10 Notable Benefits of Project Portfolio Management
It’s no secret that businesses flourish when they deliver projects successfully – more so when multiple projects are managed at the same time. While that may sound easy; significant effort, time, and resources are required to successfully create a project portfolio management strategy that works.
Project portfolio management (PPM) is the process used by project management organizations (PMOs) to analyze the potential return on new or existing projects. PPM managers determine what projects to embark on, when to take them on, the priority of a specific project, how profitable that project may be, and how to efficiently allocate resources to complete those projects.
10 Key Benefits of Project Portfolio Management
PPM has a wide variety of benefits, from evaluating potential projects and anticipating risks to corporate strategic alignment. Let’s explore some notable benefits of project portfolio management...
1. Align 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 need to ensure that all projects align with the company’s strategy and objectives.
When projects don’t align with the objectives of the company, this can result in a waste of resources and workforce efforts, together with the damaging prospect of project overload. One of the benefits of project portfolio management (PPM) is that it helps evaluate, select, and prioritize projects that align with the overall objectives of the company.
2. Improved Project Selection Process
Other key benefits of project portfolio management include improving and streamlining the project selection process. PPM helps to select the right set of projects in terms of business goals, risks, and the availability of resources, to name a few. The aim is for the project to deliver optimal value for the company.
Through a combination of quantitative and qualitative techniques – like scoring models, ranking methods, and a variety of heuristic methods – PPM can help make decisions based on relevant and clearly defined criteria, as opposed to ambiguous factors.
3. A Clearer View of Long Term Objectives
Some short-term projects can be chaotic in the execution phase, and it’s easy to lose focus on long-term objectives when trying to resolve issues for short-term projects. PPM 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. Focus on Objective Business Goals
One of the main reasons for organizational failure is the absence of clearly defined objectives that lack specific targets and milestones, from which progress can be measured. A company can easily get side-tracked by potentially fruitless projects that could hurt its bottom line.
The benefits of project portfolio management include creating an open culture where managers can ask questions, guaranteeing the needs of the business are prioritized. If there are clearly defined goals, and an effective strategy in place, companies can use PPM to ensure that projects don’t deviate from their objectives.
5. Collaboration Instead of Competition
In large companies, situations can arise where different project groups (with differing objectives) start to compete for financial or human resources. This can easily lead to discord.
PPM aligns all projects with the business’s overall strategy, as it uses a meticulous and uniform approach to evaluate requests from different project groups. It also reduces redundancies in projects and encourages mutual teams to promote a more collaborative environment.
6. Efficient Use of Resources
Demand management and resource planning can be difficult and can result in a failed project if done incorrectly. It can be overwhelming to decide whether to execute projects based on resource availability or to allocate resources based on projects.
PPM offers a more balanced approach as it considers resource availability from the outset when the project selection process starts – and continually reviews those resources so they can be optimally used across all projects.
7. Accurate Project Performance Data
PPM is renowned for its monitoring and control capabilities, enabling project managers to connect high-level portfolio data with project indicators, at the ground level. This helps ascertain if the portfolio is performing as expected.
By establishing performance guidelines and tolerance levels, it becomes easier to identify potential trends that can negatively affect the portfolio. By having access to real-time metrics, projects can quickly be adapted to strategic or environmental changes.
8. Improved Project Delivery Times
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Occasionally a project won’t be completed on time – despite the team’s best efforts and forecasting. In many instances, unforeseen factors contribute to project parameters, causing unnecessary delays.
One of the core principles of PPM is that it bridges the strategy formulation and execution of projects – helping to complete the right projects on time and within budget.
9. Reduced Organisational Risk
Project management focuses on the risks of an individual project. PPM, however, provides a birds-eye view by observing the risk-versus-return profile of the entire project portfolio. This ensures that organizations make contingency plans at an early stage, which helps to create a foundational framework for an evolved risk-management strategy.
10. Informed Decision-Making Processes
Senior management teams make important decisions constantly, and they need to get as many of them right on the first try. Great decisions can become an inflection point for that company’s history. Innovative decisions are only possible when they are supported by accurate and objective data.
With PPM, the status quo is constantly being questioned, using data-centric tools that help senior management enhance their decision-making processes.
Increased Return on Investment
The main objective of any company is to achieve increased returns on their investment. While financial goals are a given, there are other key contributors to this such as operations, service, and/or regulatory compliance.
By effectively using PPM tools, you can improve the probability that a project will succeed. Moreover, it helps increase predictability, makes faster cost-saving decisions, and gets better returns on investments.
Final Thoughts
PPM reporting tools enable companies to actively monitor all aspects of the organization’s new and existing projects. By bringing consistency and clarity to project management processes, businesses can define and pursue clearer objectives. PPM will optimize resource allocation, make planning operations more streamlined and improve the quality of all deliverables, ensuring the strategic alignment of every project.
Learn how Qvistorp can help take your business to the next level, with effective PPM solutions that are tailored to meet your specific business needs.
KJ
