Project portfolio management (PPM) is a process used by project managers and project management offices (PMOs) to analyze the potential return when evaluating a project.
By organizing and consolidating data regarding proposed and current projects, project portfolio managers can forecast and provide analysis for companies looking to invest in new ventures. Project portfolio management gives organizations and managers the ability to see the big picture by bringing together all of the disparate elements of a potential project.
This information helps executives, stakeholders, and team members evaluate and analyze projects. By keeping everybody in the loop with reliable feedback, project portfolio management helps businesses with risk management and achieve strategic objectives.
Project Management Has Become a Cornerstone of Corporate Strategy
Project management helps create the baseline for how projects will be measured. An individual project can be assessed for return on investment. Multiple projects can be analyzed to determine high-level ROI and how a set of projects achieve company goals and objectives.
A study by the Association for Project Management (APM) and YouGov uncovered that 43% of the workforce in the UK is involved in projects. According to the study, more than 10% of the workforce is involved in active project management.
What Skills Are Required for Good Project Management?
Traditional skills remain vital to delivering projects on time, on budget and to the right standard, but good project managers (PMs) must now also be excellent communicators, leaders and mentors. PMs need to be consummate problem-solvers to keep projects on track and strong communicators across diverse sets of team members and contractors.
Here are the top 20 list of skills project managers need:
- Team management
- Budget management
- Time management
- Risk management
- Technical writing
- Active listening
- Technology capabilities
- Reporting skills
- Research skills
- Interpersonal skills
- Project management methodologies
- Policy knowledge
- Conflict management
Whether project managers are managing the execution or working on long-term project portfolio management to achieve company strategic goals, PMs also need a centralized management platform. Specialized project portfolio management software and project portfolio management tools (PPM tools) are needed to facilitate the PPM process.
What Are the Keys to Successful Project Management?
Besides having the skills to manage projects from start to finish, PMs must act as resource managers to balance workloads and keep everyone on track.
Before work on projects begins, project portfolio management (PPM) will focus on the goals and scope of the project. PMs will take into account every aspect of the project, including the management of resources, capacity planning, and reporting.
Once projects are underway, project managers keep the project on track, deal with problems or unforeseen situations that evolve, and prevent project creep.
Why Do a Large Number of Organization’s Projects Fail?
If you search online for project management statistics, you’ll find varying estimates on how many projects fail. Some say it’s as high as 50-75%. Other studies put the failure rate at 30% or more.
A survey at the PM Summit in Ireland reported that around 20% of projects failed. Regardless of how many projects actually fail, the fact is that many fail and it’s an expensive proposition. The average cost of failure in the study is estimated at €580,000 per project.
With the stakes so high, why do projects often fail?
Not Establishing Clear Objectives
Many projects fail before they even get started. Unfortunately, organizations often don’t realize the problems until they are well underway. Establishing a clear project scope with exacting clarity is crucial to success.
Even large companies with strong track records of producing can fall victim. Microsoft had a series of successful product launches but fell short when it came to Windows Vista. The launch had to be repeatedly delayed. Users found that much of the existing software they were using was incompatible with Vista.
Product engineers, it was later determined, were too focused on feature sets due and never delivered on the core objectives. Without clear objectives and defined milestones, deadlines were missed. After three years of development, Microsoft scrapped the project and started over.
Failure to Do Independent Analysis
Often, companies use internal experts to do their project management. That’s understandable, since they will be the most likely to have expertise in a particular area. However, when companies choose project proponents, bias can quickly creep into the equation. This can produce inaccurate estimates based on using overly optimistic projections and forecasts.
When AOL and Time Warner decided a merger of the two companies would produce money-savings synergies and expand their entertainment footprint, they moved ahead with a deal worth more than $180 billion in stock and debt. Within a year, realism set in and the combined entity was forced to take a $99 billion write-down.
Effective project portfolio management requires a ruthless attention to accuracy and guarding against bias and overly optimistic estimates. This is especially important with large projects, which typically have larger budgets and create more risk.
In start-ups, there’s a saying: “fail fast, fail cheap.” When projects fail quickly without significant cost, often the learnings from the project are valuable to generate the next iteration. With big projects, failure is neither fast nor cheap.
Failure to Anticipate True Costs
A classic example of how projects can go awry is the tale of Levi Straus. When the company decided it needed to update an antiquated IT infrastructure by migrating to a consolidated enterprise resource planning software, the company failed to take into consideration the impact of such a move.
The company had established a budget of $5 million to complete the project, but quickly ran into overruns. Walmart, a major customer, required that the new system to integrate seamlessly with its supply chain management system. Poor planning and internal controls left the company unable to fill some orders and temporarily shut down operations at distribution centres.
This seemingly simple $5 million project ballooned to an incredible $200 million loss. It’s the epitome of a “black swan” — a series of high-impact unexpected events that appear predictable in hindsight.
An analysis by Bent Flyvbjerg and Alexander Budzier of 1,471 projects published in the Harvard Business Review found the average overrun for technology projects was 27%.
Failure to Manage Scope Creep
When additional elements are introduced into projects once underway, it’s easy for scope creep to occur. This can occur for a variety of reasons, such as:
- Poor initial planning
- Lack of detailed scope
- Poor communication
- An inadequate change management process
Another common reason for scope creep is what’s called the “CEO special.” This is when C-level executives decide to introduce new items into a project that were not part of the portfolio project management risk assessment.
Despite 15 years of planning, the construction of the Berlin Brandenburg Airport ran more than a decade behind schedule with an overrun of €4 billion. Key stakeholders regularly introduced new elements into the design, which led to conflicts and delays.
Poor Resource Management
In large enterprises, multiple projects may be underway at any one time. Without a centralized way to manage projects, it’s common for resources to be deployed across multiple projects with conflicting results and causing delays in completion.
For example, a project may require new software code to be written by the development team by a specific date. The agreed date may be reasonable as long as no additional requirements are added or the team isn’t pulled off to handle other projects. When multiple projects need the same resources, however, deadlines get missed, projects can easily run behind schedule, and cost overruns can occur.
Lack of Communication
Many projects deemed as failures occur because of a lack of coordinated communication.
The Airbus 360 was designed to be the largest passenger plane ever built but was derailed due to a lack of communication by different design teams working on the project. When parts manufactured at different places were shipped to the assembly plant, many of them wouldn’t fit together properly.
Rather than working with a centralized platform and software, engineers were using different platforms which had slightly different sets of measurements.
Why You Need a Centralized PPM Solution
A centralized PPM solution is essential to make the right decisions about investments. By analyzing strategic and execution functionality, you can create more accurate and predictable outcomes.
The best PPM platform will:
- Provide strategic insight to deliver optimal resource management and value
- Scale to any size of a project or any number of projects
- Support governance by ensuring all key stakeholders have oversight with varying access levels
- Seamlessly integrate with all workflows, including contractors, on desktop or mobile
- Allow you to control every aspect of the project in one place, including scope, financials, quality, progress, and delivery
- A centralized data dashboard to visualize the health of your total portfolio while allowing you to drill down to any specific project or item
Cora PPM provides you with the strategic capabilities you need to optimize capacity. Cora PPM lets you analyze multiple scenarios, track benefits, and outcomes, and make sure your stakeholders are informed with the most up-to-date information.
By digitizing your projects and programs, you can increase productivity and make more informed decisions. Centralizing all of the project management across lifecycles can help you plan, prioritize, execute and evaluate your project portfolios in one place.
Contact the project management experts at Cora Systems today for a personalized demo.