After the project requests have been refined and fit in the portfolio after the review and balancing a formal step is needed to authorize the project candidate to start, use resources and spend money.
The best way is to have a periodic meetings with the senior management and the requesters of projects to present the project for approval. Like this all decisions are minuted and can be tracked for compliance and governance reasons.
There might be several meetings and approval steps needed, so the portfolio manager needs to include this in his or her plannings. The reason are the so called management approval levels (MAL), where larger poject needs approvel from more senior management up to board of directors. As these meetings cannot be planned and initiated by the portfolio manager the initial approval meeting has to be aligned.
Once the approval is made several steps needs to be executed to turn the project into execution mode
- Give the project team the financial competence to spend money according the approved project budget.
- Set up a reporting structure and repository for the financial tracking, status and risk reporting.
- Communicate the portfolio change as there might be dependent project teams.
Sometimes the project planning cannot be done in detail at this stage as the project is too complex (see also Risk Estimation Diagram Method in the Identify section). In these cases it is benefical to split the approval step into a planning and an execution phase. The deliverable of the planning phase will - as the name is indicating - be a detailed project plan and approach.
A special problem is the preparation of the project plan and documents to get approval for execution. As the project can only spend money when the project is approved how can it spend money to prepare the approval? Here special funds are needed to enable the teams at least to prepare all documents. These credits will be "payed back" when the project starts and if the request should not get approval the money is lost.