and contradictions between specialists during the selection of a new project is reduced;
- the team focuses on the implementation of tasks within the project;
- provides a close link between projects and strategic goals of the organization, which increases the likelihood of achieving long-term business results.
PPM
Portfolio management enables comprehensive task selection, implementation, and project quality tracking, working towards business objectives while taking into account the organization's risks and resources.
Roles in portfolio management
In portfolio management of projects, there are certain roles that are occupied by employees of the company:
- Theproject portfolio manager is the professional who creates and manages the portfolio.
- He or she is responsible for aligning all portfolio projects with the company's strategic goals, monitoring the status of open projects, responding to changes, and receiving reports from individual project managers.
- Stakeholder Managers - managers who oversee the progress of projects within the portfolio.
- Program Manager - an employee who takes responsibility for interrelated projects
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- Unlike a portfolio manager, he or she is not responsible for projects that are not connected in any way.
- A program manager manages a number of projects that are related, for example, to the creation of a specific product.
- project manager is an employee who is responsible for one project within a portfolio.
- Project team members are specialists who work on the projects included in the portfolio. They form the project team and are its main participants. The project team can consist of specialists from different areas and departments of the organization; after the project is completed, the team is disbanded.
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PPM methods and tools
To effectively manage a project portfolio, certain methods are used to analyze and evaluate the projects in the portfolio:
- Scoring
Used to evaluate projects using established metrics. The importance of each metric is assessed on a project-by-project basis and can be indicated in points, percentages or other easy-to-understand indicators - the sum of the values indicates the value of the project.
Project value can be determined by aspects of finance, company strategy, potential risks, or resources expended. This method is used both when evaluating projects to be included in the portfolio and for their dynamic analysis during implementation.
- Visualization
Used to compare projects and analyze progress within the portfolio. It helps to visualize the whole process of task completion.
- Cost analysis
Analysis uses a set of analytics tools to evaluate an organization's costs, investment return, and profitability compared to the past period or to the company's competitors.
- Expert analysis
To assess the links between projects, expert opinions are collected - projects can often have excessive functionality or copy each other at all.
PPM methods are used both to evaluate individual projects to analyze their value and the entire portfolio to synchronize work with the company's strategic goals.
Stages of project portfolio management
To create a project portfolio and keep it up to date for the company, you need to go through a number of stages of working with projects. These stages are not strictly linear, but rather form a cyclical process that requires constant monitoring and adaptation
- Project Identification
- Project categorization
- Project Evaluation
- Project selection
- Prioritization
- Portfolio balancing and project authorization
- Portfolio Review and Reporting
- Strategic Change
In this stage, the company gathers ideas for new projects, e.g. through brainstorming sessions, employee suggestions, market analysis or customer requests. The aim is to create a base of potential projects.
Each idea undergoes an initial screening for consistency with the company's overall strategy to weed out clearly unsuitable proposals.
Here, projects are grouped according to certain attributes
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This could be the type of project (e.g. research or commercial), the target market or the level of risk. Categorization helps to better understand the structure of the portfolio and facilitates further analysis.
It also makes sure that the portfolio covers all areas of importance to the company.
In this phase, each project is carefully analyzed: financial performance (ROI, NPV), risk, resources and strategic value are assessed. Both quantitative methods (financial calculations) and qualitative methods (expert assessments) are used.
The goal is to get a complete picture of the potential and risks of each project.
Based on the results of the assessment, projects that are more in line with the company's strategic goals and have an optimal ratio of risk to potential benefit are selected for the portfolio.
Projects that are not selected may be deferred or rejected.
Selected projects are ranked by importance and urgency, taking into account strategic importance, expected benefits, risks and resource availability. It is also important to consider the interdependencies between projects.
Prioritization helps to decide which projects should be launched first and which can wait.
In this phase, the final portfolio optimization is performed. The goal is to achieve a balance between short-term and long-term projects, high- and low-risk initiatives.
Once balanced, projects are formally authorized and given the necessary resources to start.
This stage involves continuous monitoring of project progress and evaluation of the performance of the entire portfolio. There are regular reviews where the company analyzes the progress of each project and its contribution to the strategic objectives.
The portfolio manager and project managers produce reports to help make informed decisions about the future management of the portfolio.
This stage revises the composition of the portfolio in light of new strategic priorities or changes in the marketplace. New projects may be added and some existing projects may be suspended or closed. The goal is to ensure that the portfolio remains relevant to the organization's current goals and objectives.
Summary
Portfolio Project Management is a strategic tool that enables organizations to not only effectively manage multiple projects, but also ensure that they are aligned with business objectives. PPM provides a comprehensive view of all initiatives, optimizes resource utilization, and increases the likelihood of success for both individual projects and the organization as a whole. In today's dynamic business environment, PPM is becoming a key driver of competitive advantage and sustainable growth.
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