What is project portfolio management (ppm)?

Project Portfolio Management (PPM) is a management process designed to help an organization provide and view information about all its projects, then sort and prioritize them according to certain criteria, such as strategic value, impact on resources, costs, etc. The objectives of PPM are similar to the objectives of financial portfolio management: 1) to be aware of all individual listings in the portfolio, 2) to be develops a “big picture” and a deeper understanding of the whole, 3) to enable thoughtful sorting, adding and removing items from the collection, according to their costs, profits and compliance with long-term strategies or goals, 4) to enable the portfolio owner to get the best possible from invested resources.

Typically, PPM begins with the organizational development of an inventory (comprehensive list) of all its projects, with enough descriptive information about each to be analyzed and compared. This descriptive info may include project name, estimated duration, estimated costs,
business goal, how the project supports the general strategy of the company, etc. This is sometimes collected in an electronic database, so that it can be more easily analyzed and compared.

Once the project inventory is made, the PPM process requires department heads or other unit leaders to review all projects and prioritize, in accordance with established criteria. The overall list of projects is then reviewed with the aim of making a well-balanced list of supported projects. Some projects will be given high priority and broad support, some will be given medium priority, while others will be stopped or completely removed from the list.

Finally, the project portfolio is regularly re-evaluated by the portfolio management team (monthly, quarterly, etc.) to determine which projects meet their objectives, which need broader support, or which should be narrowed or eliminated altogether. Because the circumstances surrounding each project and business environment can change quickly, PPM is most effective when the team frequently reviews the portfolio and actively manages it.

In order for these PPM activities to begin, the organization must first decide who will be the active PPM process managers. Typically, the PPM management team is composed of department heads from sub-organizations that generate project requirements, provide project resources (especially team members), provide project financing, use completed project items, set strategic directions, and the like. Once the PPM management team is formed, it is a must
agree on a set of criteria for evaluating projects, so that it can prioritize them. Decisions based on these criteria are likely to be more acceptable to everyone in the organization, if the criteria are developed with the participation of as many stakeholders from different sub-organizations as possible. Usually, discussions about these criteria are conducted widely throughout the organization, before they are finalized.