Project Portfolio Management2019-03-15T13:43:48+00:00


Can PPM Be That Easy?

The project portfolio management system consisting of four ongoing activities: strategizing, collecting, designing and executing.

The Secret Formula for PPM: Less Is More

Your organization has a lot of people working on a lot of projects. It is impossible to coordinate all of these activities without project portfolio management (PPM). So you have no choice, you need PPM.

But doesn’t it take years to implement PPM, and isn’t it complicated, expensive, and difficult to maintain? And doesn’t everything also have to be agile or at least hybrid?

Don’t worry.  Project portfolio management doesn’t have to be so complicated. In fact, it can be easy to understand and relatively quick to implement. The good news is your organization is probably already doing most of the activities needed for functional project portfolio management. Now, you just need to add some structure.

There are core activities that must be carried out. For example, the evaluation of new initiatives and resource management are must-haves. But businesses often make life unnecessarily difficult with complicated processes, which often gives the entire system a bad reputation. So keep it simple from the start!

Regardless of how you eventually set up your project portfolio management – lean or full-scale – and regardless of whether you use agile or traditional methods to manage projects, if you understand the principles, you can be confident and take advantage of the benefits of good PPM.

You’re Probably Already Using Project Portfolio Management, You Just Don’t Realize It

While you are reading this, there are several things going on in your business that are basically unorganized PPM processes.

In the break room, one employee is telling another that the new website should finally go live in the next quarter.

Two doors down, an unexpected order from a category C customer comes floating in. It is an unusually large order and absolutely must go into implementation this Monday.

Meanwhile in the executive management meeting, the product road map priorities are being rearranged for the fourth time this quarter. On top of that, the budget for external programmers is being cut by a third to secure the annual profit.

At the other end of the hall, the previously mentioned website relaunch is being discussed in a team meeting. The project manager asks the marketing manager for an additional designer for the project, which is promptly approved by email. However, the promised designer is actually assigned to a different project for that time period.

Sound familiar? No wonder you want implement project portfolio management so that you can do a better job of coordinating and monitoring your projects. The good news is, when we take a closer look at what actually happened between the break room and the email, we find that you already have the foundation of a functional PPM system.

Unorganized project portfolio management processes are everywhere

A Lean Project Portfolio Management System

  • Who should implement which projects, and when?

The purpose of project portfolio management is ultimately to provide a clear answer to this seemingly simple question. Answering it requires an underlying system that can be divided into four areas of activity, which we call Strategize, Collect, Decide, and Execute.

The activities within these areas run at the same time and are ongoing. They also have a mutual effect on each other. You have to do all four. The trick is to concentrate on the particularly value-creating activities. For example, we believe that a multi-stage project approval process is not critical to the implementation of the company strategy. But, considering which projects are assigned to your key resources is very important.

Lean PPM System includes strategizing, collecting, deciding and executing.

Now, let’s take a look at the individual areas of activity, who should do which activities, and in which meetings decisions should be made.

Are you already convinced and want to get started right now? Download our guide or watch the video to the right to see how easy you can kick-start your PPM process with Meisterplan.

Are you looking for a summary of the most important aspects of project portfolio management? Get the templates for your Lean PPM here:

1 – Strategize

Translating Your Business Strategy

Formulating a business strategy is the job of upper management and is not part of project portfolio management. What is a part of PPM is translating the strategy into project selection guidelines. A good project portfolio is aligned with the corporate strategy. Projects with a high strategic contribution should be given higher priority, and projects with a low strategic contribution should be given lower priority, put on ice, or rejected.

The Father of Modern Management, Peter Drucker summed it up concisely in 1967 in his definitive work, The Effective Executive:

  • There is nothing so useless as doing efficiently that which should not be done at all.

To translate the strategy into project selection guidelines, first, you have to determine the criteria to evaluate projects. The criteria can be based on sales: will a given project bring me a relatively large or small amount of revenue? Or based on ROI: how quickly will the investment pay for itself? Or based on risk: to what extent will the project affect the risk profile of my division? Another good question when evaluating projects is: which of my current strategic objectives does the initiative support, and to what extent (0-100%)? Good criteria should have a broad, accepted application in the business. It serves to help people prioritize.

Projects, including those already in progress, should be evaluated because project benefits may change in response to other changes such as the market situation or technological progress. So, the portfolio coordinator should regularly take time to meet with the strategy team in strategy workshops to talk about the current business strategy as well as upcoming tactical measures (such as year-end budget cuts). Translate these into measurable, accepted parameters, and, if applicable, reevaluate ongoing initiatives.

The strategize step in the Lean Project Portfolio Management System

In summary, there are two central aspects to keep in mind when translating the business strategy:

  • Be explicit when formulating the acceptance criteria and simplify the criteria if necessary.

  • Regularly make time for a strategy review.

2 – Collect

Collecting Project Proposals

Project initiatives are developed in the Collect step of a project portfolio management system. There are many possible types of initiatives here: a sales opportunity for a consulting project, the improvement of internal processes, additions to IT systems, the examination of strategic options, the expansion of production capacities… the possibilities are as varied as your business.

The key aspect is that the initiatives are systematically recorded and prepared for a structured, comparative evaluation. These initiatives are officially recorded in Project proposals.  Project proposals should be simple summaries of the idea. They include a content description, a description of the benefit (based on the evaluation criteria), and a rough estimate of the efforts required. The effort estimation is usually refined until the decision is made.

The collect step in the Lean Project Portfolio Management System

Proposal coaching is an initial quality gate where the portfolio coordinator and the project initiator come together to talk through and improve the initiative and, if applicable, move it along further in the process. The structured evaluation is prepared during proposal coaching.

The next concrete steps in the process are described in the “Decide” section. It is important to know that from this point on, there are usually several alternative decision paths that can be taken – not all initiatives take the same path to approval. For example, there are often different committees for large projects as opposed to small projects, or for customer projects as opposed to internal projects. In any case, it is the job of the portfolio coordinator to steer the initiative to the right committee, while also allowing for wild-card and fast-track processes for especially important projects.

Proposal coaching in the collect step of the Lean Project Portfolio Management System

3 – Decide

Deciding Which Projects Will Be Implemented, and When

Regardless of which specific committee comes into play after the Collect phase (there can be different committees for different types of initiatives), three basic things happen now:

  • Pipeline review: Quality assurance and ranking of the initiatives

  • Portfolio board: Decisions on the future composition of the portfolio and the respective budgets

  • Communication of the results

In the pipeline review, the individual initiatives awaiting approval are first evaluated on their own.  Is the stated benefit true? Is the effort needed realistic? Were all dependencies taken into consideration? Has the strategic contribution been properly evaluated? To ensure that these questions are answered impartially and consistently across departments, the pipeline review committee usually consists of experts from different business units. Here, an initiative may be reset to concept status for quality reasons and may require revision by the initiator.  However, if the values are validated, the new initiatives are then weighed against each other. (By the way, this process can also be used for existing initiatives, such as when new evaluation criteria are introduced — everything has to be put to the test!)

Next, the initiatives are put in order by priority – the most important at the top, the least important at the bottom. This is extremely important, since it is never possible to implement all initiatives – the higher an idea’s priority, the more likely it is to be implemented.

Prioritization of projects in project portfolio management

The Strategize, Collect, and Execute steps of the PPM system come together in the subsequent portfolio board meeting. This is the highest-level decision-making committee for PPM. It monitors overall progress in the portfolio, resolves conflicts, confirms the composition of the portfolio, and decides on future resource deployment. So, the decisions almost always have a direct impact on current projects, as well.

Preparing the portfolio board, whose members usually come from upper management, is a sweat-inducing affair for the portfolio coordinator. At its core, this preparation consists of three steps:

  • Determining the state of the current portfolio and developing the resulting decision-making requirements

  • Reviewing the new initiatives awaiting approval

  • Creating one or more proposed solution or scenario for the overall portfolio, taking into account current and new initiatives as well as changes to resource availabilities and budgets (almost like magic!)

The current status and the proposed solution or solutions are presented during the portfolio board meeting. This is followed by the portfolio decision, which in effect represents the approval of individual initiatives within the presented framework (scope, budget, timing). It is important to ensure that existing initiatives can also undergo a renewed approval from time to time, in case something in the basic details has changed since the last approved version.

During the meeting, participants often voice their desire for adjustments to the solution approach or to the prioritization. In such cases, the portfolio coordinator is responsible for rapidly illustrating the effects of the desired adjustments. Without suitable software support, it is impossible both to prepare the scenarios and to perform a quick analysis of the effects. Yet, at its core, the decision of the portfolio board is the absolute essence of the PPM system. This decision connects the right resources to the right initiatives – the key management activity when moving from strategy to implementation.

The Design and Decide step in the Lean Project Portfolio Management system.

Finally, the decisions that have been made are prepared and communicated based on the target groups. Depending on the organization, there may be many different groups that have to be taken into consideration: project managers who need to adjust their projects accordingly, project sponsors who will want to be informed about the overall progress of their initiatives, company employees who want to know the transformation roadmap, or the project employees – so that they know to which projects they are now assigned.

The important thing is that the decision is top-down, which will not suit everyone involved. It is precisely for this reason that the portfolio board and portfolio coordinator must not hide behind formality and tools, but rather provide a thorough, well-founded explanation of the decisions. So take the time to communicate the specifics – the energy channeled into the team is like gold for the implementation phase!

Communication is a part of the Design and Decide step in the Lean Project Portfolio Management System

4 – Execute

Managing Approved Projects

During the Execute phase, the job of project portfolio management is limited to multi-project coordination.

The project manager is responsible for operational processing, consisting of the following four points:

  1. Staffing (please read the related “Tactical Resource Management” section on our Resource Management page)
  2. Recording the status and resource requirement of a project
  3. Resolving resource conflicts
  4. Operational project management

Two management meetings have become well established in this process. Resource conflicts (3) are usually resolved by resource managers and team leaders in a “resource conflict resolution meeting.” In these meetings, operational resource problems such as sickness and overbooking of employees are resolved, or changes resulting from new strategic priorities are implemented in current projects. Conflicts that cannot be resolved are escalated to the execution steering (4). The members of this committee monitor the content-related progress of the projects, approve re-budgeting measures within specified limits, and decide on project completion or discontinuation. Only issues that cannot be answered within this process are escalated to the portfolio board meeting.

On the whole, transparency about the progress and requirements of the projects is mandatory for PPM and making well-founded company-wide decisions. PPM is not possible without transparent operational project processing!

But remember: project portfolio management is independent of the selected PM method. Within a business or department, teams might carry out their projects in completely different ways, possibly using different tools. This is a good thing, because the employees know how to maximize their work efficiency. So, only involve the project managers occasionally in PPM – for status reporting and to discuss resource requirements – otherwise, leave them in peace to do their work.

The Execute step in the Lean Project Portfolio Management System
Many Meisterplan integrations are available including MS Excel, Smartsheet and CA PPM

What Should You Do Next?

The ultimate necessity of project portfolio management.

Resource Management

Use our process templates to get started right away.

PPM Templates

Get started with the right tool in just a few days.

Lean PPM Tool