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7 min read

Project portfolio management: Tips, benefits, and tools

Tips, benefits, and tools for reducing risk and optimizing your project portfolio management.
From Team '23

Tempo Team

Managing a single complex project is a challenging task. Handling multiple projects, aka project portfolio management (PPM), is an entirely different beast. It’s a juggling act that requires careful coordination, the right tools, and a well-oiled process.

Here, we’ll explore project portfolio management, sharing the tools you need in your toolkit and some best practices to help you become an expert portfolio manager.

What is project portfolio management?

Portfolio project management requires you to strategically manage a collection of projects as a single portfolio that aligns with your business goals. Think of it as conducting an orchestra, where each project plays its part in harmony with the others to create a symphony of success.

Without proper guidance, a project can spin out of control and take down your business. According to the Project Management Institute, project-focused organizations lose an average of $109 million for every $1 billion spent on projects. A top-down perspective affords decision-makers better visibility into the areas where projects overlap and connect.

Here are the essential components of project portfolio management:

  • Strategic alignment

  • Governance

  • Prioritization

  • Risk management

  • Resource allocation

These components are interdependent. Together, they help you achieve your objectives by making informed decisions, prioritizing effectively, managing potential risks, aligning project leaders with strategic goals, and using resources efficiently.

So, where does your role as a project portfolio manager come into play? You must lead, allocate resources, guide your team through uncertainties, and steer toward success.

The 5 steps of project portfolio management

PPM doesn’t have to be an uphill battle, even if your workplace regularly juggles multiple risky, asset-intensive projects that require organization-wide collaboration. Here’s how to get started on the right foot:

1. Identify the objectives

The first step is deciding what success means – which outcomes are most important and which can play a background role. If you’re committed to rebranding by the end of the year, refreshing the website may take priority over launching a new product.

2. Manage ideas

Now, it’s time to measure project ideas against your objectives. Gather and track ideas from many sources in a document or database. Include estimates of expenses, time, and risk.

3. Select the best projects

A portfolio project manager is responsible for picking the best projects. Now that you have gathered ideas, project selection can begin. This is where you compare risks and resource requirements while estimating return on investment. 

4. Validate the proposed projects

Before initiating top-tier projects, gather precise data. Assess whether project managers might compete for resources like labor or equipment. Your purchasing department may know if a component has long lead times, so ensure they’re involved early.

5. Manage and monitor the portfolio

Portfolio accounting asks you to continuously ensure projects are adding value. You’ll forecast revenue, make investment decisions, and prevent loss by scaling back efforts or resources. If something no longer aligns with the portfolio and needs to be put on hold, making the call early alleviates a lot of frustration.

Benefits of project portfolio management

So, why should you bother with project portfolio management? It’s all about the benefits. And trust us, there are plenty.

When managing projects, a strategic approach helps you understand if initiatives work harmoniously toward your organizational goals. Portfolio management also enables you to optimize resource allocation.

Using a project portfolio management tool further highlights the advantages of PPM. Think about a PPM tool like a road map that keeps you on track throughout your journey. These solutions give managers better visibility and control of project pipelines, tasks, teams, scheduling, and analytics. Big players with large teams can ensure they’re investing resources in the right projects, whereas small organizations can make the most of what they’ve got.

The result? The ability to make more informed decisions and maximize your ROI. Every entrepreneur’s dream, right?

Tools for effective project portfolio management

Managing a complex project portfolio is no small task. Fortunately, various tools can help you manage risk in your project portfolio and enhance decision-making.

You need a tool with reporting capabilities, collaboration features, integrations with other software, resource management functions, project tracking, and an intuitive user interface. Some industry-specific tools cater to a sector’s unique needs and requirements, but most PPM software is flexible and adaptable. You can tailor it to your unique projects and processes.

Here are a few examples:

Portfolio Manager

PPM often feels like a juggling act as you strive to meet various resource requirements and deadlines without dropping a ball. That’s where Portfolio Manager can help. It’s the only project management solution that dynamically adapts to change and manages uncertainty so your team can plan, predict, and achieve desired outcomes.

Portfolio Manager’s predictive scheduling engine considers team availability, work estimates, and priority across your portfolio, showing what’s possible and forecasting when tasks and projects will reach completion. You get a bird’s eye view of all ongoing activities, so you can easily prioritize tasks. With real-time data available at your fingertips, you can optimize your team’s capacity and consistently deliver high-quality work on time.

Stakeholders always want to know when the project will finish. Thanks to Portfolio Manager’s sophisticated Monte Carlo simulations, you can quickly see the expected start and finish dates calculated in real time. 

Try it out for yourself with a free trial.

Zeda

Customer feedback plays a crucial role in determining project priorities within a portfolio. You can identify recurring themes, requests, and pain points. These insights help you and your stakeholders prioritize projects that align with customer needs.

If you’re struggling to prioritize projects in your portfolio, Zeda can assist. Uncover the problems customers care about and decide what to build next with AI-enhanced product insights and simple integrations with your existing tech stack. You’ll unlock vital information for future projects and drive successful outcomes that please your customers and improve your bottom line.

Tempo Timesheets

Time tracking is a vital metric for assessing project health. It helps track other key performance indicators (KPIs), such as project progress, task completion rates, and overall project efficiency. By analyzing time-tracking data, you identify risks, proactively address bottlenecks, and keep projects on track.

Multiple clock-in and clock-out apps accurately track working hours, but Tempo makes the top of the automated time-tracking list. Features include automated time-tracking suggestions and integrations with popular tools, including Google Calendar and Slack.

Say goodbye to wasted time. Tempo will give you an accurate understanding of time investment across teams, projects, and initiatives.

Best practices in project portfolio management

These tips will help you make the most of your PPM efforts:

Strategic alignment with your business objectives

Managing projects is like a puzzle. Each project must fit perfectly to contribute to the bigger picture of success.

What are you trying to achieve? Are you bringing a new product to market or doubling down on marketing existing products? Once you have some answers, assess whether your portfolio of projects contributes to your objectives. If any project doesn’t align, you may want to rethink it.

Prioritize projects with the most value

Use a simple scoring system to prioritize the many projects begging for your attention. Score each project based on potential impact, resource requirement, risk, and contribution to the goal. The projects with the highest scores get top priority.

Some project management software solutions, like Portfolio Manager, have priority-based planning built in so you can drag and drop to update your portfolio.

Diversify projects to balance risk and return

Like a well-balanced financial portfolio, your project portfolio needs diversity to balance risk and return. Assess each project using risk management – a data-driven analysis of current and future projects’ dangers and potential failures within a portfolio.

Include high-risk, high-reward projects, but hedge them with safer bets to maintain a healthy equilibrium. The safe bets ensure stability, while the high-risk projects bring the most fruitful return opportunities.

Establish clear roles, responsibilities, and decision-making processes

Define who does what, when, and how. Ensure everyone knows their role and responsibilities from the start. Regular check-ins keep everyone on track and create a culture where everyone feels comfortable raising issues and suggestions.

Conduct regular portfolio reviews

Regular reviews help you spot hiccups, make adjustments, and guarantee progress. Use management tools like Structure PPM to manage projects efficiently.

Schedule portfolio reviews regularly to keep it running smoothly. Use change management techniques to build flexibility into the portfolio.

Manage expectations and foster collaboration

Stakeholders are invested in your projects, so keeping them engaged is crucial. You must manage expectations, foster collaboration, and keep everyone on the same page.

Be proactive with communication. Regularly update stakeholders on progress, successes, and challenges. Leverage dashboards with key project health metrics like capacity, resource allocation, and timelines. Don’t forget to invite input and feedback; it makes people feel involved and provides valuable insights.

Wrapping up

Managing a portfolio of projects can be challenging, but with the right strategies and tools, you can navigate uncertainty and deliver exceptional results. If you’re overwhelmed, break down your portfolio into manageable components to help you establish clear goals and prioritize tasks. And never underestimate the power of project portfolio management software. Portfolio Manager can do the heavy lifting for you.

Investing in the right tools will help you hit more deadlines, reduce team burnout, and boost your bottom line.