Managing multiple projects at once or determining which new ones to pursue can be challenging if you run a business. This is where project portfolio management (PPM) can help. PPM is a systematic approach to choosing and overseeing projects that provide value and maximize benefits for the company. It involves an assessment of the entire project budget, weighing the risks against the returns, and determining the expected turnover time to decide which projects are a priority for the business to pursue.
If you want to enlist the help of a project portfolio manager for your business but are still trying to decide, then continue reading this article to learn about the three most significant benefits of PPM to a company.
1. Improved Project Selection Process
When businesses have too many projects in their portfolio, prioritization can be better with well-defined selection criteria. It can take time to determine which ones would be the most profitable or which ones to undertake first, according to available resources. This can lead to a high project failure rate. Then, companies undertake many smaller projects to compensate for lost resources. It increases the number of low-impact projects a company is working on, making project management complex, and the projects start losing alignment with long and short-term business goals, increasing the project failure rate.
Project portfolio management helps establish a well-defined framework for assessing projects based on their adherence to business goals, time and money required, and other criteria and prioritize tasks accordingly. PPM uses various techniques like ranking methods and scoring models to evaluate the benefit of a project to the company and select only those that deliver maximum value.
2. Risk Mitigation
Every project comes with a certain amount of risk that can lead to financial losses, inevitable delays, and compromised project delivery. PPM can help mitigate this risk in several ways. It uses techniques like SWOT analysis and AI algorithms to identify potential risks across the entire portfolio and assess their likelihood and impact. Based on the risk assessment, PPM helps you develop contingency plans for different scenarios and guides you in allocating resources effectively to mitigate risks.
Portfolio managers continuously monitor the situation and track the effectiveness of implemented mitigation strategies. The portfolio is adjusted based on real-time data, e.g., postponing non-essential projects if needed.
3. Greater Return on Investment (ROI)
With PPM strategies, investments are more likely to pay off and generate greater profits. It can help reduce resourcing costs, predict shortfalls, and get cost-effective global resources. Portfolio management solutions allow businesses to recognize the best investment opportunities and efficiently manage them.
PPM ensures you prioritize projects that directly contribute to your organization’s strategic goals and don’t invest in initiatives that don’t deliver tangible results. It can lead to more optimal resource allocation, ensuring resources like staffing, budget, and technology are allocated to projects based on the strategic value of each project and not wasted on low-impact endeavors. PPM also leads to higher completion rates, on-time delivery, and improved work productivity, quality, and project success rates.
Endnote
Though businesses often manage several projects simultaneously to maximize profits, deciding which project requires the most resources, like time, money, effort, and workforce, can be challenging. In this case, PPM can help businesses quickly prioritize projects by assessing which ones will offer maximal value to the company at the time.
Project portfolio managers establish detailed selection criteria based on the potential risks and the available resources to make well-informed decisions about the projects to pursue. PPM strategies also help mitigate the potential risks involved, maximize the returns on investment, and ensure that the business is well on its way to achieving its financial and operational goals.
