The Pros and Cons of Project Portfolio Management

By Kate Eby | October 10, 2021

It is challenging to manage project portfolios, as the time and costs involved can be substantial. That said, many companies find that the benefits of project portfolio management outweigh the difficulties; this guide walks you through the pros and cons.

Included on this page, you’ll find the advantages of adopting project portfolio management methodology, the disadvantages of doing so, and the benefits of choosing the right tools for the job.

What Is Project Portfolio Management?

The term project portfolio management (PPM) refers to how a team organizes and manages groups of related projects to efficiently achieve strategic goals. Managers prioritize portfolios using predetermined criteria to allocate resources in the most efficient fashion. 

“Considering all possible project investments as a portfolio, rather than as individual projects, helps provide a balance when prioritizing, selecting, and sustaining projects, says Jack Miles, owner of Sarasota Mold Pros. “Large changes can be managed by tweaking projects within the macro portfolio sphere, instead of trying to make organizational changes at the micro project level.” Portfolio management is also useful because it can provide a larger picture of a business’s operations over time, which helps to highlight items that went well and that need improvement. 

Portfolio management can also help a company ensure it is prioritizing projects with a standardized approach and that align with company goals. To learn more about the basics of PPM, read “Project Portfolio Management 101.” For help developing your PPM strategy, check out our comprehensive PPM process guide.

The high-level benefit of project portfolio management is creating a reliable system within which companies can consistently manage their projects and programs. Other benefits include minimizing risk, maximizing profits, and ensuring smart allocation of resources.

Read our guide on the pros and cons of project portfolio management to learn about more benefits.

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What Are the Benefits of Project Portfolio Management?

Project portfolio management has many benefits. Perhaps most notably, it allows you to create a standardized system of best practices for your organization. PPM adoption can also minimize risk, maximize profit, and ensure smart resource allocation. 

Alan Zucker, a project management professional with more than 25 years of experience, sums this up: “The expected benefit of PPM is that the enterprise can manage, control, and govern its project investments to maximize its return on investment (ROI) and ensure that all efforts are aligned with the corporate strategy.”

In addition, PPM can aid your company in the following ways:

  • Minimize Risks to Maximize Business Impact: Risk is inherent in every venture, but PPM can help identify and mitigate risks before they become issues. A standardized approach to decision making can also help companies look out for less obvious risks by comparing new potential projects to similar efforts from the past.

    “Although the word ‘risk’ has a strong negative connotation, it is unavoidable at times. Because of the likelihood, type, and impact of various risks, you must explore options through an effective risk management plan to keep projects on track,” says Daniel Carter, Debt Advisor at IVA Advice. He continues, “Risks have financial and program repercussions, and reducing them helps you avoid underestimating the gross effort required for prospective and ongoing initiatives.”
  • Improve Speed of Project Completion: By implementing a standardized approach to decision-making, you reduce the time it takes to prioritize and choose projects and, consequently, the time it takes to complete them.

    “We’ve seen about a 15 percent decrease in the average length of our projects since using a portfolio project management strategy and collaborative PPM software,” says  John Li, CTO on Portfolio Project Management for Fig Loans. “Almost every piece of our projects goes more quickly, from project choice to strategy planning and execution. Now that we have information flowing in and out of one integrated source, management and key players can better tie our project strategy to the actual execution. In a nutshell, with the key players all having a clear vision of tasks and strategy, we complete more projects on time and within budget.”
  • Allow for Greater Budget Alignment: Create a realistic outline for the costs for all potential projects, and use these projections to help assess project readiness. “The PPM method can help identify budget discrepancies between planned and actual activity in real time, which allows you to minimize financial risks after a project has started,” says Carter. “PPM software can warn you of non-viable effort overexposure by highlighting possible money overruns, scheduling delays, and technological flaws. It keeps these risks from manifesting themselves throughout project delivery, leaving you with higher-value, lower-risk initiatives.”
  • Optimize Resource Management: By engaging in project portfolio management, you can determine all necessary resources you’ll need for potential projects. With this information, you can decide whether you can take on the project, based on your bandwidth.
Daniel Foley

“Competent resource allocation allows your company to make the most of its available resources and skills by directing them to the most important tasks,” says Daniel Foley, an SEO specialist at CloudTech24. “For example, resource profiling provides an updated skills inventory, which helps to ensure that peak demand periods are not affected by a skills shortfall. It assesses the capability and redistributes skill across several tasks in scientifically calculated proportions. Project demand can be forecasted to this resource capacity, which allows you to focus your resources on worthy projects without over- or unburdening them.”

  • Encourage Collaborative Decision Making: Project portfolio management can help encourage collaboration between PPM experts, project managers, and program managers when it’s time to pick projects. Because PPM emphasizes decision making based on data, team members don’t have to lean on personal preference for their partnerships, which can  fortify relationships and trust over the course of their work together.
  • Demonstrate Project Value to Stakeholders: Executives will gain visibility into why teams have prioritized certain projects over others. “If you present a portfolio of projects rather than just individual projects, communication may improve by helping bridge the gap between managers on those projects and the executives who fund them,” says Miles.
  • Increase Project Success Rate: By using PPM, you’ll be able to focus on and sequence projects that deliver maximum success for both the individual project and your organization as a whole. In turn, this can provide a competitive advantage, since you’ll have a reliable system of selecting projects that leaves little room for risk, delays, or failed projects.

    “PPM tends to gain management’s attention on every stage of project progress, which helps us perform better. Proper project management reduces the risk of the project failing by carrying out too many tasks simultaneously,” says Olga Voronkova, Digital Marketing Strategist at KeyUA.
Joe Pusz

Joe Pusz, the Founder and CEO of The PMO Squad, weighs in on the benefits of PPM: “The benefit of a well-executed PPM strategy is delivering on projects that will provide the most return on investment for the organization. Far too often, a manager initiates a project because a leader wants localized improvement within their department, even when the project provides minimal value to the greater organization. 

“While ROI is a direct benefit of proper PPM, indirect benefits include happy employees and high-performing teams. Resource utilization is directly impacted by poor PPM choices and frequently leads to low morale and lack of confidence in leadership. When you assign team members to too many projects without a proper PPM evaluation, the resource bears the burden of extra hours, reduced quality, and ultimately, a poor performance evaluation,” he says.

 That said, Zucker explains that the benefits of PPM are neither binary nor automatic. You don’t simply reap or not reap the benefits; you don’t instantly see results. Instead, realizing the extent of PPM benefits depends on your organization’s level of discipline, as well as dedication and continual adaptation to the processes you set in place. 

 “The benefits of developing and maturing a PPM process represent a continuum,” Zucker says. “At one extreme is chaos; money is spent on projects with no control, alignment, or accountability. At the other end of the spectrum, there would be an efficient and transparent process. The enterprise can effectively manage its investments to ensure alignment and maximize its investments. There would be transparency into the status of projects and programs so that appropriate corrective actions would be taken if there are problems.”

What Are the Disadvantages of Portfolio Management?

Portfolio management can be costly, both in terms of time and money. It can also remove project managers’ valuable experience from the prioritization equation, a factor that should be considered when deciding to adopt this methodology.

Potential downsides of PPM include the following: 

  • Inappropriate Allocation of Resources: Time and money are two fundamental resources for businesses of any size, and PPM uses both. “Depending on the size of the business, portfolio project management may be an unnecessary use of financial and labor resources. If your business includes fewer than five employees or doesn’t deal with in-depth projects often, you may not need PPM. Only invest if the widened management scope will help your business grow and increase revenue,” says Li.
  • Difficult Decisions: Prioritization can be very difficult, and sometimes you need to make tough decisions. If your portfolio management team is unable to make those decisions or is not empowered to do so, it can lead to decreased efficiency within the organization.
  • Removes Project Expertise from Decisions: The managers on your projects have intimate knowledge of your processes and the projects themselves, and adopting portfolio management methodology can remove their voice from the discussion. Standardized decision making, while efficient, ignores the experience of your team leaders, who might have knowledge of minute technical details that the portfolio manager may be unaware of.
  • Time Spent on Administrative Tasks: Properly managing a project portfolio takes a lot of time — not including the actual project management. A portfolio manager must spend time reviewing current priorities and ensuring that things are still on track, as well as creating reports, writing emails, and holding meetings. Issues such as scope creep on a single project can also affect a portfolio manager’s time investment by necessitating frequent re-evaluation. “Even the smallest project changes can put a strain on budgets and cause delays,” says Carter.
  • Cost: Everything costs money, from PPM software solutions to human resources. More products, more team members, and more managers means more monthly fees and salaries paid.
    Nick Drewe
    “You can use your PPM to streamline tedious, time-consuming, yet crucial tasks like inventory and product listing. These activities typically require at least one or two full-time workers, which could add up to thousands of dollars in employee salary,” says Nick Drewe, the CEO of Wethrift. “Perhaps the biggest downside, depending on your project management needs, PPM systems could set you back by a few hundred bucks every month. While large enterprises can easily afford this, small and midsize businesses might not have the extra funds.”

    Many free resources are available to help manage your project portfolios, including software and templates. We’ve compiled a list of free PPM templates to help companies stay on track.
  • Difficulty of Securing Executive Buy-In: Many factors can lead to a lack of executive buy-in, including a lack of visibility and poor communication. It can be tough to get leaders on your side, but ultimately, having the support of the executive team will lead to greater success for your portfolio processes.

    To learn more about including the executive team in your portfolio decision-making, read our guide to enterprise project portfolio management.

Project Portfolio Management Pros and Cons Quick-Reference Guide

You have a lot to consider when deciding whether to organize and manage projects as a portfolio. Use this quick-reference guide to help compare the pros and cons of implementing project portfolio management. 

Project Portfolio Management Pros and Cons Quick Reference Guide
Pros Cons
Minimized Risks: Identify and mitigate risks before they become issues. Cost: Consider the hiring, training, software, and development of new procedures.
Improved Speed of Project Completion: Standardized processes lead to less time spent on redundant tasks and less time for projects overall. Resource Allocation: PPM requires resources that small businesses may not have to spare.
Budget Alignment: Realistically outline costs using data from current and previous projects. Tough Decisions: Prioritization means making a lot of tough decisions about many important projects.
Optimized Resource Use: Portfolio view helps you see what resources are actually available and what resources are needed for new projects. Removes PM Expertise: Standardized prioritization processes can reduce input from your managers on the ground, who have intimate knowledge of day-to-day activities.
Increased Project Success Rate: Standardized practices lead to better prediction of project output over time and a better chance for success. Time: Time is a valuable resource. Development and implementation of PPM processes use time, which may otherwise be needed or spent elsewhere.
More Collaborative Teams: Creating a culture of visible decision making leads to improved communication and more cohesive teams. Securing Executive Buy-In: It can be difficult to secure executive buy-in on processes that are unproven when implementing new PPM procedures.


Download Project Portfolio Management Pros and Cons Quick Reference Guide


Microsoft Excel | Adobe PDF


What Are the Benefits of Project Portfolio Management Software?

The right software makes managing project portfolios a breeze. These programs are powerful tool sets that can easily fit into many of your existing processes. Use them to automate tasks, set reminders, and streamline manual processes that would otherwise waste time. 

  • Improved Organization and Visibility: Organization and visibility are crucial to the success of projects. PPM software can provide a central, accessible dashboard for project updates and an easy-to-understand visual organization of the projects within your portfolio. “These platforms allow us to streamline our project management process by compiling extensive, accessible portfolios,” says Drewe.
  • Ease of Sharing: Adopting PPM software across an organization makes it easier to share updates and results between departments and managers. When everyone uses the same standard program, fewer opportunities for confusion arise. “Since we have multiple kinds of projects going on simultaneously, we use a PPM software that is easy to use and can adapt to our changing requirements between departments. It is also adaptive concerning the project size,” says Voronkova.
  • Time Saving: PPM software allows you to automate repetitive tasks and schedule updates and reminders, which saves time and money. Managers can work on other more nuanced tasks while the software takes care of the simple stuff.
  • Assist Executive Decision Making: PPM software provides easy insight into the process of portfolio management. Executives can easily look over the portfolio dashboards to see what decisions are being made, how team members reached those decisions, and how to make new decisions accordingly.
  • Report Generating: PPM software can generate customized reports for many different situations. Standardized, consistent reporting makes results easy to view and save for future reference. “I use software that can give us the best KPI analysis so that I make the smartest management decisions for future growth,” says Li.

Use our simple questionnaire to help narrow down your options and choose the right PPM tool for your business. “Fortunately, the market now offers a more extensive line of PPM. I encourage users to explore their options until they find a platform that addresses their needs and matches their budget plan,” suggests Drewe.

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