Project portfolio management encompasses the centralized management of processes, methods and technology. Project management teams use PPM tools and methodologies to oversee business undertakings based on a variety of criteria.
The aim is to determine the optimal combination of resources that can help an enterprise accomplish its goals via projects, taking into account external market conditions, regulatory requirements, customer demands, competitive moves and others factors.
PPM software enables enterprises to organize multiple projects into a single portfolio, and it provides reports based on a variety of components. While each project likely has unique factors, these generally include:
- project goals
- required resources
- resource costs
- project risk
Using this software, managers can review portfolios before making project decisions, including funding levels and specific project objectives. Some products offer a dashboard that provides a real-time view across project schedules, milestones, resources and other components.
The Project Management Institute, an organization that supports project management professionals worldwide through collaboration, education and research, has stated that PPM tools are a way to bridge the gap between strategy and implementation. Companies need them because projects require time, money and staff to complete, and these resources are finite. In many cases, managers must figure out which are the most strategically important projects and allocate resources accordingly.
PPM for PMO
The growing use of PPM tools has been in lock step with the emergence of the project management office (PMO) at organizations. These offices oversee the progress of multiple projects and are particularly vital at enterprises that might have many going on simultaneously.
PPM tools can help PMOs balance available resources with a variety of projects and guide them in determining which projects make the most sense to launch and which to delay if resources are tight. The software provides the visibility PMOs need to keep projects moving and to avoid redundancies.
PPM vs. PM vs. EPM vs. ERP
While the PPM process and tools provide a holistic view of multiple projects, PM software helps organizations plan, organize and manage individual projects at a granular level, including resources. Some platforms can provide cost estimation, scheduling, budget management, resource allocation, quality control, documentation, and communication and collaboration functions, among others.
EPM software provides budgeting, forecasting and planning functions for business processes that span multiple areas within an organization, such as finance, human resources and sales. Various strategic requirements drive how organizations use EPM, all depending on the goals and business models of an organization.
ERP is a suite of integrated software applications that manage and support key business processes such as finance/accounting, procurement, manufacturing, sales and more. It facilitates information flow among these business functions and manages links to outside stakeholders such as suppliers.
Types of PPM
Organizations can define PPM to a number of different functions and sectors.
Similar to ERP platforms, there is a tight industry and market focus with PPM tools, with functionality and features varying depending on the sector. The PPM software that would be suitable for a construction company will be quite different than the software designed for use by a healthcare company.
As regulated entities that oftentimes operate on tight budgets, healthcare companies have a particular need to keep a close watch on project portfolios. Important features for PPM in healthcare include collaboration and visibility across projects, resources and documents, as well as tracking and reporting project progress and costs.
Because of the regulatory considerations, the healthcare PPM platform should support auditing efforts for the Health Insurance Portability and Accountability Act. It should also support projects related to efforts such as electronic medical records and picture archiving and communication systems deployments.
Specialized PPM isn't limited to industry verticals. Organizations can apply the PPM process and tools to enterprise functions such as software application development.
Because modern app dev requires both speed and quality, PPM platforms must be especially strong in tracking functions such as software testing and project progress throughout the development lifecycle, from design to production.
Demand for software developers is high, so effective resource tracking features are vital, including the number of people working on multiple projects. Also important is the ability to track project completion rates, project success rates, project risks and the risk trend line.
Key PPM capabilities and features
PPM tools might include several key features and capabilities. One is pipeline management. This helps organizations determine whether and how they can execute a set of projects in a portfolio within a specified time, given the available resources. Pipeline management helps them select the right projects to pursue at a given time.
Another feature is resource management. Monitoring resources -- whether it's funding, labor, materials or space -- is vital for managing multiple projects. Organizations that fail to track project resources correctly could sacrifice efficiency and spend unnecessary capital.
Project managers also have to deal with constant change, and PPM software can provide change management capabilities. The PPM platform should enable managers to adjust the portfolio as needed in order to maximize the benefits of projects and help meet the organization's strategic goals. Change could involve shifts in the mix of projects in the portfolio, the availability of resources, market conditions and even the company's overall strategy.
Yet another feature is risk management. PPM tools can help organizations manage and reduce project risk by closely tracking progress and allocating the necessary resources. They can reduce or eliminate the risks of wasting money, time and effort. With PPM, organizations can minimize the risk of project delays and resource mismanagement.
Financial resource management is another key capability of PPM, enabling more accurate forecasting. It helps individuals or teams demonstrate the value of projects in relation to the strategic goals and priorities of the organization through financial controls, and it helps assess progress using various Financial metrics. With financial resource management, project managers can better forecast project costs, establish budget plans and tweak those plans as needed.
Analytics and analysis features
Reporting/visualizations. Some PPM offerings include automated reporting and visualization features that enable users to present findings and deliver them to dashboards.
With these features, managers can visualize, share and analyze portfolio performance against a set of KPIs. Some products integrate analytics and reporting into the user experience to inform decisions, increase efficiency and deliver better results.
By employing data visualization, organizations can gain a visual representation of trends and data from work management tools, helping with decision-making and enhancing the ability to prioritize projects.
Real-time data. Getting timely updates on project schedules, resources and team members is a key to successful portfolio management, so the ability to receive real-time data is an important feature.
Software platforms can offer automated methods of task and status reporting so team members can provide project managers with real-time progress data, and managers can create status reports to collect progress updates from team members. Users can access up-to-date data on projects and portfolios, including business metrics, resources and other aspects of portfolios.
What-if scenario analysis. These types of analyses allow managers and team members to gauge the impact of certain changes in schedules, resources and other project components. PPM tools for what-if scenario planning can help teams address potential problems.
Some of these analysis tools use sophisticated algorithms and embedded best practices to help executives quickly identify the optimal project portfolio under a variety of budget and business constraints. Using what-if analysis, managers can model different scenarios for various projects. This can help ensure success despite challenges such as cost constraints and provide guidance as to which projects should be included or excluded from a portfolio.