PROJECT PORTFOLIO MANAGEMENT: Meaning, Top Software, Processes & Benefits

project portfolio management
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Ideas for projects can come from anywhere, at any time, and it’s common for a business to have a long list of potential projects to complete. However, there is usually not enough time, money, or resources to do them all right away. A project portfolio management process is necessary to understand which projects will have a beneficial impact on the company and prioritize them accordingly. Project portfolio management software helps with the consolidated planning, tracking, and management of processes, projects, and technologies to help project managers command and evaluate projects both existing and proposed based on specific details. Keep scrolling to learn about the benefits and the difference between project portfolio management vs project management.

What Is Project Portfolio Management in Simple Words?

Project portfolio management is the centralized management of the processes, methods, and technologies used by project managers and offices to analyze and collectively manage current or proposed projects based on numerous key characteristics. With project portfolio management, you gain visibility across projects and initiatives to connect your team’s daily to-dos with your company’s organizational strategy.

Project portfolio management is aimed at reducing inefficiencies that occur when undertaking a project and eliminating potential risks, which can occur due to a lack of information or systems available. It helps the organization to align its project work to meet the projects whilst utilizing its resources to the maximum. Additionally, all the project managers of the organization need to have an awareness of the organizational project portfolio management in order to contribute to the organizational goals when executing respective projects.

What Are the 4 Types of Portfolio Management?

To reduce risk, the active manager prefers to diversify investments among the various sectors. The issue with active portfolio management is that it all comes down to the manager’s skill. But should you find one with the necessary know-how, the value investing method will likely bring in good gains.

#1. Active Portfolio Management

The aim of the active portfolio manager is to make better returns than what the market dictates. Those who follow this method of investing are usually contrarian in their approach. Active managers buy stocks when they are undervalued and start selling when they rise above the norm. Also, active portfolio management involves the quantitative analysis of companies to determine the cost of stock in relation to its potential. To do this, the active manager disregards the efficient market hypothesis and instead relies on ratios to support his claim.

#2. Passive Portfolio Management

The passive management approach falls on the other end of the spectrum from active management. These managers adopt the “efficient market theory.” That means that they assume stock prices provide an accurate reflection of known information about the company.

These managers look for lower-risk options, such as index funds, that provide stable value over time. Since this approach requires substantially fewer trades, it helps keep down the overall management fees you’ll pay.

#3. Discretionary Portfolio Management

A discretionary manager is given full freedom to make decisions for the investor. While the individual goals and time frame are taken into account, the manager adopts whichever strategy he thinks is best. Once the cash has been handed to the professional, the investor sits back and trusts that the profits will roll in.

#4. Non-Discretionary Portfolio Management

The non-discretionary manager is simply a financial counselor. He advises the investor on which routes are best to take. While the pros and cons are clearly outlined, it is up to the investor to choose his own path. Only once the manager has been given the go-ahead, does he make a move on the investor’s behalf.

In addition, whether you decide to use a portfolio manager or you choose to take on the role yourself, it is important to opt for a viable strategy and ensure that it is put forward in a logical way. The merit of maintaining a sensible portfolio is that it cuts down the confusion while providing investments that fit the individual’s goals.

Project Portfolio Management Software

Tracking multiple active projects while staying informed on overall portfolio performance is challenging. Project portfolio management software provides organizations with a high-level, global view regarding the progress and sustainability of multiple projects.

Project portfolio software is a tool that’s designed to concentrate the management and maintenance of a project management portfolio. With the increasingly large amount of data now associated with a single project, let alone a portfolio, the use of portfolio management software has become a necessity for project managers. 

With software moving from the desktop to the cloud, project portfolio management grew more efficient and effective. Project portfolio management software was quickly adopted by IT and software development organizations, but has multiple benefits for any type of company or organization, including:

  • Consulting agencies
  • Construction companies
  • Human resources departments
  • Financial institutions
  • Marketing and advertising agencies
  • IT departments
  • And other organizations

Examples of Project Portfolio Management Software

Because, Project Portfolio Management software makes it easier for project leads and organizations to analyze goals across projects, manage resources at the enterprise level, and communicate between project teams. This is why firms need to choose the best and most reliable software that fits their various needs

#1. Wrike

Wrike is an award-winning project portfolio management software trusted by 20,000+ companies worldwide. Streamline your project portfolio management and see which projects are worth investing in. Plan, execute, and report on your projects using templates, Kanban boards, Gantt charts, time tracking, custom request forms, reports, automated approvals, and advanced AI.

#2. Monday .com is an open platform where you can build custom solutions for your team’s project portfolio management. See the big picture with dashboards and get a high-level overview of your project budgets, timelines, and resources in one place. Easily visualize performance with embedded analytics so your team can maximize your ROI and ensure success for your business.

#3. Teamwork

Growing teams need to be able to easily see what tasks are coming and communicate about them, which is why Teamwork earns the spot for best for growing teams. Not only does it make it easy for teams to communicate, but it also opens transparency on projects to an unlimited number of free client users. A collaborative document editor gets everyone on the same page, working toward the same goal.

#4. Smartsheet

Smartsheet focuses its design and workflow using a spreadsheet-style dashboard that may already be familiar to project managers. Like any good PPM solution, it offers grid, Gantt, card, and calendar views. As with standard spreadsheets, you can create formulas in cells and columns to help with tracking and reporting.

Teams can work together to share work via presentations, images, and PDFs with real-time updating and collaboration.

#5. Asana

Asana software helps project managers monitor their team’s initiatives, such as project status, progress, and resource allocation, in a unified dashboard. They provide a comprehensive view of an organization’s project portfolio, enabling managers to prioritize projects, allocate resources and manage budgets more effectively.

Project Portfolio Management Process

The project portfolio management process aims to establish specific stages in which team members are notified about different project landmarks, such as when you meet resource thresholds, project conflicts arise, or budgets exceed their amounts. Hence, Teams use PPM in project management to create and maintain processes that continually consider all projects against overall business objectives and strategic goals, which helps to prioritize and validate projects as they arise.

Why because, the right project portfolio management process keeps projects aligned with strategic enterprise goals in a well-organized, efficient manner by drafting how the organization manages project ranking, resource distribution, planning, development, and other important elements. Below are the basic processes,

#1. Define Business Objectives

Before you start thinking about the project portfolio management process, you’ll need to understand your organization’s business objectives and strategic goals. The idea is that your project portfolio needs to align with the strategic planning of your organization, so you’ll need to check if its financial objectives and customer value are good enough for your organization.

As a project portfolio manager, you’ll need to reach an agreement about the strategic goals of the project portfolio with stakeholders, and then proceed to establish valuation criteria for project selection.

#2. Collect Project Ideas for Your Portfolio

Once you’ve defined your portfolio’s strategic goals it’s time to start building it. To do so, you’ll need to start collecting projects. Those could be in-progress projects or project ideas that are similar enough to be managed simultaneously. Gather project management data and prepare the valuation criteria to choose the best.

#3. Select the Best Projects for Your Portfolio

To determine which are the best projects for your portfolio, you’ll need to do a cost-benefit analysis and use your valuation criteria. These valuation criteria will measure the amount of value that each project brings into the portfolio. There are a variety of aspects that can go into the project selection scoring criteria, such as the payback period, net present value, or risk level.

#4. Develop a risk management strategy

Companies need to evaluate each project’s inherent and potential risks to the overall portfolio, rather than just comparing project initiatives side-by-side. It’s important to conduct risk assessments several times over the course of a project’s lifecycle because this enables project managers to keep the PMO and stakeholders up-to-date on any changes. Stakeholders, in turn, can weigh new initiatives against the overall portfolio more accurately.

#5. Validate Project Portfolio Feasibility

Now that you’ve chosen the projects that are the best fit for your portfolio, it’s time to do a feasibility study that takes into account all the financial risks, capacity planning, and resource management constraints.

#6. Execute and Manage your Project Portfolio

Now you’ll need to coordinate the execution of the projects and programs in your portfolio simultaneously by working with project and program managers. To evaluate performance, identify problems, and make adjustments as necessary to keep projects on track.

Project Portfolio Management Benefits

Project portfolio management has various benefits, from evaluating potential projects and anticipating risks to corporate strategic alignment. Let’s take a look at some notable benefits of project portfolio management,

#1. Aligns Project Goals With Business Strategy

The ultimate mission of any company is to meet both short and long-term objectives, and every project embarked upon takes that company closer to its goals. Project managers must ensure that all projects align with the company’s strategy and objective. Also, another benefit of project portfolio management is that it helps evaluate, select, and prioritize projects that align with the overall objectives of the company.

#2. Improved project selection process

The project portfolio management process emphasizes selecting the right set of projects according to business goals, risk, resource availability, and other criteria. The purpose of processes is to evaluate and pick the project that will deliver maximum value to the organization. By using a combination of qualitative and quantitative procedures, such as ranking methods, scoring models, and other heuristic methods, 

#3. Clearer View of Long-Term Objectives

Some short-term projects can be disorganized in the execution phase, and it’s easy to lose focus on long-term objectives when trying to resolve issues for short-term projects. Project portfolio management is invaluable in this respect as it puts everything into perspective and helps with tough decision-making processes that are based on the long-term objectives of the company.

#4. Boost Productivity with Enhanced Team Collaboration

Project portfolio management provides a real-time view of the progress of projects to all the stakeholders. Project managers have easy access to team members. Everyone has a personal dashboard and an updated Gantt chart that provides a visual view of the work’s progress, the different phases, and their interdependencies.

#5. Increased ROI

ROI is the revenue/profit generated after the deployment of the project. Any organization has a goal to achieve increased returns. By investing in portfolio management tools and training your people, it becomes possible to improve the project success rate and make cost-saving decisions. It helps clarify the broader company goals, improve resource management, and increase productivity and agility.

Project Portfolio Management vs Project Management

Even though both parties are highly concerned with the successful implementation of projects, It’s understandable why these terms might be confusing they are nearly the same! But there’s a big difference between project management and project portfolio management. Here’s how these two practices differ,

Differences between Project Portfolio Management vs Project Management

Below are several key differences between project management vs  portfolio management,

Firstly: Project management is a single undertaking: a series of tasks that aims to produce a specific product, service, or benefit within a defined timeline. Also, we can say that it is the use of skills and processes to successfully complete temporary work (a project) that adds value to your organization. While 

the portfolio is a high-level view of all the projects an organization is running in order to meet the business’s main strategic objectives. It could be every project across the entire company, a division, or a department.

Secondly: Project management is temporary and unique, while project portfolio management is ongoing initiatives that involve strategic and cohesive objectives. Once a project deadline has come and gone, it will be no more. Portfolios, on the other hand, span across years of existence.

Thirdly: Project portfolio management is a specialized process exercised when an organization brings together projects with a common goal, aiming to maximize their profit margin and increase the overall return on investment. while Project management is the process of organizing resources, coordinating teams, setting deadlines, and monitoring the progress of individual projects.

In addition, Both project and portfolio management each focus on achieving goals in a timely and resourceful fashion. But there are key differences between each role. While project managers have to look at the scope of an individual endeavor, portfolio managers look at numerous projects and piece the connection between them.

Lastly: The Project managers might provide updates on how current projects are doing or how successful finished projects are to program managers. while Portfolio managers may meet with program and project managers to align projects with large-scale objectives and provide key performance metrics.


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