Since the last decade, project portfolio management has emerged as a leading key function of the project management. In technical terms, project portfolio management is a process or method used by the project managers and project management offices to categorize and align the project based on their organizational goals. For IT leaders, there is a key advantage of using the PPM as it lets them balance their project portfolios, capacity-demands, and link plan and resources for their project execution. Project portfolio management provides a great number of benefits to its users. These include:
1. Improves the project selection process
The project portfolio management helps in selecting the best projects for their company based on a certain criterion. It lets you select the project keeping in mind the availability of resources, your business goals, risks in taking up the project, and other criteria. The PPM helps you in the better evaluation of the project and select the best project that will offer maximum returns to the organization. Rather than depending on ambiguous factors, it relies more on relevant and well-defined criteria like ranking methods, scoring models, and other heuristic methods to pick up the project. Project portfolio management works more on qualitative and quantitative techniques.
2. Evaluate things in the broader picture
Very often, the business organization does not see things in a broader picture as they get stuck in fixing errors and executing short-term projects. In the case of large infrastructure projects, it takes months and years to complete and strategies, project demands, objectives, and resources change with time. Things that are relevant today may no longer be relevant tomorrow. So, project portfolio management helps you decide on project management, keeping in mind the long-term objectives.
3. Focus on objective business goals
Lack of clearly defined goals and objectives has become the primary reason for the failure of the business organization. If you do not set clearly defined goals and objectives to meet the project demands, it will ultimately result in project failure. With the help of project portfolio management, you can make sure that the goals and objectives fulfill the needs of the project, and the projects offer a huge return to the organization.
4. Collaboration over competition
If we take larger enterprises in the frame, they function as competing units with different groups having different objectives and goals. As one group works on the research part and others on the on-going projecting, it develops a sense of competition between each other. But with project portfolio management, you can ensure complete alignment of projects with the overall strategy and meticulously evaluate the demands of the different functions of the project. PPM helps in eradicating the sense of competitiveness among the different project teams and encourages project managers to develop collaboration among the different teams of different projects.
5. Using resources efficiently
Another major factor that fails in the project is resource dependency. In such conditions, there are only two options left, either you plan projects based on the availability of the resources or allocate resources based on the project demands. But resource planning and project management is not an easy job. With Project Portfolio Management, you can work on a rounder approach. First, they figure out the availability of the resources in the initial stages while choosing the project and then review them periodically. It gives you a clarity of using the project efficiently.
6. More accurate project performance data
Continuous monitoring and controlling are one of the key features of the project portfolio management. If the portfolio performance is as per the expectations, PPM helps in establishing a better connection between the high-level portfolio data and the real-time ground project indicators. Collecting real-time data on portfolio performance makes it easy to adapt to strategic changes.
7. Increased timely project deliveries
According to the 2017 PMI reports, the best performing organizations can complete an average of 88% of their projects on time without fail, whereas the under-performers can only reach up to 32%. Despite the limitless efforts and best team management, it is difficult to complete the project before the deadline. Concerning the budget, the best performers can complete 90% of their projects within the given budget. In contrast, the underperformers can complete only 25% of their projects with the frame of the designed budget. Project Portfolio Management works on the core principle of strategy formulation and execution, which helps the organization to become successful. A successful organization works by interconnecting strategy formulation and execution.
8. Less Organizational Risk
With the project’s return, there come certain risks, and project management focuses only on the risk part. But Project Portfolio Management gives you a better analysis of both the risks and return of the project portfolio. This risk versus return analysis will help you prepare the methods to eliminate the risks and get ready with a backup plan. It makes you ready to face any risk with the strategical approach by laying the foundation of the evolved risk management strategy. PPM can be a powerful tool in mitigating the risk and deal with any plan failure with a backup plan ready.
9. More informed decision-making
While working on a project, the project manager has to make certain decisions in a single day, and every decision he takes must be right as it casts a great impact on the success of the project and the organization as well. An accurate and authentic database can help in making realistic decisions. Project Portfolio Management helps you work with data-centric tools to provide you accurate and authentic, which helps in making ground-breaking decisions.
10. Increase in ROI
Every organization works on a project intending to achieve high returns, i.e., the financial returns. With Project Portfolio Management, you can train your team members to wear “portfolio hat,” increase the probability of the project’s success, make budget-friendly decisions, increase your ROI by putting fewer efforts.