Project Portfolio Management
Project Portfolio Management is the same process as Product Portfolio
management, but this time all projects are included, not just new
product projects, because they potentially use some of the same
resources and are potentially all fighting for a limited budget.
Many companies these days are trying to do too much and hence failing
to get their projects launched on time. It is understandable in these
straightened times to want to do everything possible and to hedge ones
bets, thinking that this will maximise the opportunities for success.
However it often leads to overloading of resources, which leads to
delays and hence not realising the benefits because the projects are not
completed on time.
The answer is Project Portfolio Management which is a process of
prioritising projects, so that they are
undertaken in an orderly, rather than chaotic, manner. This means
that you choose which projects have first call on the resources and
deliberately delay others until resources are available (or obtain more
resources to reduce the bottlenecks), rather than having project
deadlines moved around in a higgledy-piggledy uncontrolled fashion.
Portfolio Management Goals
The three goals of project portfolio management are typically:
- Maximize the value of the portfolio
- Seek balance in the portfolio
- Keep portfolio projects strategically aligned
Portfolio Management Tools and Methods
There are a number of methods that can be used to help decide and
control what is in the portfolio. Some of the most common ones are
* Productivity Index = (Net Present Value x Probability
of Success) / Development Cost Remaining
2nd Generation Portfolio Management
Typically portfolio management has concentrated on the financial
aspects, i.e. allocating budget to projects. However the real problem is
handling limitations on resources, i.e. manpower. Therefore 2nd
Generation Portfolio Management needs to have an equal focus on resource
allocation, especially manpower. See
Resource Management for more info.
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