A project portfolio signifies prioritizing. You can’t just leave behind the secondary goals and pursue only your main goal. A project portfolio is mainly used on the presumption that organizations may not have adequate resources to achieve all their goals simultaneously.
It might look dumb to peep for the one outside the framework of your company but it will surely help you to understand the potential conceptions of conundrums and to establish the purpose for judgment.
Below are five key considerations you must know while executing this approach.
Consideration 1: The scope of the portfolio has to be a motivation and also a basis for debate
A portfolio will also have a scope just like a project. But, the relation between the scope of a portfolio and its results is just contrary to a project’s scope and results.
The project scope comprises all the prerequisites in the tiniest foreseeable detail. In the management of the project portfolio, the scope is specified precisely as top-down, arising from the overarching objectives as a basis of inspiration for the project types that are lined up with them and that are prone to be initiated.
A project portfolio’s scope informs the kind of projects that comprises the organization’s activity.
Some of the vital criteria that have to be analyzed for your portfolio scope contain the following.
- Objectives and goals
A portfolio manager must always respond clearly to the following questions: What will a portfolio seek to facilitate? How will the current project contribute to the objectives and goals? Will it contribute in multiple ways simultaneously?
Beyond the main objectives and the overarching goals, determining intermediate objectives that play as success criteria and enablers is also recommended.
- Tactics and strategies
Tactics and strategies should be articulated: these are the empirical translation of the organization’s strategic objectives and goals. Projects that aid similar business objectives are bound together into tactical programs. Larger projects that provide informally to various business goals are inferred as strategic – also in the inadequacy of a portfolio management practice that is explicit.
The particular composition is precisely idiosyncratic to each company and strongly impacted by the coordinators in each enterprise and project managers’ skill levels.
In pharmaceuticals, a distinct project portfolio is made up of internal projects which will be directed by R&D, followed closely by business development and IT, while in an engineering firm there will be programs of outer projects which will be categorized by nature of the outcome delivered.
- Balance of external vs internal projects
Every company has to make vital exchanges in terms of inside growth vs client delivery. This is likely the most sophisticated area of inside negotiations between departments and business areas and one in which power dynamics will be a vital barrier.
This is exactly why it’s practical to involve thresholds or percentages of ventures in the scope of the portfolio for each of those.
- Areas affected in business by the projects
Visualize that a large construction organization has a strategic objective of outsourcing all the IT systems for larger efficiency. It will enormously affect the IT department. It will possibly create the demand for new technology policies and procurement methods.
The resources will be shifted away by the resulting portfolio from the downscale department. It involves smaller inner government projects which have immense strategic priority and probably divest resources and funds towards projects with greater ROI.
Consideration 2: Managing complicated risk is about equalizing
Portfolio management and risk have a powerful relationship. The concept of a portfolio, an arrangement of disparate components with profitability and independent results plunged together by ownership has been obtained from financial theory.
The main objective of a financial portfolio is to modify risk exposure. This helps to compensate for the loss with the profits of additional investments with the overall result.
The risks of the project are multifaceted, expanding to scope risk, risks pertinent to resource availability, and technological risk.
The recipe of diversification still holds. A project portfolio should have low-risk and high-risk projects combined.
Consideration 3: Evaluation of project plans depends on who reviews them
Don’t make yourself a fool: The outcome is mostly dependent on the evaluation panel regardless of the modes applied to evaluate project proposals.
The crucial moment in the management of the project portfolio is when you submit the new project proposal and it must be assessed for approval.
Many steering committees may not have a precise checklist of factors required for evaluation. They might choose to subject the opinion to open discussion. Some use an assessment template with the sponsors of the project for greater transparency. A few critical factors are often a part of the debate in both cases.
Projects must reflect the organization’s nature, contribute to its objectives and goals, and have to be within the framework of what an acceptable project is considered. A project will hardly be considered if the project plan has no connection to the scope of the portfolio.
The Steering Committee must avoid personal biases just like the jury, and the only means to indicate the diversity of a company: female staff to be appointed, also staff from different skill sets, backgrounds, minorities, and age groups. If you know the candidates’ psychological profile, then it’s a good strategy to combine moderates with big risk-takers – a pattern that has been mimicked with gender diversity and age.
The personal, sensitive factor of portfolio assessment is perhaps the riskiest to insure with policies. But it’s not a reason not to try that.
There are other more objective and useful criteria. For instance, A cap can be set up for the highest number of projects which can be incited in the same period and hold on to it or not. Those are the handrails the Project Management Office specifies.
You can have the policy to assess it counting on whether you want to deliver more rapidly or not, or you can externalize more work. The embracement of Little’s law has been recommended by some folks for the management of Agile organizations. It might give good advice whenever a question about throughput times arises.
Consideration 4: Monitoring of portfolio should be ongoing
Continuous portfolio assessment is better than wasting too much time on formal assessments.
With the assessments of periodic portfolios, how frequently do you like to shake up the routines of everybody? How much time will they take? How intense will they reach? What kind of KPIs will you look into? How much space will you provide for qualitative computation? How will the post-mortem reports feed into bigger portfolio assessments? How will the potential projects get reinforced into the mix?
You need to find answers to the above questions. Companies will have 6-month, 12-month, or 18-month cycles.
Your choice must be realistic. You need to take the following into account before making a decision:
- The complicatedness of the organization
- Maturity of resource management and how good the process of resource allocation is
- How good are the practices of your new project reporting
- Whether to follow any change requirement.
If you are gathering all the data already, then adopting acceptable portfolio management software enables you to regulate the important portfolio KPIs live, largely expediting the assessment requirements.
While choosing a PPM tool, select an option that gives importance to both program managers, project managers, and also the portfolio team. Many tools of project portfolio management offer considerable significance for the latter, but they may be hard to approve for the fundamental project planning requirements of the ‘accidental’ project managers. It may even add less value to the members of the team.
The less impressive the tool of project management is for the project teams, the poorer the project data quality. It implies that you have to gaze for the method that enables easy planning of the project and execution: it’s not just BI and portfolio management. Always know that your portfolio reviews are as useful as your data.
You still have to speculate in terms of sequences. Portfolio assessment is distinct in that there will be a necessity to regulate how goals are being favored, and whether an environmental change or shift in strategy is presumed enough for adjustments.
Consideration 5: Incorporate non-project work
Whenever the work related to non-project occupies reserves that are crucial to the project team, comprising the debugging and fixing of existing outcomes, it has to be incorporated into the project portfolio for clear purpose and optimization. This visibility level assists with the capacity planning of limited resources.
This might look like a secondary element but the developments in the effectiveness of dealing with maintenance and operational work with the elegant portfolio approach are huge.
In other words, for project management, portfolio managers aspire to maximize the objectives but in non-project-related tasks, they just have to get the stuff done.
This practice is compared with the agile PMO’s role in the management of complicated backlogs, prioritizing the responsibilities that have an increased customer value, and enhancing the benefits of the overall outcome of the teams.
It’s like carrying out the defragmentation task on your laptop: you are more capable than that as the project manager.
Managing the portfolio involves balancing the above considerations carefully to assure steering committees, project stakeholders, and portfolio managers act in flexible coordination that is essential to bring the corporate machine to work.
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