approved-StampThe intake processes deliver only deliver a shortlist of project candidates. Usually described on high level with rough estimations concerning the costs, benefits and timelines. It needs dedicated processes to turn the candidates into real projects. One one hand to get an established project plan and for the other to get detailed information on the impact on the portfolio.

Still it would be possible to reject a project request because the environment has changed in the meantime. This could be the case when

  • Budgets are cut. This can happen all the time and the portfolio manager needs to be able to react in these situations. Budget reductions usually doesn't happen over night and when the portfolio management is accepted as competency the finance teams will work together with the portfolio manager.
  • Priorities have changed. The economical environment has changed and the initial value that was seen in the intake phase is not relevant anymore.
  • Opportunities or threats have been detected and new projects are needed. Without a budget increase, which is usually very unlikely to happen, projects in the shortlist pipeline have to give way for better, more valuable or needed projects.

Every authorized project candidate will take away available resources for other projects hence there is always an impact on the portfolio that need to be taken in account.

  • Funding: obviously there will be less funding that can be allocated to other projects. On portfolio level this decreases the freedom of launching new projects, even they would deliver a higher value (unless the organization is willing to stop a running project).
  • Resources: internal resources are limited and to a certain extent external ones as well. Unlike the budget that is limited to 100% allocation organizations tend to overload the human resources over the 100% allocation mark. This when done over a longer period dangerous as it increases risk and decreases the quality of the projects. In some countries it could also be illegal.

So before a projects gets its approval the impact has to be evaluated the other running and waiting projects in a portfolio. This analysis is called portfolio balancing. Eventually other projects need to be slowed down or even stopped (even this is only rarely the case) to free up resources in form of funding or people.

Another form of balancing is sequenzing the project authorization to support any dependencies among project deliverables. So even launching a lower value project can lead to higher benefits when the depending project is bringing this in.

So the portfolio manager is challenged in several ways. Maximize the value agains other project candidates, ensure the needed resources are available and keep an eye on dependencies.