Can PPM Be That Easy?

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

Bring structure to your project portfolio management.

Icon for resource management

The ultimate necessity of project portfolio management.

Icon for project portfolio management templates

Use our process templates to get started right away.

Icon for lean ppm tool

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

The Secret Formula for PPM: Less Is More

Your organization has lots of people working on lots of projects. It is not possible to coordinate all of these activities without project portfolio management (PPM). So there is no way around implementing true PPM.

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

Put your mind at ease.  Project portfolio management is easy to understand and relatively quick to implement. The good news is a majority of the activities needed for functional project portfolio management are probably already in place in your business. Now, you just need to add some structure.

It is important to note that there are core activities that must be carried out. For example, you cannot simply do away with resource planning or the evaluation of new initiatives. But businesses often make life unnecessarily difficult with complicated processes. These often give 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 approach the matter confidently and take advantage of the benefits of good PPM.

Everyone Uses Project Portfolio Management, but Not Always in a Structured Way

While you are reading this, there are probably several things going on in your business that are nothing more than unorganized PPM processes.

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

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

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

At the same time, at the other end of the hall, the previously mentioned website relaunch is being discussed in a team meeting. Next, 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 during the same period of time.

Sound familiar? No wonder you want do a better job of coordinating and monitoring your projects and would, therefore, like to implement project portfolio management. If we take a look at what actually happened between the break room and the email, the foundation of a functional PPM system is evident.

Unorganized project portfolio management processes are everywhere

A Lean Project Portfolio Management System

  • Which projects should be implemented, when, and by whom?

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

The activities within these areas run continuously and parallel to one another and have a mutual effect on each other. You have to do all four; there are no shortcuts. The trick is to concentrate on the particularly value-creating activities. For example, we do not believe that a multi-step approval process is necessary for the release of project status reports in the implementation of business strategy, but it is crucial to consider to which projects your key resources should be assigned.

Now let’s take a look at the individual areas of activity, which roles carry out which activities, and in which meetings decisions are made.

Or are you already convinced and want to get started right now? Get the templates for your Lean PPM here.

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

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 for use in implementing the strategy. A good project portfolio is derived from the strategy and reflects it to the greatest possible extent. 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.

The strategy is usually translated by specifying criteria for evaluating projects. These criteria can be quite different. Will a given project bring me a relatively large or small amount of money (sales)? How quickly will the investment pay for itself (ROI)? To what extent will the project affect the risk profile of my division (cluster risks)? Which of my current strategic objectives does the initiative support, and to what extent (0-100%)? Incidentally, a good criterion is not just one that has a good formula, but one that has broad, accepted application in the business. It serves to help people prioritize.

Projects are evaluated as usual – yes, even those that are already in progress! – since their benefits change in response to changing general conditions such as the market situation or technological progress. So, as portfolio coordinator, you should regularly take time to meet with your strategy colleagues in strategy workshops to talk about the current strategic orientation of the business as well as upcoming tactical measures (such as year-end budget cuts). Translate these into measurable, accepted parameters, and, if applicable, re-evaluate ongoing initiatives.

The strategize step in the Lean Project Portfolio Management System

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

  • Be explicit in the formulation of the acceptance criteria and simplify the criteria if necessary.

  • Regularly take time for a strategy review.

  • If you think you don’t need any evaluation criteria, please read this section again.

2 – Collect

Collecting Project Proposals

The Collect step of a project portfolio management system covers the processes in which the project initiatives are developed. There are many 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. Project proposals are the established means for this recording process.  Project proposals are simple(!) summaries of the idea. They initially include a content description, a description of the benefit (see evaluation criteria!), and a rough estimate of the efforts required. The effort estimation, in particular, usually undergoes further refinement until the decision is made.

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

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

The next concrete steps in the process is 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.

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: Preparation for decision-making and deciding on the future composition of the portfolio

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

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.

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 project steering committee (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?

Get started right now – with our process templates for Lean PPM and Meisterplan, your Lean PPM & resource management tool!

Icon for resource management

The ultimate necessity of project portfolio management.

Icon for project portfolio management templates

Use our process templates to get started right away.

Icon for lean ppm tool

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