What's Project Portfolio Management

(PPM) & Why Should Project Managers

Care About It?
A Web-Published Article by Michael Greer

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What Is Project Portfolio Management (PPM)?

Project Portfolio Management (PPM) is a management process designed to help an organization

acquire and view information about all of its projects, then sort and prioritize each project
according to certain criteria, such as strategic value, impact on resources, cost, and so on. The
objectives of PPM are similar to the objectives of managing a financial portfolio: 1) To become
conscious of all the individual listings in the portfolio 2) To develop a "big picture" view and a
deeper understanding of the the collection as a whole. 3) To allow sensible sorting, adding, and
removing of items from the collection based on their costs, benefits, and alignment with long-term
strategies or goals. 4) To allow the portfolio owner to get the "best bang for the buck" from
resources invested.

Typically, PPM begins with the organization developing an inventory (comprehensive list)
of all its projects and enough descriptive information about each to allow them to be analyzed
and compared. Such descriptive info can include project name, estimated duration, estimated
cost, business objective, how the project supports the organization's overall strategies, and so on.
These are sometimes compiled in an electronic database so they may be analyzed and
compared more easily.

After the project inventory is created, the PPM process requires department heads or other
unit leaders to examine each project and prioritize it according to established criteria. The
overall list of projects is then considered in order to develop a well-balanced list of supported
projects. Some projects will be given high priority and extensive support, some will be given
moderate priority, and still others will be placed on hold or dropped entirely from the list.

Finally, the project portfolio is reevaluated by the portfolio management team on a regular
basis (monthly, quarterly, etc.) to determine which projects are meeting their goals, which may
need more support, or which may need to be down-sized or dropped entirely. Since the
circumstances of each project and the business environment can change rapidly, PPM is most
effective when the portfolio is frequently revisited and actively managed by the team.

In order for the above PPM activities to take place, the organization must first decide who will
participate as active managers of the PPM process. Typically, the PPM management team is
made up of department heads from sub-organizations which generate requests for projects,
provide project resources (especially team members), provide project funding, use finished
project deliverables, set strategic directions, and so on. After the PPM management team is
established, they must agree on a set of criteria for valuing projects in order to prioritize
them. Decisions based on these criteria will likely be more acceptable to everyone in the
organization if the criteria have been developed with the input or review of as many stakeholders
as possible from within the various sub-organizations. So typically broad, organization-wide
discussions of the criteria are held before they are finalized.

Why Should Project Managers Care about PPM?

Project managers who find themselves continually frustrated by lack of resources or by other
organizations stealing their resources should be especially interested in PPM. These frustrations
are symptoms of an unbalanced (or unacknowledged) project portfolio. In short, the frequent
complaint of "not enough resources," is simply another way of saying that there are too many
projects! And if there are too many projects, then someone should be sorting them out, prioritizing
them, and "killing" the projects that aren't high priority.

Every project manager wants to have enough resources available to complete high-quality project
deliverables, on-time and within budget. And every project manager wants to work on projects
that are perceived to be valuable and, therefore, enjoy plenty of support throughout the
organization. PPM can help project managers achieve both of these visions.

What Should Project Managers Do about PPM if None Exists in Their

Organizations?

The average project manager is not in a position to implement PPM alone. Meaningful PPM
cannot exist without the support and and active involvement of managers at the highest levels of
the organization. But these senior managers are not likely to initiate PPM unless they are aware
there is a documented need for it. So if you believe your organization could benefit by PPM, you
need to first educate yourself, then build your case for PPM, and, finally, present this case to your
senior managers. Here are some specific steps you might take:

1. Look for symptoms that PPM is needed and document them. Some of these symptoms
include:

Frequent difficulty finding enough people to put together a solid project team
Excessive project delays due to "not enough resources"
High turnover due to "burn out" of key project contributors because they are working on too
many projects and spending too many overtime hours
Frequent change of status of projects (i.e., moving from "active" to "on hold" to "top priority"
and back)
Completion of projects that, when all is said and done, don't really meet a strategic need
Intense competition, rather than cooperation, among departments and sub-organizations when
staffing and funding projects

2. Learn more about PPM. You might:

Talk to other professionals in your field and see how PPM is being applied in their companies.
Search the internet and find out more about PPM.
Examine these, and other, online articles:
Datz, Todd, Portfolio Management: How to Do It Right [insights and methods used by senior
managers using IT project portfolio management in major organizations], CIO Magazine
(online), CIO Communications, Inc., May 1, 2003
 [http://www.cio.com/archive/050103/portfolio.html]
Waxer, Cindy, Portfolio Management: How Lowe's Grows [describes how Lowe's goes
beyond IT project portfolio management to enterprise portfolio management], CIO
Magazine (online), CIO Communications, Inc., December 1, 2005
[http://www.cio.com/archive/120105/lowes.html]
These UMT White Papers available at http://www.umt.com:
* The Seven Habits of Highly Effective Portfolio Management Implementations (2005
Edition): Proven Best Practices That Work
* The Efficient Frontier Technique for Analyzing Project Portfolio Management (November
2003)
Check out these vendors who provide PPM support services, background information, PPM
software, and more:
Artemis International -- www.aisc.com
Business Engine -- www.businessengine.com
Barometrix -- www.barometrix.com
Mercury -- www.mercury.com
Pacific Edge -- www.pacificedge.com
PeopleSoft -- www.peoplesoft.com
Primavera -- www.primavera.com
ProSight -- www.prosight.com
IBM -- www-306.ibm.com/software/awdtools/portfolio/
UMT -- www.umt.com

3. Document your resource requirements and share these with senior management.
Specifically:

Create "high resolution" project plans that accurately spell out, in vivid detail, the resources
required to complete each task and activity
Capture the actual hours spent by all project players in completing project tasks and activities
Create summary tables showing planned and actual time spent by each person in your
organization on every project to which he or she is assigned in order to demonstrate who's
overloaded
Document all incidents of resources that are "stolen" across projects, excessive overtime,
large-effort-but-ultimately-useless projects, and so on.
By conducting project "post mortem" evaluations, gather information about how systematic
PPM might have prevented problems and encouraged successes. (See Greer's online tool
Project Post Mortem Review Questions.)

4. Make your case for establishing PPM in your organization.

Conclusion
Effective PPM can help make a project manager's life much easier and more professionally
rewarding. More importantly, it can help an organization align its project workload to meet its
strategic goals, while making the best use of limited resources. But PPM can't be effective without
solid, well-documented project plans, accurate estimates of resource requirements, and accurate
information about actual resources consumed. Project managers who are equipped with such
high resolution project artifacts are in a good position to start a grass roots movement to
sell PPM and help senior managers decide how to set up the best PPM system for their
organizations. What's more, once the PPM is up and running, it is these same high resolution
artifacts that provide the accuracy necessary for good decision-making by the PPM team.

For more information about practical, step-by-step methods for creating high resolution project
plans and corresponding tracking techniques, check out The Project Manager's Partner, 2nd
edition or consider having Greer conduct an in-house PM Basics workshop for your
organization.

Disclaimer: Michael Greer does not claim expertise in establishing or maintaining PPM systems.
There are plenty of vendors (see above) who can help with this and provide sophisticated
software to support PPM decision-making. Greer does, however, have the expertise and a solid
track record in helping project managers develop the planning and tracking skills to achieve the
high resolution project artifacts necessary to support PPM.

Do you like this article? The latest edition of The Project Manager's Partner: A Step-by-Step
Guide to Project Management contains 57 tools, checklists, and guidelines to help project
managers. For more information, click on the link above or phone HRD Press at (800) 822-2801.

Would you like a custom-tailored, on-site PM workshop for your organization? Click here to
check out the possibilities or send an e-mail to greers_pm@yahoo.com.

(C) Copyright 2006 from Michael Greer's Project Management Resources web site. The URL
is http://www.michaelgreer.com. For more information, send e-mail to greers_pm@yahoo.com.
-- Feel free to copy and distribute for informational (not-for-profit) purposes.

Return to Michael Greer's Project Management Resources home page.