Benefits of Project Portfolio Management: Making the Business Case for PPM

The main disadvantage of project portfolio management is the initial investment, but experts agree that PPM typically has a high ROI over time. Other disadvantages include the potential for bureaucracy and resistance to change, which teams can address using time-tested methods.

Here’s a more complete look at the disadvantages of PPM and how businesses can overcome them:
 

• High Initial Investment: Project portfolio management requires a significant initial investment in people, training, and technology. Companies likely will need new people with PPM expertise. They will also need to purchase a PPM platform and train existing staff to use it.
  
  Teams can conduct a cost-benefit analysis to assess whether the potential efficiencies and strategic advantages gained from implementing PPM outweigh the initial setup and operational costs.
   
• Implementation Challenges: PPM implementation can be time-consuming due to its complexity and some people’s general resistance to change. It may also initially lower productivity until it takes root.
  
  “Project portfolio management is a simple concept, but can be incredibly difficult to implement,” Richter says. “A PPM solution needs to work at every level of the organization and be adapted to dramatically different audience types. It can be time-consuming to create and maintain the system required to support true PPM. Even the best portfolio management framework can fall apart if there isn’t total buy-in from the teams expected to work within it.”
  
  Zucker emphasizes overall Lean thinking as a way to overcome PPM challenges: “Lean portfolio management is a reaction to a lot of the problems that we'd seen in the traditional view of portfolio management — for example, creating flow, pushing decision-making down, and eliminating waste.”
  
  For details on how PPM works, see these guides on implementing PPM effectively and PPM processes, phases, and workflows.
   
• Ongoing Administrative Costs: Project portfolio management has ongoing administrative costs that may or may not be higher than a company’s previous project efforts. These costs could include team members with PPM expertise, including a PPM VP or director. There’s also the cost of the technology and maintaining it. The idea is to offset any increased costs with increased ROI.
   
• Bureaucracy: PPM can lead to time-wasting bureaucracy if organizations don’t focus on efficiency and productivity. 
  
  Zucker gives this example: “One company I worked with had an enterprise portfolio management organization. They implemented and customized an enterprise tool. When a member of the PPM team attended an industry conference, they saw a vendor demo and realized they balled up the tool's implementation.”
  
  He says the PPM team had 50-75 people, including a senior vice president, a couple of VPs, and several directors. “The intention was to create oversight and standardization. But things just became bureaucratic,” he says. 
  
  The remedy lies in Lean approaches to PPM. “Portfolio management, like everything else, should be an evolving art,” he says. “We started with our traditional approaches, but they became bureaucratic and inefficient. We're now modifying that with Lean. Hopefully, we will continue to improve and evolve the processes and practices. When we see things that do not work, we should change them. Make them simpler instead of more complicated.”
   
• Funding Overload: With PPM, annual funding cycles might lead to excessive project requests and resource commitments, resulting in teams being overwhelmed and unable to complete projects effectively.
  
  “Traditionally, organizations have annual funding cycles,” Zucker says. “A lot of time and effort is expended developing project requests and budget justifications. Teams request two or three times more money than they could reasonably spend under the expectation that the request would be halved. Then, at the beginning of the year when the funds are released, teams start executing more projects than they can effectively manage. Everyone is very busy, but projects are not getting completed.”
  
  “To improve the process,” he continues, “we can take lessons from Lean. Rather than having effort-intensive annual funding processes, simplify everything. Move to a rolling funding model. Push tactical funding decisions down to the lowest responsible level in the organization. Create pull and do not start a new project until the teams have the capacity to deliver it.” 
   
• Mistakes in Planning: PPM relies on accurate data projections, and mistakes made during planning can have significant impacts. This happens with any project method, but it can become more pronounced with PPM at a large company.
   
• Required Skill Sets: An organization may need to hire people with PPM expertise to implement and run this new approach, which can be expensive and time-consuming. However, just as the increased administrative costs can be offset with a high ROI, the benefits of the training can be extensive. For example, team members can use the training as an opportunity for professional growth. 
   
• Inflexibility: Standardization can lead to a one-size-fits-all approach, which may not suit every project. An organization needs to apply the right criteria to recognize nuances between departments and projects. Project managers attached to particular departments often have a good view of these nuances, and it pays to listen to them while implementing PPM.
   
• Low Project Manager Influence: Depending on the company’s structure, project managers may lose influence and some decision-making authority in a PPM system. This is also true of departments as a whole.
  
  However, this doesn’t happen in all companies, and it can pay to listen to your project managers and give them authority. Zucker gives this example from personal experience: “At one point in my career, I managed an organization with 175 project managers,” he says. “I recognized that there was no way I could keep track of the 150 or so projects that were in process at any given time. So I told my managers that they were responsible for each of their portfolios. I only asked that they let me know before a project went sideways so we could collaborate on the solution. I was there to support them. And it worked great.”
   
• Executive Micromanagement: PPM tools and dashboard metrics can lead to centralized decision-making and micromanagement. Ground rules are necessary to delineate who has decision-making authority. 
  
  “The PPM tools, metrics, and reports only tell a small part of the story,” Zucker says. “To understand how a project is performing, you need to talk to the team to understand what is happening on the ground.”
  
  He gives this example of micromanagement: “I worked for a vice president who was a micromanager. He would read the 300-page report that came out of the PPM system each week. That was a huge waste of his time. He should have created an environment where people felt comfortable raising issues and concerns directly to him.” 
   
• Overcomplication: PPM may be too complex for smaller businesses with fewer projects. However, PPM practices may help with strategic alignment even in small businesses. 
  
  “Like any project, potential benefits need to be evaluated against the cost; project portfolio management will not work in every scenario,” Richter says. “If you’re struggling to align functional teams with larger strategic goals, PPM can be a powerful tool to transform the way you work.