« Project management exists in a broader context that includes program management, portfolio management and project management office. Frequently, there is a hierarchy of strategic plan, portfolio, program, project and subproject, in which a program consisting of several associated projects will contribute to the achievement of a strategic plan. »
Many organizations have large numbers of change initiatives running in parallel, addressing a wide range of factors such as industry trends, globalization, emerging markets and rapid technology innovation all create challenges and opportunities to which businesses need to respond. These “responses” requires continuous change across all aspects of the business that comprises people, processes, organization and technology.
Portfolio Management (PfM) is critical for decision making, governance, and to ensure that business objectives are supported by the right set of projects whereas project management is critical to ensure that budget, resource allocation, activity and work are accurate and delivered on time.
Program Management (PgM) is the way to provide an “abstraction layer” above the management of projects and focuses on selecting the best group of projects, defining them in terms of their objectives and providing an environment where projects can be run successfully.
Project Portfolio Management (PPM)
Strategic changes to the organizational state are cascaded down to a set of projects that are coordinated and managed as a unit in programs, such that they achieve outcomes and realize benefits in line with strategic objectives.
PPM is about decisions or choosing to do the right things at the right time. The foundation is formed based on effective delivery, with the triple constraint of delivering the agreed scope, on time and within budget, driving through from decision to completion with an appropriate level of quality. To a certain extent, every project relates to a business objective aimed at creating a competitive advantage. In delivery, perception should be focused on realizing business results and generating better performance.
PPM is fundamentally a funnel-shaped process. The starting point is the organization’s strategy that needs to be translated into clear goals and objectives. Corporate strategies sometimes end up at quite a high level, but for the purposes of guiding investment decision-making, this really needs to be at the level of an individual “business driver” and ideally prioritized as well.
The common challenges at this stage are:
- Initiatives that not only overlap, but also aim to achieve the same end result
- Initiatives that have no link to the business strategy
- Attempting to satisfy strategic objectives when there are no related projects in place
- Initiatives that have overly optimistic and unsubstantiated cost and benefit estimations
Just because a project supports a strategy does not guarantee it a pass into the project portfolio. The project is still competing with other candidates for the limited resources of the organization and thus must go through the organization’s standard project portfolio evaluation process. Among the criteria by which the projects will be evaluated is the degree of impact the project has on the organization’s strategies. The sum of the individual strategy impact provides an overall project value score.
Certain critical data must be made explicit and communicated to all decision makers. One is the capacity of the organization. The most important is to source the most important and critical projects or to narrow the scope of the strategy.
Project Portfolio Management (PPM): Processes
According to PMI, PPM Processes are aggregated into two groups:
- Monitoring and Controlling croup
Aligning Process Group: How projects will be categorized, evaluated, and selected for inclusion, and managed in the portfolio. The processes within this group are most active at the time the organization refreshes its strategic goals and defines short-term budget and plans for the organization.
Monitoring and Controlling Process Group: How to review performance indicators periodically for alignment with strategic objectives. The purpose of this process group is to ensure that the portfolio as a whole is performing to predefined criteria determined by organization as ROI and NPV.