A guide to project portfolio management (PPM)

What is project portfolio management?

Project portfolio management (PPM) ensures that all projects in the portfolio adhere to strategic goals. While project management focuses on nurturing a specific project, PPM takes a holistic view. Every project is subject to review by the PPM team.

As companies grow, they often commit to too many projects. Initiatives pile on each other until employees feel overloaded, and production suffers.

PPM stops this problem. Capacity planning is integral to a PPM expert’s role, and every project across the company enters the calculations.

Key components of project portfolio management

Mature PPM requires at least four elements:

• Portfolio governance: The rules governing your portfolio should address project selection, review, and prioritization. To create these rules, determine your company’s long—and short-term goals. 
• Resource management: Careful resource planning maximizes opportunities by allocating help where it’s most effective. Within a PPM framework, resources flow to critical projects. 
• Risk management: Identify potential risks by creating a plan that considers important industry factors. For example, the cost of computer chips matters if you run a data center. A price increase could devastate cash flow. 
• Performance management: Your team needs to define success for each project and monitor performance. For more in-depth insights, utilize regular status reports or a sophisticated PPM tool such as Jira. 

Strategies for effective project portfolio management

An effective PPM project will look different for everyone. Some companies want to reduce their current project load, while others want to launch new ideas continuously. Whatever your ultimate goals are, there are actionable strategies you can implement if you want your company to follow PPM principles.

Align portfolios with business strategy

Project portfolio management becomes more manageable when all projects support the same overarching goals, though the support method may differ. For instance, one project might focus on improving software quality while another looks at reducing customer service response time. Both projects encourage more sales and better reviews. 

To see if a project contributes to company goals, identify its objectives and compare them to the guiding rules. It’s also smart to identify success metrics such as increased market share.

Prioritize projects

When selecting projects for the portfolio, consider specific criteria, such as potential risks, costs, potential ROI, success indicators, and the overall goal.

After analyzing available projects, the next step in project planning is prioritization. Determine which projects receive the most resources by examining their strategic value and inherent risks.

A project prioritization matrix can provide more clarity—the grid plots projects against criteria such as cost, time to completion, and revenue potential. A weighted scoring model adds more value to the factors your team cares about the most.

Balance the portfolio

A portfolio stuffed with high-risk, high-reward projects, such as creating new software, could pay off. However, it could also deplete your funds and lead to payroll troubles.

Avoiding risky endeavors might save the company from catastrophe, but this plan also cuts off the disproportionately large rewards. The best portfolios balance riskier projects with more predictable ones. 

Running a simulation can help you delve into the nuances of individual project risks.

Continue to monitor and adjust

PPM success hinges on continuous monitoring and adjustment. Goals fluctuate due to competition, technology, and other changes. While the project timeline for your portfolio may be correct, it’s a good idea to remain flexible. New competition could mean that your prioritization matrix needs tweaking. 

Conducting a review outlining project goals, costs, and earnings will help you assess whether a specific project needs more or less attention. A project realignment may also be necessary to stay connected to business objectives. Specific project-related metrics like ROI and ad engagement let you track performance over time.

Benefits of project portfolio management

Companies that embrace PPM can experience transformative benefits, from better resource use to increased team cooperation. PPM’s all-encompassing approach keeps every project tied to company ideals, increasing the odds of success. 

Here are some distinct advantages of PPM:

Improved resource utilization

A project manager who knows only the scope of their own work might over-allocate resources during sprint planning. It’s unavoidable, as company projects pull from the same limited resource pool. A manager overseeing a crew of programmers cares about finishing the sprint backlog. Funding the research team or determining the product development budget isn’t part of their calculation. 

PPM presents the whole picture, making optimal resource allocation possible.

Enhanced decision-making

The best decisions happen when you have all the information. Agile workflows constantly generate data about your projects and processes. PPM strategies allow you to aggregate that data and capitalize on the insights. You get the facts you need to decide the next steps. 

For example, the PPM team can assess if the company has the resources to initiate new projects. The collected data also lets you track minute changes in performance.

Risk management

Most companies already monitor project risks. When you incorporate a portfolio-level risk strategy, your resilience deepens. Does your product line depend on an uncertain supply chain? PPM lets you foresee the pitfalls and orchestrate a response for the sales, finance, and warehouse teams. A simpler project management system may lead to a more piecemeal approach.

Strategic alignment

PPM identifies and links specific project contributions to company aims for better alignment. Because continuous reviews are part of the strategy, you’ll know when projects no longer fit the company ethos. This rigorous and continued vetting maximizes business value.

Best practices for PPM

Introducing and maintaining a PPM environment takes concentrated effort, regardless of your company’s size. Here are some best practices to consider:

• Establish a PPM framework. Before implementation, define your PPM strategy. Think about project selection criteria and prioritization metrics. Orient all projects around your stated goals.
• Use PPM tools and software. PPM functionality is a defining feature of project management platforms such as Jira. Standard business software, such as Quickbooks, often includes PPM tools. These software aids are beneficial if you’re managing an Agile portfolio and need to balance diverse projects. 
• Build a PPM team. A portfolio manager can shape day-to-day operations but needs a support team to optimize their efforts. To limit confusion, ensure every PPM team has clear responsibilities. Always foster cross-functional collaboration—the team's varied perspectives are part of what helps PPM excel.
• Implement effective governance. Compliance with company processes can falter for many reasons, including lack of accountability and unclear instructions. PPM, bolstered by solid governance protocols, removes these risks by ensuring that all projects follow the same guidelines and stay in tune with company goals.
• Continuously improve. PPM practices should naturally evolve to fit changing business goals. Shifts may occur due to altered market pressures, new product lines, etc. If you regularly examine critical performance indicators such as project completion rates, you can gauge portfolio health and learn from past project mistakes. 

Jira's Plans feature facilitates strategic PPM by creating a single source of truth that allows for work scheduling, dependency mapping, and more. You may know Jira Plans as advanced roadmaps, the feature’s original name.

Maximize success with strategic project portfolio management

PPM helps keep your company on the right track. Projects that leak money or stray from defined standards will fail PPM reviews. Adopting PPM methods helps maximize success by highlighting top-performing projects.

Using Jira to manage your project portfolio introduces even more advantages. The software helps with: 

• Compliance and coordination. 
• Adapting your plans to new rules. 
• Responses to industry shifts. 
• Leveraging data to simulate possible outcomes. 

Ready to see the effect PPM can have on your operations? Get started with Jira Plans today.