What is Project Portfolio Management? 7 Steps to Success

1. Define Strategic Business Objectives

Strategic objectives are like a roadmap, ensuring every project supports the big-picture goals of your organization.

When focusing on these, you get a clear direction for selecting and prioritizing projects – no more wasted resources on initiatives that don’t align with your vision.

Wondering how to make these objectives actionable?

Start by asking: Are our goals clear and measurable?

Gather key stakeholders for a workshop to nail down specific, strategic objectives. Then, create a statement for each goal with concrete targets and timelines.

Also, remember, it’s not a “set it and forget it” process. Review these objectives regularly to keep them relevant as the market evolves.

2. Inventory Current and Proposed Projects

Imagine you’re managing several projects across different teams, but things feel scattered, some projects overlap, and others seem to lack focus. This is where a comprehensive project inventory can be a game-changer.

For example, say you have three different teams working on marketing initiatives. By using an inventory, you might spot that two projects are targeting the same customer segment, creating unnecessary overlap.

With everything organized in one place, it’s much easier to decide where resources are best allocated and avoid duplicating efforts.

Ready to set one up? Start with a standardized project proposal template so all project details are easy to compare. Use project management software to keep everything centralized as well as easy to access, and conduct regular audits to ensure your inventory is always up-to-date.

3. Evaluate and Categorize Projects

Evaluating and categorizing projects can give you a clear picture of each project’s value, nature, and risk. It’s like creating a guide to help you decide which initiatives to focus on, ensuring you’re investing in projects that truly make a difference.

Here’s how to make evaluation and categorization work for you:

Develop a scoring system

• Score projects based on key factors like strategic fit, financial return, and risk level.
• It helps you objectively compare projects, making it easier to see which ones bring the most value.

Create clear project categories

• Group projects into categories that align with your organization’s goals—like “high ROI,” “long-term growth,” or “risk mitigation.”
• These categories will help you balance your portfolio and allocate resources smartly.

Bring in cross-functional perspectives

• Involve team members from different departments in the evaluation process.
• Diverse insights will help you catch risks, spot opportunities, and make more well-rounded decisions.

4. Prioritize Projects

Suppose your team is juggling projects in marketing, product development, and customer experience. By creating a ranked list of projects, you can see which ones align most closely with your strategic goals.

Maybe a new product launch ranks higher than a website update because it promises a bigger return on investment. Prioritization gives you a clear view of where to focus first.

But, how do you choose?

Use a weighted scoring model

• Assign scores based on factors like strategic alignment, expected return, and urgency. This way, the projects with the greatest potential impact rise to the top.

Run scenario analyses

• Test out different prioritization approaches to see how they might affect your project outcomes.

Adjust priorities regularly

• Keep in mind that priorities shift. Revisit your list regularly to stay aligned with changing business needs and goals.

5. Balance the Portfolio

Portfolio balancing is all about creating a well-rounded mix of projects, with varied types, risks, and timelines. This approach helps organizations stay stable while still pushing for growth and innovation.

By balancing the portfolio, you can keep things running smoothly without overextending resources as well as ensure your projects align with both immediate needs and long-term goals.

For example, using visual tools like bubble charts makes it easier to see where each project stands and spot any imbalances—say, too many high-risk projects at once.

Setting target allocations for different project types, like innovation projects versus process improvements, helps keep resources spread out wisely.

By using a “rolling wave” approach to adjust the mix periodically, you can adapt to changing needs and keep the portfolio on track for maximum impact.

6. Implement Governance and Control

Governance and control mechanisms ensure decisions are consistent, resources are used effectively, while everything stays aligned with your organization’s strategy.

To keep things on track, schedule regular portfolio review meetings where you can evaluate project updates, address risks, and make timely decisions.

Using standardized reporting during these meetings ensures everyone’s on the same page, making decision-making smoother and more effective.

With governance in place, managing the project portfolio becomes a well-organized process that keeps projects aligned and accountable.

7. Monitor and Adjust

Continuous monitoring and adjustment keep your project portfolio aligned with shifting priorities as well as market changes. By regularly tracking performance, you can catch issues early and adjust as needed, ensuring your resources are working toward the most valuable outcomes.

Here’s how to make monitoring and adjustment work for your portfolio:

Set up a real-time dashboard

• Use a dashboard to get an instant view of key metrics and project statuses.
• This visibility lets you quickly spot areas that need attention or adjustments.

Schedule quarterly health checks

• Conduct regular reviews to see how the portfolio is performing overall.
• Check for alignment with strategic goals and adjust project priorities if necessary.

Establish a clear process for project termination or resource reallocation

• Create guidelines to identify when a project is underperforming.
• Having a formal process ensures that resources can be redirected efficiently to higher-value projects.

The Best Tools for Project Portfolio Management

Choosing the right tools for project portfolio management is essential to streamline processes. These tools empower organizations to plan and monitor projects effectively, driving overall portfolio success.