All About the Project Portfolio Management Process: Phases, Steps, and Flows

Smartsheet Contributor Kate Eby

September 19, 2021 (updated August 30, 2022)

In this comprehensive guide, you’ll learn how to create and implement a PPM process, which will lead to better management of projects that align with your business’s overall goals and objectives.

Included on this page, you’ll find a definition of PPM and how it differs from project management, the phases of the PPM process, and an example PPM process for the enterprise.

What Is Project Portfolio Management?

Project portfolio management (PPM) refers to the consolidated planning, tracking, and management of processes, projects, and technologies to help project managers command and evaluate projects —both existing and proposed — based on specific details.

Using PPM, organizations aim to achieve their strategic goals and objectives, while considering such factors as market conditions, competitors, customer wants and needs, and government requirements.

PPM also aims to create a portal of information that covers all project-oriented objectives and initiatives. This helps team members and key stakeholders to easily view all key project, organizational, and performance data so they can assess which projects help or hinder the business.

Additional goals of PPM include the following:

  • Providing ample information so key stakeholders can make the best, most informed business decisions about projects, priorities, and resources
  • Maintaining both high-level and granular visibility into all key project information across the entire organization
  • Implementing a way to collaborate among all stakeholders so you reach a succinct consensus when aligning projects with business goals and objectives

Whereas general project management focuses on one specific project at a time, PPM establishes a process by which organizations can collectively collaborate, agree, and act upon specific programs that support the overall business goals and objectives.

Portfolio Management Process in Project Management

Teams use PPM in project management to create and maintain processes that continually consider all projects against overall business objectives and strategic goals, which helps to prioritize and validate projects as they arise. 

This process also helps organizations to appropriately finance and resource projects.

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Phases of Project Portfolio Management

The PPM process aims to establish specific phases in which team members are notified about different project milestones, such as when you meet resource thresholds, project conflicts arise, or budgets exceed their amounts.

The phases of the PPM process help to create a strategic link between the overall business strategy, project selection, and project execution.

Aligning Process Group (Phases 1-7) of the PPM Process

The first group of phases in the PPM process is the aligning process group, which revolves around all of the preparatory work that a team must complete before approving or kicking off a project. 

  1. Identification: Document all ongoing and new processes and projects that should be managed using PPM.
  2. Categorization: Sort these processes and projects into appropriate business groups or units.
  3. Evaluation: Assess each process or project to determine its business value. This evaluation should be data-driven, but you can use it on both qualitative and quantitative variables.
  4. Selection: Choose the most valuable and effective processes or projects from the evaluation phase and create a comprehensive list.
  5. Prioritization: Rank each process or project based on specific strategic categories, such as risk vs. return, cost savings, innovation, competitive advantage, etc. Most often, organizations determine rank using a scoring model, which is a form of analysis in which decision-makers rate the project on a number of questions that distinguish superior projects (typically on a 1–5 or 0–10 scale). This score serves as a stand-in for the value of the project to the company but also includes strategy, leverage, and factors apart from financial measures.
  6. Portfolio Balancing: Organize projects by value and create a sensible business plan based on their prioritization.
  7. Authorization: Communicate the prioritization and strategy that you identified in the previous steps, gain approval on budget and timelines, and allocate resources appropriately.

Benefits of Aligning Process Group of the PPM Process

The primary benefit of the aligning process group is that it allows organizations to evaluate all projects and processes, then select only the ones that provide the greatest value to the business and best align with the overall business goals and objectives.

Challenges of Aligning Process Group of the PPM Process

The aligning process group can be difficult to navigate because it challenges organizations to list all current projects and processes, then rank them based on their return on investment (ROI) and alignment to business goals, which can be hard to identify.

Monitoring Process Group (Phases 8-9) of the PPM Process

The next phase of the PPM process is the monitoring process group, which involves analyzing, reporting on, and reviewing a project. In this phase, PPM teams review all projects and their associated processes and modify them as needed.

  1. Portfolio Periodic Review and Reporting: Collect all key performance indicators (KPIs) and analyze them against your business objectives. Review these KPIs periodically to constantly improve upon internal processes.
  2. Strategic Changes: Further analyze and fine-tune your strategic processes as needed, based on the review in the previous step.

Benefits of Monitoring Process Group of the PPM Process

The key benefit of the monitoring process group is that it provides specific steps in analyzing and reviewing all projects against business objectives using predetermined KPIs. This allows organizations to consistently improve their projects and processes.

Challenges of Monitoring Process Group of the PPM Process

The monitoring process group can be challenging, because it requires organizations to judge the projects and processes against specific KPIs, which must be strategically updated based on what is and is not working.

Component Process (Phase 10) of the PPM Process

The last phase of the PPM process is the component process, in which you analyze the performance of the components involved in the overall PPM process.

Component Execution and Reporting: Analyze the performance of each component and determine the relative success of each one to gain feedback on the strength of your PPM process as a whole.

Benefits of the Component Process of the PPM Process

The component process group offers the benefit of determining the components that are successful and enabling organizations to strengthen their overall PPM process.

Challenges of the Component Process of the PPM Process

The primary challenge of the component process is the actual analysis of each component, which can be difficult to look at individually and judge for its success.

What Is the Project Portfolio Management Process?

The project portfolio management process is a continuous process, though it still follows a specific set of phases that appropriately assess each project or set of projects. 

Below, you’ll find the PPM process outlined from identification to execution and reporting:

How to Define a Project Portfolio Management Process

The PPM process involves a continuous process of identifying, selecting, planning, tracking, and managing projects that deliver the maximum business value and ROI, as well as align with strategic objectives. 

PPM is a dynamic decision-making process that defines the best use of resources, as well as determines appropriate and realistic timelines and budgets for projects that align with the overall business goals and objectives.

Steps in the Project Portfolio Management Process

The steps in the PPM process are the same as the phases, which are made up of three core groups (aligning, monitoring, and component), as outlined in more detail above.

Project Portfolio Management Process Template

Project Portfolio Management Process Template

Use this template to create a cohesive process for the PPM components. Start by identifying and listing all your projects and end with a full analysis of your components. This template provides a framework for a PPM process that you can implement across your organization.

Download Project Portfolio Management Process Template

Microsoft Excel | Smartsheet

Visit this article for additional PPM-related templates, including templates geared toward the PPM process.

Project Portfolio Management Process Flow

The PPM process is a living, agile flow that includes phases, detailed above, in which you accurately assess each project and program against overall business objectives.

Example Project Portfolio Management Process for Enterprise

An enterprise-level PPM process must pay especially close attention to aligning projects and programs with the goals and strategic objectives of the entire organization, which can easily become obscured in a large business.

Here is an example of a PPM process for enterprise that enables you to capture all projects within the organization, rate them based on specific criteria, and prioritize, resource, and check on them throughout the lifecycle to ensure they maintain alignment to business objectives. 

Visit this article to learn more about PPM specifically for enterprise.

Best Practices for Project Portfolio Management Process

To create and implement the most effective PPM process in your organization, start by identifying your business goals and objectives.

Doing so will help you and the rest of your organization develop a specific plan of action with which you can move forward, based on how they align with your strategic vision. 

Additional best practices to use as you develop your PPM process include the following:

  • Establish a Project Management Office (PMO): A PMO is a specific business unit intended to oversee the entire PPM process and coordinate project and program efforts across the organization to ensure that the projects align with the company’s business strategy.
  • Create Specific Project Evaluation Criteria: This criteria will help the organization review, evaluate, and prioritize projects effectively, so you can easily determine which projects can proceed and which projects to backlog. Consider the following questions:
    • How does the project drive business goals?
    • What are the expected outcomes of the project?
    • Is there already another project underway that can achieve similar outcomes?
    • What is the project’s risk-return profile?
    • What resources do you need for the project, and do you have the bandwidth and finances to source them?
  • Develop a Risk Management Strategy: Create a way to both evaluate a project’s potential and inherent risks, as well as a way to conduct risk assessments throughout the course of the project.
  • Research and Implement a PPM Solution or Tool: A PPM tool can help increase visibility into the PPM process, so all stakeholders and team members can see how projects move through the process from start to finish.

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