Project Management

Project Portfolio Management

last edited by: Robert Adams on Sep 8, 2020 6:23 AM login/register to edit this page

1 Applications
   1.1 1) Project Portfolio Management
   1.2 2) Application Portfolio Management
   1.3 3) Enterprise Infrastructure Portfolio Management
2 Procedures
3 Instructions
   3.1 Definition
   3.2 Baselining
   3.3 Gathering
   3.4 Prioritizing
   3.5 Authorizing
   3.6 Scheduling
   3.7 Tracking
   3.8 Benefit Realization
4 Examples
5 References

A set of interrelated techniques and/or activities, undertaken to maximize project investment decisions. This includes project demand management, project ranking, portfolio balancing, enterprise resource planning and master scheduling. To successfully implement enterprise portfolio management, an organization must embrace transparency, be forthcoming and honest in investment analysis and possess competent managers responsible for projects, on-going operations and assets.

From a project point of view it is important to highlight the difference between a Program and a Portfolio. The main difference being that a program generally deals with related projects and a portfolio deals with unrelated projects.

Project Portfolio Management is a sub-process within Enterprise Portfolio Management and shares many of the same techniques.


In any enterprise Portfolio analysis is done either to select the best initiatives for funding or compare health of similar projects or to manage existing applications and decide which one should be continued with or to manage the IT assets and their performance. Applications of Portfolio Management can be categorized in 3 buckets:

1) Project Portfolio Management

The purpose of this category is to:

  • Manage new initiatives or projects currently underway
  • Monitor activity and resource information
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  • Select best project for sponsorship
  • Elimination of redundancy
  • Better resource utilization
  • Real-time business value metrics

2) Application Portfolio Management

The purpose in this category is to:

  • Inventory existing applications and tie them to various business processes applicable to an organization
  • Deliver management intelligence about applications
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  • Better alignment of maintenance and renewal decisions with business goals
  • Disaster recovery and business continuity planning

3) Enterprise Infrastructure Portfolio Management

The purpose in this category is to:

  • Manage IT assets
  • Deliver system performance information
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  • Better license compliance
  • Better maintenance and replacement requirements for improved utilization


For carrying out any of the above mentioned portfolio analysis, typically the following procedures would be carried out:

  1. Identify the projects or initiatives -- to determine which efforts are projects or programs (vs. operational work or minor changes).
  2. Identify Portfolio Parameters and their scoring criteria
  3. Distribute these parameters under various categories
  4. Develop Portfolio Prioritization Template using these parameters -- it will help to adjust Project Portfolio based on target mix, performance and current business directions (Portfolio Balancing).
  5. Identify Portfolio Analysis team
  6. Identify various maps that you want to build that will give you the results of the portfolio analysis
  7. Portfolio analysis and scoring in various analysis cycles.
  8. Prioritize projects (based on (Strategic Alignment)).
  9. Identify work efforts (Demand Management).
  10. For Application & Infrastructure Portfolio analysis, the team also needs to capture the right metrics that would be used in tandem with the portfolio parameters for analysis.
  11. Creation software from for the analysis of works (Qulix Systems)


We have established why Project Portfolio Management is so important; now we will define the steps needed to create the successful PPM process for your company. Project portfolio management is a repeatable process for defining, gathering, prioritizing/planning, selecting/authorizing, scheduling, and tracking work as a portfolio. You cannot start the planning portion of the process without first understanding and prioritizing in key areas.

  1. You need to define the nature and scope of the work you want to manage as a portfolio. What is your true business?
  2. You must gain agreement on what is important to your organization so you have the context to make work prioritization and balancing decisions.
The main sections of the project portfolio management process are:


The definition step is where you define the terms and scope of your portfolios, and gain agreement on your basic portfolio model. For instance, you need to define information like:

  • The organizations covered. Will you include the entire company or just certain divisions or departments?
  • The type of work included. Does your portfolio include projects, support, operations, maintenance, etc.?
  • The categorization schema. How you categorize your portfolio elements helps you balance your portfolio so you can optimize the overall allocation of resources. For instance, categories could include work supporting the business, growing the business, and leading the business or global versus local.
  • Financial Index. You may want to prioritize projects based on ROI, NPV, Payback, or a combination of factors.
  • Risk Index. You can categorize work as high, medium and low-risk or you can actually provide a value to your risk exposure determined by Impact and Probability.
  • Strategic Alignment. You want to make sure you choose projects aligned to your goals and strategies.
  • Technology Index. If this is a technology project, you may want to score the project on old, current, or future technology. It will be up to the scoring organization if future technology is good or bad. It may bring more risk on the projects than known technology.
  • Patient/Customer/Employee Satisfaction or Safety. Other criteria may include patient/employee/customer safety or satisfaction.
  • Funding Source. You may categorize your efforts by Internal/External Discretionary/Non-Discretionary, Capital Expense/Operating Expense, or other factors such as process improvement, training, or leadership work.
No matter what you use for prioritization and selection, your organization will need to understand the elements to make sure all projects are justified using the same criteria.

Though the Definition step may be a lengthy process, agreement on the selection criteria is critical. As your portfolio management process matures, you will revisit and revalidate the definitions you have established since changes in emphasis will occur over time. For instance, in the first year, you may decide to include only project work in the portfolio. In the second year, you may decide to include all other work categories as well and may result in changes to your categorization scheme.


You cannot make decisions on prioritizing work without knowing what the company or organization feels is important. Baselining starts with evaluating your environment through a Baseline Assessment and comparing it with the vision you have for the future. The process culminates with the validation (or creation) of your mission, vision, strategy, goals and objectives. Your strategy and goals will provide the high-level direction for alignment and prioritization of all the work for the coming business cycle.

The Baselining step can be very lengthy, but at the same time, very valuable. The Assessment may take a long time to complete but will provide you with a way to compare future changes and achievements to a starting point. For instance, your strategy and goals may change slightly to put new emphasis in a couple different areas and your Baseline Assessment may need to be reviewed and updated.


Listing is where all of the potential work is surfaced for the coming year. The criteria agreed on in the Defining step should be applied to all projects at this point and each request needs a completed Value Proposition or Concept document describing the work and the value it will provide to the organization.


One of the key assumptions is there is much more work requested than the organization can execute in one year. A prioritization process is crucial to ensure your organization is doing the right work. You may initially prioritize within a business unit or department to determine if you have the capacity to accomplish the project. If you pass this hurdle, a more detailed Business Case or other criteria may be created for a more in-depth analysis. The new criteria are then prioritized between all business units to come up with the final list of prioritized work. This process is easily described, but hard to accomplish because of the need for collaboration and consensus among senior managers, Executive Steering Committee, or Governance Committee. As a recommendation, it is better to prioritize defining all management components from the strategic ones to the operational (for example defining first the vision and then the strategic objectives and the program goals and project scopes). This can make the prioritization process more organized and logic.


When the prioritization is complete, the top projects will need to be authorized. With this step, you set aside a portion of the company budget and resources needed to complete the work. This is not a guarantee the work will be funded as changes in business conditions or newly surfaced work could bump some authorized work off the approved list; however, authorized work will be scheduled and executed in the coming year.


Scheduling is the process of actually scheduling and executing the work throughout the year. In the Scheduling step, managers and project manager build schedules to start and complete as much of the approved work as possible. Operations and support staff are in place at the start of the year and will be in place all year. Projects and leadership initiatives, however, need to be scheduled throughout the year based on business urgency and available staff. Capacity planning is a key tool used during this step in order to have the staff on hand when needed for project planning and execution.


Any new projects appearing throughout the year should go the same steps outlined above and should be gathered, prioritized, authorized objectively on par with current work. If new work is authorized, it may mean some work previously authorized will need to be canceled or delayed.

Tracking includes keeping track of completed project metrics and costs and the comparison of future work to ensure all work is scheduled appropriately based on business priorities and available staff.

Benefit Realization

The success of future portfolio resides in how well we can execute the current portfolio. The measurement of this happens via the Benefit Management process. This is a continuous process which monitors the projects/ programs within the portfolio to ensure they all add value to the overall organizational strategy. Once the projects/ programs are completed the expected benefits is compared with actual. The end result should then be fed into the Portfolio Management process to ensure that the right projects are selected.


Peruvian Government has developed a system to improve participation of populations to select project management software for a City Council or a Regional Government (similar to an American State). The legislation promotes selection processes but the strategic alignment is still not defined. Further information in Spanish can be found at


uProject Portfolio Management - A view from the management trenches/ubr The EPMC; 2009br ISBN: 978-0-470-50536-6 br

Associations supporting Project Portfolio Management:

last edited by: Robert Adams on Sep 8, 2020 6:23 AM login/register to edit this page

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