How often does one project determine the success or failure of an entire company? For small companies, fairly often. For large companies, almost never.
Yet, no project is an island in any large enterprise. How it gets completed, how resources are utilized, how effectively teams collaborate during a project—all these things are indicators of the over-all project management health and ability to execute and achieve objectives. Long-term survival for a large organization is typically dependent on the performance of dozens or hundreds of interconnected projects, rather than one isolated success or failure. If the project management process is broken, it will have a lasting impact on the success of an organization.
This raises an important question: how can a large company manage so many concurrent projects in a way that will maximize its chances of long-term success? The answer is project portfolio management.
What is Project Portfolio Management?
The primary goal of project portfolio management is to help a company choose and support the projects that are most likely to help the company achieve its long-term strategic goals.
In practice, portfolio management has many similarities to project management. Like project management, portfolio management requires careful attention to timelines and resource allocation, and success in both endeavors usually depends on cross-functional communication and collaboration. The key difference between project and portfolio management is in the objective. While project management, by definition, is focused on specific goals that are to be accomplished by specific dates, the goals and deadlines involved in portfolio management are often more open-ended. However, even if its strategic goals are not tied to specific dates, an organization must ensure that its goals are well-defined in order to manage its portfolio effectively.
How Portfolio Management Can Help Your Business
Small companies rarely invest much time in developing a portfolio management strategy, because their operations are typically restricted to one or a few lines of business and can be managed by a relatively small group of people. As a company grows, however, especially if it grows by acquisition, it runs the risk of losing focus and spending money on projects that have little to do with its long-term goals.
If your organization is experiencing turmoil due to shifting priorities, changes to executive leadership or mismatches between project demands and resource availability, it’s time to start paying more attention to portfolio management. A thoughtful approach to portfolio management will provide multiple benefits, including reduced costs from the elimination of unnecessary projects, and better project outcomes through alignment between project demands and resource capabilities.
One of the keys to successful portfolio management is a flexible cloud project management solution. Project and portfolio management software like Clarizen allows portfolio managers to view and report on budget performance, resource availability and project status across the entire enterprise, providing visibility into the combination of factors that will lead to the organization’s ultimate success.
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