The short answer is: yes, you should! A good Statement of Work (SOW) may save you a lot of stress, time, and costs. Sounds like something worth trying out, right? In this blog post, we'll cover the...
Managing a project, your goal is to deliver it successfully: on time, within the budget, while maintaining high client and team satisfaction rates. What happens when your company is able to work on several projects at the same time? On a single project level, the goal remains the same, but on a higher level, you want to be confident that your team is working the right projects at the right time and within the right project teams. It seems like a complex thing to achieve, but fortunately, Project portfolio management (PPM) is here to help.
What is project portfolio management, and what are its primary benefits?
Project portfolio management can be described as a centralized management strategy for your company’s project portfolio. A portfolio is a collection of grouped together projects that don’t have to be related to one another. Importantly, a portfolio of projects is designed to serve a strategic business objective and bring your company some form of value.
Of course, said business value would be one of the major benefits of project portfolio management. Apart from that, this strategy is also an excellent measure to manage the risk that’s connected to delivering projects. If you follow the steps outlined below, you will have a chance to carefully scrutinize your company’s potential projects even before you commit to delivering them. As a result, your estimates are likely to be more accurate, and possible challenges will be taken into account upfront.
Adopting the PPM approach also results in the company’s managers getting a clearer big picture of projects and how they perform. On top of that, this strategy champions collaboration between different project teams instead of competition.
Critical steps in Project Portfolio Management:
These are the stages you need to consider when you want to adopt project portfolio management at your company.
Work out your company’s strategic objectives
Strategic objectives are your guiding lights during the process of selecting projects for your company’s portfolio. It’s essential that you know what they are. Your business objectives may be related to increasing revenue, maintaining profitability, or diversifying revenue streams. On the other hand, however, there might be a very different objective that your company is set to achieve. Don’t think that you have to come up with a sole all-encapsulating objective—it’s perfectly fine to list a couple of them.
Identify potential projects and analyze them
Before you start narrowing down projects that could end up in your company’s portfolio, you need to know how big your project pool is. Gather all project requests, find out what kind of sales opportunities are there, and list all of the potential projects. Now, take a closer look at each and every one of them. You need to know what kind of resources (human or otherwise) they require, what’s their timeline, what are the risks and potential challenges etc.) Evaluate the possible profit from these projects.
When you have a very good understanding of potential projects that could be a part of your team’s portfolio, you need to perform an alignment analysis: check if these projects are in line with your overall strategy.
Try to judge the projects on your list in terms of your company’s business objectives: are they supporting these goals or perhaps putting them at risk? What are the chances that your team will be able to complete a given project and produce the desired business value? Portfolio managers need to pick projects that work well together in terms of achieving business objectives but also in terms of the workload and resource allocation. Know which projects match your criteria? It’s time to do more planning before you launch them!
Prioritize selected projects
At this point, you should have a list of projects that may as well become a part of your company’s portfolio. It’s a good moment to prioritize them and, if necessary, introduce some changes. The good news is that you have found the right projects for your company. The challenge is that you may need to adjust their timelines or budgets in order to be able to launch these projects together. Think about resource management as well: decide which team members should be involved in each project and for how long. As a project portfolio manager, you will likely need to collaborate with resource or project managers at this stage. Take some time to analyze the schedules of your new projects – perhaps you will need to move a few things around in order to avoid scheduling conflicts.
Now that you know which projects go into your portfolio and how they’re going to be delivered time or resources-wise, you can plan their kick-off. What happens after the project teams start working on their respective projects?
Launching your portfolio projects is not the end of the project portfolio management process. Sure, the focus is now on project management, but as project managers make some progress with their projects, it’s good to look at the project portfolio from a higher level – head to the next section to learn how you can monitor your projects.
This is also a good moment to reiterate the fact that all conflicts (resources-based or otherwise) and change requests should be resolved with the portfolio and its strategic goals in mind.
Monitor projects and report their progress
Project managers should regularly monitor their project’s KPIs and keep track of their team members’ workload/timesheets, that goes without saying. But project reporting is also an essential part of project portfolio management simply because it allows you to determine whether a given project is going as planned and whether the projected value will be achieved.
What should you measure when it comes to your project portfolio?
- Resource utilization (within projects and overall)
- Time logged by people working on project teams
- Estimates vs. actuals (planned hours versus tracked hours)
- Projects burndown or burnup,
Do you need dedicated PPM software?
You’re likely to come across several apps that pride themselves on their project portfolio management features. These features usually include:
- Project management features (task scheduling, Gantt charts)
- Resource management features (resource scheduling, time tracking, absence tracking)
- Reporting features
- Project archive
While all of these are extremely convenient in effective project portfolio management, you can probably see that similar options can be found in project management apps you likely already use. It’s possible to manage your project portfolio with tools that are not dedicated to PPM per se. Make sure you’re able to:
- visualize your projects’ progress – it can be through a Gantt chart, a Kanban board, or using a calendar view with planned hours per project or even project progress reports. It’s important to know where your projects’ at and how much work is left to do.
- track chosen KPIs – whether it’s resource utilization or the amount of time logged per project, you want to be able to say that the projects in your portfolio are going well or that some areas should be improved.
- collaborate with project managers, clients, and other team members with a given tool: it’s great when a project-focused app can be accessible by more people than a project manager (or a project portfolio manager). It streamlines communication and promotes transparency.
- integrate your software with other tools you use on a daily basis – we can’t overstate this: integrations are essential if you want to create an efficient portfolio management process (or project management process for that matter). What kind of integrations do we have in mind? First of all – your favorite communication app (Slack, Skype, or *sigh* email) so that you can receive important notifications and updates there. You should also think about connecting your portfolio management tool with the CRM your company uses – this way, you’ll have visibility into the sales pipeline and know which projects are likely to join your project pool soon. Finally, if you’re working on software development projects, you might want to integrate with developers’ tools such as BitBucket or GitHub: you don’t want to miss important repository issues. Integrating apps sounds like a daunting task reserved for people with programming prowess, but you can do it on your own, utilizing one of the task automation apps like Zapier.
- customize the software to fit your needs – sure, your portfolio management process might be similar for all projects across the board, but you still may want to utilize a tool that can be edited and adjusted to your workflow. Fortunately, many apps come with customization options: adding custom fields, creating your own categories and tags, building custom reports, or project views. Only when your tools are well-tailored to your process, the whole thing can be truly effective.
We hope that this guide to project portfolio management helped you to better understand this strategy and made it easier to adopt it at your organization. If you have any questions about effective project and resource management, ping us via chat: we’re happy to give you some tips and walk you through our product.