Managing project portfolios
Project portfolio management is the task, the relevance of which has considerably increased in recent years. In my opinion it is connected with a number of circumstances.
Firstly, increased investment activity of operating companies around the world has high requirements for the selection of projects to be included in the portfolio.
Secondly, the growth of investment activity in some sectors of the economy creates a need for a tool for project selection that correspond the chosen development strategy and promotes the growth of the competitiveness of companies.
Thirdly, new ideas and approaches are emerging that require the generalization and development.
Studying management of project portfolio is impossible not to touch the definition of the term. Project portfolio is a collection of projects to be managed concurrently under a single umbrella; each project may be related to or independent of each other, share same strategic objectives and the same scarce resources. (Lecture: Martinsuo 5 Sep, 2013). And according to PMI another definition of project portfolio is a collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives.
This implies that the projects or portfolio may not necessarily be interdependent or directly related, i.e., they may represent individual independent, just going at the same time unit. In particular, portfolio management is one of the key challenges in managing projects.
After getting acquainted with a case during group work, course material readings, in terms of commercial and technical criteria success is the main ultimate goal of company and the most difficult task as a whole. To date, the project portfolio management - a comprehensive concept, which includes a number of key issues which solution is provided by technology portfolio management.
One of the first challenges faced by managers is the problem of lack of resources such as labor, material, and financial. Actually, this problem occurs even while operating one project, as the availability of resources will affect the key characteristics of the project duration, cost and quality. Lack of resources can make to suspend or terminate the execution of the projects, may appear overload of project managers. Therefore, it is vitally necessary to each company dealing with a project portfolios to efficiency allocate (correctly appoint or align) resources.
Speaking about the new level of development project management should not be allowed to drift in the hope that the project managers do all the work, because their work will depend on the future of the company. In this case, it is arised the problem of establishing priorities on the basis of which will be allocated resources across projects. In the simplest case, this technology allocates resources to projects with the highest priority, and those projects that have a lack of the resources are suspended.
But even in the case of successful establishment of priorities, limited resources are not enough, so it is arised a problem of the projects selection to form a "proper portfolio." This problem itself is quite complicated, because in addition to cost-effectiveness of individual projects, it is necessary also to take into account conformity of projects to chosen strategy. Therefore, one of the prerequisites for the implementation of project portfolio management is availability of strategic vision in the company: mission, objectives and strategies. Besides having a strategy the involvement of top management and skills of project teams is also requires. Also, the formation of a proper balance between the strategic and tactical goals of the company is a difficult and very important task for the formation of a "proper portfolio."
The next problem of portfolio management is to assess the risk. After all, if we will make a more efficient portfolio from an economic point of view that would be perfect implement strategies of the company, but it would possess an unacceptable risk to the company, there is an objective needs to find less efficient portfolio, but with an acceptable risk for the company. If the company does not take into account this fact, it is incurred to a high risk.
As I summarize, when a company takes into account all the above mentioned factors, the task of determining and managing to complexities becomes easier and uncertainty fills by clarity of understanding. In addition, in order to implement successfully project portfolio it is practically enough to select the “right things to do” and “doing things right” (Miia Martinsuo (2011). Uncertainty and complexity in the management of project business, page 74).