Project portfolio management

Project portfolio management (PPM) is the centralized management of the processes, methods, and technologies used by project managers and project management offices (PMOs) to analyze and collectively manage current or proposed projects based on numerous key characteristics. The objectives of PPM are to determine the optimal resource mix for delivery and to schedule activities to best achieve an organization’s operational and financial goals, while honouring constraints imposed by customers, strategic objectives, or external real world factors. Standards for Portfolio Management include Project Management Institute's framework for project portfolio management, Management of Portfolios by Office of Government Commerce and the PfM² Portfolio Management Methodology by the PM² Foundation.

PPM provides program and project managers in large, program/project driven organizations with the capabilities needed to manage the time, resources, skills, and budgets necessary to accomplish all interrelated tasks. It provides a framework for issue resolution and risk mitigation, as well as the centralized visibility to help planning and scheduling teams to identify the fastest, cheapest, or most suitable approach to deliver projects and programs.

Pipeline management involves steps to ensure that an adequate number of project proposals are generated and evaluated to determine whether (and how) a set of projects in the portfolio can be executed with finite development resources in a specified time. There are three major sub components to pipeline management: ideation, work intake processes, and Phase Gate reviews. Fundamental to pipeline management is the ability to align the decision making process for estimating and selecting new capital investment projects with the strategic plan.

The focus on the efficient and effective deployment of an organization’s resources where and when they are needed. These can include financial resources, inventory, human resources, technical skills, production, and design. In addition to project level resource allocation, users can also model ‘what if’ resource scenarios, and extend this view across the portfolio.

The capture and prioritization of change requests that can include new requirements, features, functions, operational constraints, regulatory demands, and technical enhancements. PPM provides a central repository for these change requests and the ability to match available resources to evolving demand within the financial and operational constraints of individual projects.

With PPM, the Office of Finance can improve their accuracy for estimating and managing the financial resources of a project or group of projects. In addition, the value of projects can be demonstrated in relation to the strategic objectives and priorities of the organization through financial controls and to assess progress through earned value and other project financial techniques. It is an important part.

An analysis of the risk sensitivities residing within each project, as the basis for determining confidence levels across the portfolio. The integration of cost and schedule risk management with techniques for determining contingency and risk response plans, enable organizations to gain an objective view of project uncertainties. At the portfolio level, risk management enables organizations to protect portfolio investments and balance the level of risk in the portfolio.

The roots of project portfolio management can be traced back to financial theories that emerged in the 1950s, often linked with the pioneering work of Harry Markowitz, which was later recognized with a Nobel Prize. In essence, portfolio theories underline the importance of coordinating diverse elements to mitigate collective investment risks. These theories enable the optimization of portfolio benefits, the effective utilization and cultivation of limited resources, and the proper consideration of portfolio stakeholders.

Enterprise project portfolio management (EPPM) is a top down approach to managing all project intensive work and resources across the enterprise. This contrasts with the traditional approach of combining manual processes, desktop project tools, and PPM applications for each project portfolio environment.

A key result of PPM is to decide which projects to fund in an optimal manner. Project Portfolio Optimization (PPO) is the effort to make the best decisions possible under these conditions.