Portfolio Management refers to way organisations take a corporate view in selecting new projects. They follow a selection process based on the project's contribution towards the strategic aims of the organisation compared with other potential projects vying for approval. The process is by its nature enterprise wide. It cuts across the organisation horizontally rather than departmentally (vertical).
Portfolio management offers the following benefits:
Enables a corporate perspective to be taken thus preventing local initiatives that may lead to duplication, obsolescence or conflict
- Provides business driven project selection
- Informs better investment decision making and resource deployment
- Enforces best practice and consistency
- Enables measurement and continuous improvement leading to excellence
- Keeps staff gainfully employed by identifying peaks and troughs
- Provides a means by which all departments can have a fair voice and be assessed consistently
- Ensures that all projects are scoped and initiated according to the standards in place
- Provides a means to ensure that live projects are monitored and regularly reviewed to determine their progress, relevance and priority
The following diagram shows how a generic Portfolio Management model may look
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The benefits of portfolio management are brought about by:
- identifying new requirements as part of the strategic review process
- quantifying those requirements in terms of likely cost, benefit, impact and alliance with the strategic goalsprioritising the requirements against the portfolio of projects and potential projectsapproving, rejecting or otherwise prioritising the projects
- formally handing over the requirements to the programme director or equivalent for project initiation thus ensuring top level recognition and approval
- monitoring the progress of live projects with the authority to cancel and put on hold if circumstances dictate
As will be realised from the above list, the process necessitates involvement by senior management and decision makers. Although many organisations will employ less formal arrangements for carrying out the above, many find that the process leads to conflict and the danger of departmental projects being instigated which may impact other initiates and developments.
Clearly, implementing successful portfolio management is a project in itself and has to be designed to fit within the enterprise project management culture - whichever stage this may be at. Our associates have experience of several different approaches to Portfolio Management and can help to design an approach that best suites your situation.
