Project Portfolio Management (PPM) is the centralized management of the processes, methods, and technologies to analyze and manage current projects or proposed requests based on economical and organizational factors such as expected benefit and constraints based on scarce resources. The objectives of PPM are to determine the optimal resource mix for delivery and to schedule activities to best achieve an organization’s operational and financial goals ― while factoring in constraints imposed by strategic objectives, customers or external real-world factors. A well-managed project portfolio is not only reducing in-efficiencies and risks and hence saving costs it is also a driver for increasing the project management capabilities by improving the underlying processes as a result of the allover governance.
The following pages will cover the major 4 process groups of portfolio
Identify project requests - there are many ideas in the heads, but this is not enough. The ideas must be gathered, categorized and evaluated to estimate if they are worth getting the resources needed and the funding
Authorize project candidates - Selecting a project for execution means that it will take away resources for other project candidates in the pipeline, so the decision must be made carefully. It is not only about doing a project but also of not doing another project.
Execute the projects - to ensure the projects will deliver the value that they promised the progress is closely tracked. In this phase of the cycle the differences of looking at the project become best visible.
Value Management of the project deliverables - the deliverables usually don't live forever and at a certain point in their lives a decision has to be made if they need to be life cycled, migrated or ramped down. But also care about the project management assets such as the project people and methods.
The process groups mentioned above are supported by four more processes.
Communication: Almost everything in portfolio management needs to be aligned with the Stakeholders and communicated in a transparent manner. The communication processes are mainly touching the Identify, Authorize and Execution process groups but with different content and audience.
Change Control is the formal process used to ensure that changes to the magic triangle of the project are managed in a controlled and coordinated manner to reduce the possibility that unnecessary changes will be introduced and the stakeholders a clear about the consequences. The changes are feeding back to the project portfolio and impacting the value generation of it.
Resource Management: The management of the scarce resources is one of the key side processes in the portfolio management cycle. Already starting in the intake of project requests (Identify) the main focus lies here in the Authorize and Execution process groups and provide input for the risk management (see below).
Risk Management: The portfolio risk management is different from the one of projects and not an aggregation of those. If project risks and opportunities are summed up there might be only a little impact on the overall portfolio level. The portfolio manager is striving for cluster risks that are in multiple projects and so put a large part of the portfolio at risk in either a negative or positive way. The proper management of the portfolio cluster risks will make the difference.
Finance Management: Project Management is heavily linked to financial excellence and so is portfolio management as well. It is absolutely crucial to have the spend and forecast development well controlled. This means the portfolio manager needs to have a quite deep understanding on accounting practices and controlling.