What Is a Project Portfolio?

A project portfolio is a collection of projects, programs and processes that are managed together and optimized for the financial and strategic goals of an organization. A portfolio can be managed at either the functional or the organizational level.

Unlike a project, which has a defined end goal or deliverable, a portfolio represents a more strategic planning commitment to continuously optimizing the allocation, prioritization and scheduling of resources across many projects.

What Is Project Portfolio Management? (PPM)

Project portfolio management (PPM) is the analysis and optimization of the costs, resources, technologies and processes for all the projects and programs within a portfolio. Project portfolio management is typically carried out by portfolio managers or a project management office (PMO).

Related: 15 Free PMO Templates for Excel and Word

The key focus of PPM is to make sure that all the outcomes in the portfolio support the strategic goals and business objectives of the organization. The project portfolio manager or PMO does this through business analysis, reviewing budgets and forecasting while minimizing risk and managing stakeholder expectations.

Project portfolio management tools (PPM tools) are often used to collect and analyze that data to ensure that their project portfolio is aligned with the overall strategic planning and goals of the organization. ProjectManager has powerful, yet intuitive, tools for managing project portfolios. Track all your projects with a customized dashboard, manage your portfolio on a roadmap, even allocate resources across your projects. It’s easy to do all this and more with ProjectManager. Try it free.

ProjectManager's portfolio management summary showing several projects

ProjectManager’s portfolio dashboard is one of its many PPM tools.

Project Portfolio Management vs Project Management

In the hierarchy of business management, project portfolio management is the link between project management, which we will define briefly below, and enterprise management, which deals with the overriding vision, mission and strategic planning of the organization.

To understand where project portfolio management and project management differ, we must first define each and explore the areas where they diverge.

Project management is, quite simply, the management of a project. A project is a temporary endeavor that results in a product or service. It has a beginning and an end. Project goals are defined, and tasks are broken down into a schedule. Cost and budgets are set; resources are assigned, and stakeholders are reported to.

Project portfolio management, on the other hand, is a higher level approach that orchestrates, prioritizes and analyzes the potential value of many projects and programs in a portfolio to manage them simultaneously and optimize resource management. The goal of the portfolio management process is to manage and leverage the life cycle of investments, initiatives, programs, projects and outcomes to best reach the overall goals and objectives of an organization. Therefore, project management is a subset of project portfolio management. It leads to the ultimate objective, which is meeting the strategic goals of the organization.

The Project Portfolio Management Process

There are five basic project portfolio management steps:

1. Define Business Objectives

Before you start thinking about portfolio management, you’ll need to understand your organization’s business objectives and strategic goals. The idea is that your project portfolio aligns with the strategic planning of your organization, so you’ll need to check if its financial objectives and customer value are good enough for your organization.

As a project portfolio manager you’ll need to reach an agreement about the strategic goals of the project portfolio with stakeholders, and then proceed to establish valuation criteria for project selection.

2. Collect Project Ideas for Your Portfolio

Once you’ve defined your portfolio’s strategic goals it’s time to start building it. To do so, you’ll need to start collecting projects. Those could be in-progress projects or project ideas that are similar enough to be managed simultaneously. Gather project management data and prepare the valuation criteria to choose the best.

3. Select the Best Projects for Your Portfolio

To determine which are your best projects for your portfolio, you’ll need to do a cost benefit analysis and use your valuation criteria. This valuation criteria will measure the amount of value that each project brings into the portfolio.

There are a variety of aspects that can go into the project selection scoring criteria, such as the payback period, net present value, or risk level.

4. Validate Project Portfolio Feasibility

Now that you’ve chosen the projects that are the best fit for your portfolio, it’s time to do a feasibility study that takes into account all the financial risks, capacity planning and resource management constraints.

Doing this will guarantee your project intake process prioritizes the best projects while also considering what is feasible considering the available resources of your organization.

5. Execute and Manage Your Project Portfolio

Now you’ll need to coordinate the execution of the projects and programs in your portfolio simultaneously by working with project and program managers.

Related: Free Multiple Project Tracking Template for Excel

What Does a Project Portfolio Manager Do?

Project portfolio managers oversee the management of the project portfolio which includes approving or rejecting project and program ideas. They are responsible for getting a return on investment and meeting the goals and objectives of their organization. The project portfolio manager can be tasked with managing one or more portfolios.

The job is done by working with various portfolio management tools, financial algorithms and models to help the project portfolio manager align the projects to strategic goals of the organization. They are further guided by a set of valuation criteria and standards that help them through the portfolio management process.

Project portfolio managers are often involved with the PMO, which also sets the processes and standards for the portfolio. The project portfolio manager and PMO can also provide direction on what project management methodologies are used, whether traditional waterfall or an agile framework when managing the project.

5 Project Management Processes for PPM

Project portfolio management requires a balance of resources, time, skills, budgets, risk mitigation and running the projects in the portfolio frugally and expediently without sacrificing quality. Managers do this through the use of five key project management processes.

  1. Change Management: Identifying and prioritizing change requests. These can be feature requests, business strategy, regulatory requirements, etc., based on business strategy, capacity planning, demand, financial and operational constraints.
  2. Risk Management: Identifying risks in projects that make up the portfolio, and developing a risk management plan to mitigate uncertainty within the project portfolio.
  3. Financial Management: Managing financial resources related to the projects in the portfolio and demonstrating financial results of the portfolio in relation to the organization’s business goals and strategic objectives.
  4. Pipeline Management: Ensuring project proposals are in the pipeline and using valuation criteria to determine if they’re worth executing.
  5. Resource Management: Efficiently and effectively using an organization’s limited resources, from materials and equipment to people and financial resources.

Project Portfolio Management Software

Project portfolio management software is a tool designed to centralize the management and maintenance of a project management portfolio. With the increasingly large amount of data now associated with a single project, let alone a portfolio, the use of portfolio management software has become a necessity for project managers.

Project management training video (7y5z887r5q)

Portfolio managers and project management offices (PMOs) use portfolio management software to gather data, analyze information and use the results to better manage the portfolio and achieve the goals of their organization.
Typical PPM software offerings are also used for portfolio optimization to better achieve the financial goals of the organization. Managers or PMOs use portfolio management software to find complementary processes, methods and technologies that will help each project succeed and the portfolio flourish. Microsoft Project is one of the most commonly used project management software, but it has major drawbacks that make ProjectManager a better choice for project management, program management and portfolio management.

Desktop vs. Online Project Portfolio Management Software

Managing a portfolio is like keeping many plates spinning at once. To keep up, you need robust project portfolio management software. The question is, what kind should you go for?

In terms of features, desktop and online software applications, at this point, are on an even playing field. It depends on the product, of course; but for the most part, both offer similar PPM tools. The major differences are price, security and speed. For example, desktop portfolio management software tends to cost more and require a license for each team member. This can add up.

Pros of Desktop PPM Software

Security on a desktop, even one linked to an office intranet, is likely better than many online services. Performance for a cloud-based software depends on your internet connection, and if your service goes out you’re out of luck. This, obviously, is not a concern for desktop apps.

Pros of Cloud-Based PPM Software

Online apps are monopolizing the project management sector, and for good reason; they excel at connectivity, collaboration and real-time data. So long as your team has an internet connection, they can use the tool—no matter where they are. This creates a platform where even distributed teams can work together anywhere and at any time. As teams update their status, you get live data that is more accurate and timely to help make effective decisions.

Must-Have Features of Project Portfolio Management Software

See All Your Projects Together

A Gantt chart is a visual tool that helps plan and schedule a project, but it can also be used as a roadmap to view all the projects in your portfolio on a single timeline. This helps managers find synergy between projects and work to make the portfolio more effective and efficient.

Gantt Charts image

Get Live Data Across Portfolio

Being able to monitor your project portfolio is key to keeping it on track. A portfolio dashboard collects information on all your projects, calculates that data and then displays it in easy-to-read graphs and charts that can be read at a glance.

Dashboards image

Use Detailed Data to Make Better Decisions

Better data leads to better strategies when managing your portfolio. Managers need a tool that can mine information from their project portfolio and present them with detailed reports. Being able to share and filter those reports to target the information your stakeholders want to see is also key.

In-Depth Reports image

Keep Team’s Tasks Balanced

Project portfolios work at the task level. To get the level of performance you need, your teams have to have the right number of tasks. Balancing their workload keeps your portfolio progressing as planned, so you need a portfolio tool with a feature to track who’s working on what.

Resource Management image

Easy Change of Assignments

If you’re using the roadmap or dashboard, and see that there’s a need to reassign a task, the last thing you want is to have to go into another application to adjust a project in your portfolio. With a task management feature, you can stay in one tool.

Task Management image

View Your Portfolio in Real Time

The sooner you know something, the faster you can act. This can make the difference between taking advantage of an opportunity and missing a deadline. With online portfolio management software, you see what’s happening as it happens and can respond quickly to take advantage.

Live Data image

How to Use Portfolio Management Software

Projects are hard enough to manage, and a portfolio of them even more so. It’s many times more complex and requires robust project portfolio software. In this section, we will use ProjectManager as an example on how to use portfolio management software.

If you want to follow along, then sign up for a free 30-day trial of ProjectManager. Once you’ve got our PPM software up and running, follow these steps.

1. Set Goals & Objectives

Having goals and objectives for your project portfolio is important, as it gives portfolio managers a target to hit when trying to increase their return on investment and keep risk at bay.

Start by writing down the goals and objectives for each project in your portfolio. There will likely be a number of detailed project management documents describing these projects. Attach them to our portfolio management software, which has unlimited file storage.

A screenshot of ProjectManager’s PPM tools unlimited file storage window

2. Group Related Projects

Grouping projects in a portfolio and creating reports around them collectively, rather than individually, gives portfolio managers the data they need to make better business decisions about costs, resources and more.

Keep all the projects in your portfolio together in our overview section. Compare status, budget and more of everything in your portfolio, all in one place. Now you can use resource allocation to boost one of the projects that might be underperforming.

A screenshot of ProjectManager’s project portfolio management tool, which displays multiple projects at once

3. Create Milestones

Milestones mark the end of one major phase and the beginning of another. They can be easily inserted on the Gantt chart, where they’re represented by a diamond symbol.

Set milestones and break up your projects into more manageable parts. This boosts the team’s morale by giving them a series of successes as they work through their tasks. Managers can use milestones as a means to measure progress.

4. Set Dependencies

Tasks are not all the same. Some can’t start until another has finished, or must start or finish at the same time. It’s important to know which of your tasks are dependent to keep the portfolio healthy.

Link dependent tasks by dragging one to the other to avoid blocking teams. This prevents these dependent tasks from falling through the cracks during the execution of the project. Once you have set dependencies, you can filter by critical path.

5. View Roadmap

When managing a portfolio, it’s important to keep the big picture in sight. Without it you can easily get lost in the weeds and fall behind schedule.

Keep goal-minded with the roadmap tool, which places all the projects in your portfolio on one Gantt chart. See every project on a timeline and quickly discern if there are any conflicts and resolve them before they interfere with the goals and objectives of your organization.

A screenshot of ProjectManager’s PPM roadmap view, which shows all the projects in your portfolio together on a timeline

6. Balance Resources

Workload represents what your team has been assigned, in terms of their tasks. If you overburden one team member, they’ll not be as productive and morale will suffer.

See the planned effort for every team member working across your portfolio in a color-coded chart that shows who has too many hours assigned and who has too few. Then you can reallocate their hours right from the same page, improving efficiencies.

A screenshot of ProjectManager.com’s PPM workload page, showing team member’s task load and labor costs

7. Track Portfolio Progress

A dashboard is a tool that graphically depicts various project metrics, so you can see how your project is performing. It’s a high-level view that can alert you of issues to address before they become problems.

Use our cloud-based dashboard to see your portfolio’s progress in real time. Mini-dashboards appear for each project that offer important metrics such as progress, budget and costs. You can also customize the dashboard to show only certain projects, and you can create reports based on projects that are filtered in this manner.

ProjectManager’s dashboard view, which shows six key metrics on a project

8. Analyze & Present Reports

Status reports are a way to measure the current state of your project. They communicate important data to stakeholders, keeping them updated. They also maximize portfolio performance.

Use the built-in reporting tool for a deep dive into project data to see progress and measure performance. A portfolio status report is perfect for stakeholder presentations. If they have questions, the status report can be filtered to bring up just the information they’re interested in.

ProjectManager's portfolio management status report

9. Collaborate with Stakeholders

Collaboration means working together to increase productivity. This can be at the task level for teams, or on an executive level. Ideally, it’s practiced throughout every department in an organization.

Project portfolio managers have the tools they need to stay in touch with every project manager leading a project in your portfolio. Get in touch with anyone by tagging them in a comment. They’ll get an email notification. Alerts can be customized, so your inbox doesn’t get cluttered.

Task list in ProjectManager

Project Portfolio Management Tools

With software moving from the desktop to the cloud, project portfolio management grew more efficient and effective. Some of the features that serve portfolio managers are the following:

Project Portfolio Management Roles & Hierarchy

The following is a hierarchical listing of the team members involved in managing and executing a project portfolio.

  • Board Member: Members of the board are responsible for governing an organization and bear the legal responsibility for the organization. Their skills and experience help guide the organization to achieve its vision.
  • Project Portfolio Manager: This individual manages the plans, development and implementation of the portfolio, keeping in mind best practices to make sure that the portfolio is performing as expected and right what is preventing that.
  • Program Manager: Programs differ from portfolios in that all the projects collected under it are related. Therefore the program manager’s role is similar to that of the portfolio manager, coordinating the projects in the program to work together to achieve their shared objective.
  • Project Sponsor: This position is usually held by a manager or an executive who is tasked with being accountable for the project. They are the hub that connects the project to the business and those responsible for making large strategic decisions for the organization.
  • Project Owner: This person is the one who is usually working with the sponsor and is responsible for the project’s implementation. Therefore, they usually come from the business unit that is getting the final deliverable for the project.
  • Project Manager: They are responsible for the planning, scheduling, monitoring and reporting of a project. They also assemble and lead a team hired to execute the plan. They build the budget, manage resources, etc.
  • Project Coordinator: Working under the project manager, they take smaller tasks off the project manager’s desk to free them up for larger managerial responsibilities. Mostly, this means that the project coordinator is handling administrative duties.
  • Team Member: Hired because of skills and experience related to the project, these individuals are assigned tasks and oversee their completion. They meet regularly with the project coordinator or project manager, to whom they update their status.

Which Industries and Organizations Benefit from PPM?

Any industry that is working on multiple projects at the same time benefits from the discipline of project portfolio management. That’s a lot of industries and organizations.

Some of the industries and organizations that are reaping the rewards from using project portfolio management include:

  • IT
  • Computer software
  • Hospitals and healthcare
  • Construction, automotive
  • Nonprofit
  • Financial services and banking
  • Service and staffing recruiting
  • Insurance
  • Telecommunications
  • Government administration
  • and more!

Project Portfolio Management (PPM) Key Terms

The following is a mini-glossary of project portfolio terms that have been used in this guide.

  • Portfolio Management: Controlling a portfolio of projects to make sure they align with the overall strategic goals and objectives of an organization.
  • Program Management: Managing a portfolio of projects with the same aim as portfolio management, only the projects in the portfolio are all similar or related.
  • Project Management: Planning, executing, monitoring and reporting on one project, from start to finish, including controlling scope, costs and schedule.
  • Project Management Office (PMO): Group within an organization that’s tasked with maintaining standards for project management within that organization, often oversells portfolio and program management.
  • Change Control Management: Process to identify and successfully respond to change in a project or portfolio.
  • Portfolio Reporting: Creating charts, graphs and other reporting documentation to communicate progress and other portfolio metrics.
  • Risk Management: Identifying and resolving risk before it happens and after.
  • Resource Management: The process of allocating resources throughout the life cycle of the portfolio.
  • Pipeline Management: Making decisions for estimating and selecting which projects to fund that align with an organization’s strategy.
  • Financial Management: Understanding each project’s unique risk and using this knowledge to make decisions across the entire portfolio.

All these factors and more make it clear that project portfolio management is a methodology that can serve any organization with a portfolio of projects. And, with ProjectManager, you have the best PPM tool in the market to fully take advantage of all these business benefits.

Sign up for your free 30-day trial and start managing your portfolios better.

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