Project portfolio management has many benefits. Perhaps most notably, it allows you to create a standardized system of best practices for your organization. PPM adoption can also minimize risk, maximize profit, and ensure smart resource allocation.
Alan Zucker, a project management professional with more than 25 years of experience, sums this up: “The expected benefit of PPM is that the enterprise can manage, control, and govern its project investments to maximize its return on investment (ROI) and ensure that all efforts are aligned with the corporate strategy.”
In addition, PPM can aid your company in the following ways:
- Minimize Risks to Maximize Business Impact: Risk is inherent in every venture, but PPM can help identify and mitigate risks before they become issues. A standardized approach to decision making can also help companies look out for less obvious risks by comparing new potential projects to similar efforts from the past.
“Although the word ‘risk’ has a strong negative connotation, it is unavoidable at times. Because of the likelihood, type, and impact of various risks, you must explore options through an effective risk management plan to keep projects on track,” says Daniel Carter, Debt Advisor at IVA Advice. He continues, “Risks have financial and program repercussions, and reducing them helps you avoid underestimating the gross effort required for prospective and ongoing initiatives.”
- Improve Speed of Project Completion: By implementing a standardized approach to decision-making, you reduce the time it takes to prioritize and choose projects and, consequently, the time it takes to complete them.
“We’ve seen about a 15 percent decrease in the average length of our projects since using a portfolio project management strategy and collaborative PPM software,” says John Li, CTO on Portfolio Project Management for Fig Loans. “Almost every piece of our projects goes more quickly, from project choice to strategy planning and execution. Now that we have information flowing in and out of one integrated source, management and key players can better tie our project strategy to the actual execution. In a nutshell, with the key players all having a clear vision of tasks and strategy, we complete more projects on time and within budget.”
- Allow for Greater Budget Alignment: Create a realistic outline for the costs for all potential projects, and use these projections to help assess project readiness. “The PPM method can help identify budget discrepancies between planned and actual activity in real time, which allows you to minimize financial risks after a project has started,” says Carter. “PPM software can warn you of non-viable effort overexposure by highlighting possible money overruns, scheduling delays, and technological flaws. It keeps these risks from manifesting themselves throughout project delivery, leaving you with higher-value, lower-risk initiatives.”
- Optimize Resource Management: By engaging in project portfolio management, you can determine all necessary resources you’ll need for potential projects. With this information, you can decide whether you can take on the project, based on your bandwidth.
“Competent resource allocation allows your company to make the most of its available resources and skills by directing them to the most important tasks,” says Daniel Foley, an SEO specialist at CloudTech24. “For example, resource profiling provides an updated skills inventory, which helps to ensure that peak demand periods are not affected by a skills shortfall. It assesses the capability and redistributes skill across several tasks in scientifically calculated proportions. Project demand can be forecasted to this resource capacity, which allows you to focus your resources on worthy projects without over- or unburdening them.”
- Encourage Collaborative Decision Making: Project portfolio management can help encourage collaboration between PPM experts, project managers, and program managers when it’s time to pick projects. Because PPM emphasizes decision making based on data, team members don’t have to lean on personal preference for their partnerships, which can fortify relationships and trust over the course of their work together.
- Demonstrate Project Value to Stakeholders: Executives will gain visibility into why teams have prioritized certain projects over others. “If you present a portfolio of projects rather than just individual projects, communication may improve by helping bridge the gap between managers on those projects and the executives who fund them,” says Miles.
- Increase Project Success Rate: By using PPM, you’ll be able to focus on and sequence projects that deliver maximum success for both the individual project and your organization as a whole. In turn, this can provide a competitive advantage, since you’ll have a reliable system of selecting projects that leaves little room for risk, delays, or failed projects.
“PPM tends to gain management’s attention on every stage of project progress, which helps us perform better. Proper project management reduces the risk of the project failing by carrying out too many tasks simultaneously,” says Olga Voronkova, Digital Marketing Strategist at KeyUA.
Joe Pusz, the Founder and CEO of The PMO Squad, weighs in on the benefits of PPM: “The benefit of a well-executed PPM strategy is delivering on projects that will provide the most return on investment for the organization. Far too often, a manager initiates a project because a leader wants localized improvement within their department, even when the project provides minimal value to the greater organization.
“While ROI is a direct benefit of proper PPM, indirect benefits include happy employees and high-performing teams. Resource utilization is directly impacted by poor PPM choices and frequently leads to low morale and lack of confidence in leadership. When you assign team members to too many projects without a proper PPM evaluation, the resource bears the burden of extra hours, reduced quality, and ultimately, a poor performance evaluation,” he says.
That said, Zucker explains that the benefits of PPM are neither binary nor automatic. You don’t simply reap or not reap the benefits; you don’t instantly see results. Instead, realizing the extent of PPM benefits depends on your organization’s level of discipline, as well as dedication and continual adaptation to the processes you set in place.
“The benefits of developing and maturing a PPM process represent a continuum,” Zucker says. “At one extreme is chaos; money is spent on projects with no control, alignment, or accountability. At the other end of the spectrum, there would be an efficient and transparent process. The enterprise can effectively manage its investments to ensure alignment and maximize its investments. There would be transparency into the status of projects and programs so that appropriate corrective actions would be taken if there are problems.”
