Project Portfolio Management Guide

Smartsheet Contributor Kate Eby

August 10, 2017 (updated May 16, 2022)

Project portfolio management (PPM) can help businesses manage their resources and establish an efficient project prioritization system. In this article, you’ll learn everything you need to know about PPM and find best practices.

Included on this page, you’ll find tips and best practices, a downloadable facilitation kit, and information on how to choose the right tools for you.

What Is Project Portfolio Management?

The term project portfolio management (PPM) refers to the way a team efficiently organizes and manages groups of related projects to achieve strategic goals. Managers prioritize portfolios using predetermined criteria, and allocate resources according to priority level. 

The objective of project portfolio management is to increase efficiency by implementing a repeatable, criteria-driven process to choose and prioritize upcoming projects. The main goal is to successfully evaluate your projects’ probability of success, while accounting for any risks, and to schedule them in a way that maximizes the utility of an organization’s resources. A successful strategy will evolve with the organization as needs change.

You can tailor project portfolio management strategies to any internal department, and scale it for any size or volume of projects. Common types of project portfolio management include enterprise project portfolio management, which refers to large-scale initiatives responsible for evaluating every project across all departments, and IT project portfolio management, which includes projects run within the IT department. For more information, check out our guide to the project portfolio management process.

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Project Portfolio Management vs. Program Portfolio Management

Project portfolio management refers to the large-scale management of projects within a company, which may not be related. Program portfolio management is the supervision of groups of projects that are related, and share strategic goals. 

Alan Zucker, a project management professional for over 25 years, gives an example of the difference between the two: “For example, an automotive company manages a project portfolio that includes all of the cars, trucks, and SUVs in its product line. There may be a separate portfolio dedicated to managing SUVs that includes managing the existing suite of products as well as developing new models. The effort to develop a new SUV model would be a program [that consists] of several interrelated projects that need to be coordinated. There would be individual projects to design the engine, interior, exterior, and more that are part of the new SUV model program.”

Project Portfolio Management vs. Project Management

Project management refers to the facilitation and supervision of a specific project and team by a project manager. Project portfolio management prioritizes the many projects within a company and manages the time and resources needed to complete them.

The Project Management Institute (PMI) defines project management as “the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.” 

Joe Pusz is the Founder and CEO of The PMO Squad, a project management consulting firm. He clarifies the difference between the two terms. “Project portfolio management is doing the right project or program at the right time. Project portfolio management is a strategic function, while project management is the delivery of work as prioritized within your portfolio decision making.” Ultimately, project portfolio management is the strategic framework that drives decision making when carrying out projects or programs.

What Are the Objectives of Project Portfolio Management?

Project portfolio management has many objectives. The main goals of project portfolio management are to establish consistent and effective prioritization strategies and efficient resource management, and to facilitate executive decision making.

  • Effective Prioritization: Successful project portfolio management hinges on prioritizing projects effectively. Projects should be prioritized by predetermined criteria and monitored over time.
  • Efficient Use of Resources: Managing your project portfolio means ensuring that you allocate resources — including time, money, and labor — as efficiently as possible.
  • Facilitate Executive Decision Making: When properly managed, a project portfolio is well organized and easy to look over. When executives have easy access to clear information, it makes it easier to make informed decisions.
  • Visibility and Communication: A well-run project portfolio makes project statuses visible and reduces the need for excessive communication. Team members should be able to answer many of their own questions by looking at project dashboards and reports.
  • Encourage Executive Buy-In: A history of successful project portfolio management increases executive confidence in managers and their teams. They are more likely to back projects led by these teams in the future.
  • Project Completion: The ultimate goal of project portfolio management is to complete more projects on time and on budget.

What Is the Role of a Project Portfolio Manager?

 

A project portfolio manager oversees individual project managers and ensures that projects align  with company goals. A successful project portfolio manager makes sure that deliverables are on time and consistent among departments and that resources are allocated appropriately. 

A project portfolio manager can also act as a liaison between individual project managers and executives. They have a unique insight as to how projects and departments interact and help determine the ultimate direction of a company by prioritizing projects accordingly.

Why Do We Need Project Portfolio Management?

As a company grows and takes on more projects, portfolio management becomes more and more critical. Project portfolio management provides a big-picture view of all potential and ongoing projects, which allows executives and managers to make more informed decisions about their business.

 

“Project portfolio management has helped our managers effectively manage time, skills, resources, and budgets. It has made it much easier to accomplish many tasks, especially in situations where our managers have to multitask. Implementing project portfolio management has ensured that our company operates with minimal risk by providing managers with centralized visibility of project information for all projects,” says Sam Shepler, the Founder and CEO of Testimonial Hero.

The main benefit of project portfolio management is that it grants visibility into every aspect of your project portfolio management process, including budget, resources, risks, status, and the decisions themselves. Project portfolio management software can standardize processes and eliminate discrepancies by documenting all communication, decisions, and evaluations that occur in the project portfolio management lifecycle. Additionally, many tools — reporting, data analytics, dashboards, etc. — enable higher-level functionality to grant visibility into your decision making. For more information, read our guide to the pros and cons of project portfolio management.

Components of Project Portfolio Management

There are four main components of project portfolio management. You must develop a strategy, define an enterprise framework for your organization, determine criteria and prioritize your project portfolio, and maintain and make changes to it as needed.

Here’s a bit more information on each component:

  • Strategy: Develop your approach to project prioritization management. Determine what is most important to your business, and outline your portfolio management goals.
  • Enterprise Frameworks: Take note of the ways that various projects and departments interact with each other, and create a framework that supports those interactions. There are many approaches to project and portfolio management — read our guide to project management frameworks to learn more about what is right for your organization.
  • Portfolio Prioritization: Project prioritization is essential to successful portfolio management. With the input of all key stakeholders, choose your prioritization criteria based on their relevance to the business’ goals.
  • Portfolio Maintenance: Understand that many factors may change over time, and adjust accordingly.

Project Portfolio Management Examples

Project portfolio management can look different based on industry, the size of the company, and the needs of the team. We’ve outlined a few examples of different approaches to project portfolio management below:

  • Small Businesses Portfolios: Small and large businesses have different needs. A small business might only have a few ongoing or potential projects at any given time, as well as smaller teams and a smaller budget. These companies might prioritize projects in their portfolio more aggressively toward growing their customer satisfaction or their leadership teams in order to grow the business.
  • IT Portfolios: IT portfolios are prioritized heavily around the existing demands on the IT team. IT teams tend to be relatively small and highly specialized, and IT projects tend to be more expensive, so it is especially important to keep those employees well supported and to not overwhelm them with tasks, so that they can do their best work.
  • International Businesses Portfolios: International businesses likely have teams located in many of the markets they do business. Portfolio management becomes more difficult because the needs of those teams and markets may differ so wildly. In this case, it is especially important to prioritize portfolios toward initiatives that support the business’ goals as a whole, rather than just the goals of any one particular market.
  • Remote Businesses: Businesses that are fully remote should consider using project portfolio management software to ease communication and project visibility. Central dashboards, automatic workflow notifications and reporting, and real-time messaging are invaluable tools to use when managing portfolios and teams from afar.
  • Manufacturing Business Portfolios: Businesses that produce goods for customers should consider using tools that allow their customers to receive updates and view project reports in real-time. You can save a ton of time by automating notifications or giving customers their own access to status reports, rather than manually sending update emails and answering questions to dozens of different people.

Best Practices for Project Portfolio Management

It can be difficult to know how to implement project portfolio management in your organization. From choosing your prioritization criteria to finding the right software tools, we’ve compiled a list of expert advice below:

  • Create a Portfolio Management Team (or Department):

    Creating an experienced team to be accountable for project portfolio management is one of the best ways to ensure its success. “It’s a lot of power in the hands of those managing the project portfolio, but if they’re well-suited for the task, it will mean considerable forward momentum for the business. Having a few well-experienced managers in charge of project portfolio management can help combat any major issues, as teammates can balance any individual biases in decision-making,” suggests James Diel, Founder and CEO of Textel.
  • Choose Prioritization Criteria That Aligns With Company Goals:
    Brad Tousenard
    One of the most critical parts of project portfolio management is prioritizing various projects. It is essential that you prioritize projects using criteria that encourage progress toward the company’s goals. “Our projects are carefully selected to take our company closer to our strategic objectives. If any project does not help us meet our goals, it would be a waste of company resources and workplace efforts. As a project manager, I evaluate and prioritize projects with our overall business strategy in mind,” says Brad Tousenard, Founder and CEO of SpinupWP.
  • Be Flexible: Understand that business needs change for a variety of factors. Encourage flexibility in your teams, and you will have an easier time adjusting to them. “For any business to stand out and excel in a dynamic and saturated market, it has to have the capacity to quickly adapt. Rapid adaptability to provide solutions for any given problem requires exceptional leadership and effective management,” advises Shepler.
  • Use Available Tools: There are numerous free template resources and software tools to help make project portfolio management easier. Choose the ones that work best for your needs, and don’t be afraid to use them regularly. “Resources are finite at every organization as projects compete with each other for funding. With proper portfolio management tools, you can look at enterprise-wide resource availability before choosing projects, and choosing the best fit to optimize your allocation. Using project portfolio management, you can also periodically review and reassess those projects to ensure that your budget is still in line with business and project goals,” says Diel.
  • Understand the Existing Culture: Keep the company’s culture in mind when making any large-scale changes. A company with a history of a laissez-faire approach to deadlines may not react well to an overnight shift to hard due dates, and vice versa. “When implementing a PPM program, it is important to understand the organizational and cultural context. Many new programs fail because they establish practices that are out of context. Successful programs establish clear business goals, and then establish processes and practices that begin moving the organization in the new direction,” advises Zucker.

Project Portfolio Management Templates

Project portfolio management templates are tools to help support specific processes of the PPM lifecycle by providing budgeting tables, timelines, and dashboards to help visualize your data. Many full-scale software tools combine these features into a unified solution.

If you find specific gaps in the software you are currently using for portfolio management, you can use templates for things like easily reporting your portfolio status, tracking your ongoing budget, or creating a dashboard to visualize your entire portfolio. You can also choose from a wider variety of free project portfolio management templates.

Project Portfolio Management Facilitation Kit

Project Portfolio Management Facilitation Kit

Project portfolio management is a complicated process. We’ve put together this project portfolio management kit to help you get started. Included in this kit, you’ll find customizable templates to help you plan and execute meetings, prioritize projects, and create portfolio reports and dashboards. 

Download Project Portfolio Management Facilitation Kit

Meeting Agenda Template

Business Meeting Agenda Template

Use this meeting agenda template to easily plan your project portfolio management meetings. Create a schedule to discuss project priorities, ongoing projects, budgets, or other portfolio management concerns. We’ve provided a sample schedule, but you can easily edit the template to reflect your specific needs.

Download Meeting Agenda Template
Microsoft Excel | Microsoft Word | Adobe PDF | Google Sheets | Smartsheet

Meeting Minutes Template

Meeting Minutes Template

Use this meeting minutes template to record feedback and notes from your project portfolio management meetings. In this template, you’ll find space to list meeting attendees and objectives as well.

Download Meeting Minutes Template
Microsoft Excel | Adobe PDF | Google Sheets

Project Prioritization Template

Project Prioritization Template

Use this template to create a customized list of projects, ranked by priority, using the criteria you set. Choose your most essential criteria and rank your project options on a scale from one to five. This template will then generate a ranked list of the projects most imperative to your organization.

Download Project Prioritization Template
Microsoft Excel | Google Sheets

Project Portfolio Status Report Template

Project Portfolio Status Report Template

Simplify reporting with this project portfolio status report template. Create and display a 12-month timeline of project statuses, with details and summaries for each. Generate a budget summary, and use the color-coded guide to view which items are on track.

Download Project Portfolio Management Status Report Template
Microsoft Excel | Smartsheet

Project Portfolio Dashboard Template

Customer Facing Project Portfolio Dashboard

Create a visual guide to project status with this project portfolio dashboard template. Using easy-to-read graphic charts, display delivery timelines, resource allocation, and financial status of all of the projects within your portfolio. You can also summarize project status in a less graphic spreadsheet format.

Download Project Portfolio Dashboard Template — Microsoft Excel

Important Features in PPM Tools

A project portfolio tool is a centralized management system to oversee the project portfolio management process. To accomplish the many goals of portfolio management, there are a variety of software tools that automate processes and organize data.

“Before jumping into the vast ocean of project management software in the current market, it is important to take a step back and assess exactly what your company needs from your project portfolio management software,” says Shepler. “A best-in-class PPM software consists of certain features that ensure the optimum level of attention and analysis required to execute projects without a hitch. This includes flexible workflows, automated and scheduled reminders and notifications, Gantt charts, and the ability to collaborate and [generate] reports. The best project portfolio management software is one that models portfolios and objects in only a few clicks without compromising other features or ease of use.”

Zucker explains the recent popularity of software tools. “The software platform enables [you] to track the lifecycle of all projects, from ideation to funding approval to execution to benefits realization,” he says. “If you don’t use a software platform, all of this information would not be tracked, or would be tracked on incompatible and out-of-date spreadsheets.”

“The software can ensure that data is collected consistently for all projects,” Zucker continues. “Workflow can be enabled to reduce the manual effort of tracking down approvals. Standard reports can be generated from the solution, which eliminates the need for people to waste countless hours manually creating reports. The software also fosters standardized tools and practices.”

 Pusz emphasizes that PPM tools keep team members focused on the data. “When properly configured and integrated into organizational processes, the tools help to eliminate emotional decision making,” he says. “The tools focus on the intended ROI and other configured factors,  such as resource utilization, skill sets, and budgets.”

How to Choose the Right Project Portfolio Management Software

There are many considerations to make when choosing the right project portfolio management software for your company. Consider organizational fit, cost, and the challenges of implementation, as well as the features that the software has to offer.

The basic framework for choosing a tool is simple in theory, but often complex in practice. To find the right project portfolio management software for your company, you must consider two key factors: organizational fit and cost

While each tool will tout unique features that you can tailor to your organization, you shouldn’t choose software based on functionality alone. As Zucker and Pusz point out, a fancy software program will not solve all of your process problems overnight. And, in some cases, it might introduce more issues. Concerning this first step, organizational fit, determine the specific needs of your company and if and how a software tool can meet these needs. Think of fit as an umbrella term that includes size, capabilities, support systems, and other cultural factors.

“The first step when choosing a project portfolio management tool is understanding your enterprise and organizational needs,” says Zucker. “Most of the tools have their own strengths and weaknesses. The key question is: How will the tool work in your environment?

Pusz agrees. He says it is necessary to ask the question, “‘How will the tool fit the culture of the organization?’”

Regarding cost, expenses go far beyond the sticker price of the new software. As Pusz and Zucker explain, there are many hidden and qualitative costs that take your organization’s budget, resources, and health into account. 

As Zucker says, “Don’t just look at the initial cost of purchasing or licensing the software. Look at the total cost of ownership.” It is also important to consider the cost of learning a new software and training your team to use it.

There can be significant challenges in the implementation of project portfolio management software. As Pusz explains, “Project portfolio management software, like most software, is as good as the time spent to configure it properly. The larger enterprise tools can be cumbersome to configure to consider all criteria for project portfolio management evaluation. Also, they can be expensive and require constant training and maintenance to stay current with organizational strategy.” Read our guide to implementing project portfolio management to learn more.

These challenges should not deter you from adopting project portfolio management software, but you should be aware of the limitations before you begin implementation and actively work to combat them. After all, as Zucker points out, “In general, these challenges do not arise because the tools have intrinsic limitations. The challenges are often caused by how the enterprise decides to build or configure the software.”

The Qualities and Functionality of Project Portfolio Management Tools to Consider

Once you’ve identified your organization’s specific needs and constraints, you can look at products and assess their functionality. There are no objectively necessary features, but some common qualities of strong project portfolio management tools include reporting, dashboards, and usability. 

Here’s a list of things to consider when selecting a PPM tool:

  • Usability/UI: Choose a tool with an interface that is easy to use. Consider the learning curve involved when training new users.
  • Collaboration and Communication Features: Communication and collaboration features should be built into the tool. You should be able to automate messages  and view them in real time.
  • Cloud-Based vs. On-Premises Software: Consider the cost of implementation, both in time and budget. You should also consider security and upkeep, as well as access to support.
  • Reporting: A project portfolio management tool should offer automatic reporting on various different metrics. 
  • Integrations: Ensure that new tools integrate with software already in use. You should also ensure that the tool works seamlessly on multiple platforms, including on mobile devices.
  • Data Storage: Consider your storage needs and ensure that new tools can accommodate them. Take note of what kinds of file types are compatible, and which are not.
  • Dashboards: A dashboard is a data visualization that is often used to report high-level metrics and statuses. A good project portfolio management software tool will possess this functionality, and it can elevate your reporting and analytics tactics.

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