Effective Project Portfolio Management—Achieving Positive Results

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10 SEPTEMBER 2012

Effective Project Portfolio Management—Achieving Positive Results By Christine Otis Understanding the value of good project portfolio management is vital to delivering maximum benefits. In the current economic conditions, companies are leaning toward successful project portfolio management practices to ensure cost reduction with higher returns on investments. The 2012 Pulse of the Profession Portfolio Management survey findings show that organizations that are highly effective at portfolio management have significantly more projects coming in on-time, on-budget, meeting their original business intent and meeting their forecasted ROI than minimally effective organizations, particularly when portfolio management is housed within an organization’s project management office. Also, more effective portfolio management in an organization will increase the number of projects completed on time and on budget by one third. This was the opinion of 443 global portfolio managers who responded to Project Management Institute’s 2012 Pulse survey. According to the Pulse survey, three actions are can help organizations apply more effective portfolio management: Creating a portfolio-minded culture Elevating portfolio management to a strategic level Implementing appropriate tools and practices Building awareness around what a project portfolio manager does and how a portfolio manager aligns a project to strategic goals to benefit an organization is essential to creating a portfolio-minded culture. The portfolio should represent the organization’s intent, direction and progress in accordance with the organization’s strategy. It is the project portfolio manager’s responsibility to understand that the projects in a portfolio are the tactical implementation of an organization’s strategy. By elevating portfolio management to a strategic level, portfolio managers are able to prioritize, adapt, allocate and analyze information and resources. Senior managers receive this most current information available and are able to make the right decisions that correlate with the overall strategic objectives of the organization. This balances the organization’s risks and opportunities, which collectively advances the organization and the practitioner by enhancing strategic competitiveness while maintaining an acceptable level of risk. An example of an effective portfolio management culture is the Centers for Disease Control (CDC) and Prevention in Washington, D.C., USA, a governmental agency that provides healthy practices and disease prevention. As part of the CDC’s portfolio management process, a review team examines how each project aligns with the agency’s goals and how it specifically delivers critical strategic functions. By looking at the whole portfolio, the CDC team can choose those projects with the best risk-reward scenario and make sure they receive top priority. Implementing Appropriate Tools and Practices According to the Pulse survey, highly effective organizations are nearly five times more likely than minimally effective organizations to frequently use formal prioritization tools and are twice as likely to have software designed specifically to support project portfolio management. Shell is one example of a company effectively implementing the tools and practices of portfolio management. The energy company is able to extrapolate the risk of their organization by using an interactive device that demonstrates risk options. This device illustrates how moving or removing a project from a portfolio affects the organization, which in turn, also affects the ROI. Maintaining an acceptable level of risk is highly important to achieving the organization’s objectives. By understanding their organizations strategic business goals, the project portfolio manager aligns project selection to strategy and thus improves the likelihood of a positive business result, which in turn improves the organization’s competitive edge. A more in-depth version of this article will be published in the 19 September issue of PMI Credential Passport.