Portfolio management is a growth-oriented function that drives continuous improvement in a business by leveraging project managerial frameworks, processes, and controls. Within a company’s portfolio of projects, portfolio management is the process that optimizes and measures Return on Investment (ROI) through strategic project selection and helps develop a roadmap that supports the goals of a strategic vision.
The role of program management is to tie together vision with results and drive continuous improvement throughout the organization at a regular cadence. A solid portfolio management strategy helps ensure projects are selected with key business considerations in mind. Otherwise, more informal processes may result in the misuse of capital.
There are four main activities that a portfolio management function performs: Program Strategy, roadmap development, ongoing risk management and regular reassessment of value. Developing a portfolio of projects that advance a business’s goals is key to driving success and growth.
Program Strategy
When thinking about planning projects, the origination starts with defining business growth goals. These are used for benchmarking where one is versus where one wants to be in terms of one’s operational model and the development and transformation of one’s functional capabilities.
Roadmap Development
Once current state measurement and future state goals are defined and targeted, a portfolio roadmap can be developed through project ideation, prioritization and selection of “right-sized” projects. This part of portfolio management enables decisions of where to invest time, money, and effort for optimal returns. This ensures efficient dispersion and utilization of resources.
Once decisions are made and a roadmap is aligned, projects are handed off to project managers to initiate and execute.
Risk Management
Measuring and tracking risks in a portfolio are essential to finding trends in successful or unsuccessful management across a score of projects. Risks are defined as bottlenecks, challenges and pain points that appear in the process and which must be mitigated before they escalate to a real issue. By identifying commonalities of project misses and challenges, the portfolio can roll out improved procedures and processes to help reduce risk for projects on a go-forward basis.
Portfolio Performance Assessment
As the series of projects gets executed, it is important to have regular review sessions on overall portfolio health indicators to be proactive in managing the returns and risks associated with each project. It is important to measure collective progress on projects, as well as the outcomes they yield.
In conclusion, portfolio management facilitates a comprehensive understanding of projects before decision-making, empowering businesses to make informed and educated choices. This aspect is instrumental in avoiding costly mistakes. By aligning strategies, optimizing resources, managing risks and fostering adaptability, portfolio management is a guiding force for businesses, regardless of their size or sector. Embracing this practice ensures that organizations not only survive but thrive in today’s dynamic and competitive business landscape.
Authors: Griffin McDermott | [email protected], and Kim Gordon, MAcc, Senior Consultant | [email protected]
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