Why take on project portfolio management?

A portfolio is a collection of live projects within a business. This can be a particularly daunting task to manage but we cannot stress enough just how important effectively managing it is. Each project may not obviously interconnect, but it is important to remember that they will all have the same aim: business improvement.

So, whilst certain projects may not seem as important as others, it’s important to remember that they actually all share the same goal, which is to benefit the company. This is why project portfolio management is so essential; the portfolio is what drives business change.

Only when it is managed effectively will a business reap the benefits of a project portfolio. But, what are the specific benefits professionals in portfolio management (ourselves included) keep harping on about? Let’s break them down for you:

– It allows for a more focused approach to change, and ensures the right change initiatives are focused on.

– Similarly to the above point, when an individual is in charge of managing a portfolio as a whole it is easier to see which projects are delivering results and which can be abandoned.

– It allows for more engagement with business change, as it is easier to see how individual projects are feeding into a more cohesive whole.

– It creates better relationships in a business, particularly between projects, departments and employees, with decision making becoming more collaborative.

Resources become better utilised, meaning each project – and as a result the business as a whole – becomes more streamlined and efficient, improving ROI and proving the value of different projects and the portfolio as a whole.

– It also creates better visibility regarding the projects and their outcomes, highlights accountability at individual project level and allows for professionals to learn and adapt strategies for the future.

These are but a few of the benefits that successful project portfolio management can provide to a business. However, if you’re looking for more benefits that have been objectively proven, then the Project Management Institute has actually conducted research into this and can provide some useful stats.

In the Institute’s ‘Portfolio Management 2012’ report, it was found that the top reason for businesses investing in such a practice was increased customer satisfaction, as stated by 73% of respondents (1,000 project, programme and portfolio managers took part). This is because effective management leads to better business outcomes – meaning not only do business leaders reap the rewards, but perhaps more importantly the customers and clients do, too.

Next up came cost reduction – 59% of respondents stated that portfolio management helped with this, as it allows for better resource management and more streamlined approaches, as mentioned above. This also leads to revenue growth (58%) and better ROI (45%).

The report also helpfully included comparisons between businesses that were highly effective at project portfolio management, and those that were less so. It was discovered that 68% of businesses with a highly effective portfolio management scheme completed individual projects on time, compared to just 50% of businesses with a minimally effective portfolio management initiative. Similarly 64% of those who were good at portfolio management delivered projects on budget, compared to 54% who were less so.

Efficient and effective project portfolio management also led to businesses meeting or exceeding their predicted ROI (62% compared to 48%), but perhaps most importantly of all led to over three-quarters of businesses meeting business goals (77%, compared to 65%).

It seems, therefore, that the writing is on the wall and it’s less a question of ‘Why should we invest in project portfolio management?’ and more ‘Why on earth would we not?!’ These benefits will undoubtedly prove popular with stakeholders and business leaders unsure of the practice, as they are sure to give any company a competitive advantage.

In the next article we’ll look to better define a portfolio itself – rather than the management of it – and hope to provide you with a more detailed understanding of its organisational context.

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