Project portfolio management is the central management of all projects in an organization in order to achieve strategic goals. It therefore encompasses the maintenance and management of the entire project world within an organization, both internal and external projects. In the project management context, it is abbreviated as portfolio management or by the acronym PPM. Usually, project portfolio management is the responsibility of the Project Management Office (PMO), specifically the project portfolio manager.

The portfolio consists of the totality of all programs and projects of an organizational unit. Thus, it contains a collection of projects, but they do not necessarily have to pursue the same or similar goals. Projects within the project portfolio can even compete with each other. A collection of projects that pursue the same substantive goal is called a program.

A portfolio therefore consists of programs and individual projects. Portfolio management comprises the continuous planning, prioritization, overarching control and accompanying controlling of all projects in an organization.

The term and the concept of project portfolio management have been spreading since 2008 due to the publication of the "Standard for Portfolio Management" by the PMI (Project Management Institute). In the German-speaking world, it has since displaced the term "strategic multi-project management", which had been in use until then. Project portfolio management has been anchored in the German DIN 69909 standard since 2013. The standard is entitled "Multi-project management - Management of project portfolios, programs and projects". Described there are. The DIN standard describes the fundamentals, process models, methods and roles of project portfolio management.

The core objective of project portfolio management is to maximize the benefits from the projects carried out by the company. To this end, it must ensure that those projects and programs are selected and executed that are most likely to contribute to the company's strategic goals.

Therefore, the most important tasks of project portfolio management and the portfolio manager include:

• Evaluating and prioritizing project proposals (based on opportunities, risks and their strategic importance to the company).

• Approving and rejecting project proposals on the basis of objective data

• Identifying dependencies between (planned and ongoing) projects

• Grouping of projects into portfolios

• Hierarchization of portfolios

• Controlling of ongoing projects

• Coordination of ongoing projects and identification of synergies and conflicts

• Mitigation of risks across projects

• Cross-project resource planning

• Evaluation of completed projects and securing of experience values for follow-up projects

• Definition and initialization of new projects that contribute to the company's objectives

Thus, to achieve the goal of portfolio management, the portfolio manager must identify the projects that will make the greatest contribution to meeting the company's goals. However, since a company has limited resources (budgets and employees), an optimal mix of (external) customer projects and internal projects must be found so that the right projects are carried out at the right time with the available resources. Thus, project portfolio management ensures the profitability and security of an organization's overall project work.

With the help of project portfolio management, you get a real-time, holistic overview of the state and status of:

• Project groups/programs
• Resources
• Dependencies

Effective PPM benefits your project work and your business in five key ways:

A seven-step strategy has proven effective for performing project portfolio management tasks.

1. project worthiness analysis

Not every project is a project, because many tasks can be handled more sensibly within the framework of line activities. The task of the project worthiness analysis is to define which project should actually be treated as a project and thus included in the project portfolio. Furthermore, a categorization can be made within the scope of the analysis, for example into small, normal or large project. The criteria according to which you carry out your project worthiness analysis depend on your individual requirements.

Possible criteria:

• Legal requirements
• Investment level
• Complexity of content
• Quality risk
• External impact
• Resources required
• Number of divisions involved
• Strategic relevance
• Duration

2. project initiation

The project portfolio manager's task is to include all internal and externally requested projects in the portfolio selection. Therefore, establish a standardized system for recording ideas and project proposals. You should also establish an approval process with defined workflows, checklists, authorizations and evaluation criteria. In this way, you can ensure adequate planning quality for new projects.

In doing so, it is important to consider the following questions:

• How should project ideas be submitted?
• What criteria should be used to evaluate the ideas?
• What does the approval process look like?
• Who is authorized to approve or reject ideas?
• What tools are available for evaluation?

3. prioritization

In project proposals, you define the strategic relevance of the project for the company. This relevance is the basis for prioritizing various projects and programs within the project portfolio. You should determine the factors for evaluating strategic importance globally. Such factors are, for example:

Not only should you evaluate new project ideas, but you should also record and properly categorize ongoing projects according to the same criteria of strategic importance. This is the only way to ensure that the most effort goes into the most important projects. In the course of this, you will also recognize projects that would be better terminated immediately in order to free up resources for new and more significant projects.

5. rough planning

Evaluate current projects in terms of available residual capacity and residual budget to determine when new high strategy contribution projects can be launched. This requires rough planning of effort and costs including capacity planning of each new project.

6. controlling

At the same time, of course, it is important to keep a permanent eye on all ongoing projects and to monitor the portfolio. Only on the basis of current data can you identify where planning changes are taking place, where increased resource requirements or time delays are to be expected. Such events require the earliest possible action and also determine when new projects can be scheduled. On the other hand, if the strategic direction of the company changes, you must adjust and reweight the evaluation criteria of all current and planned projects accordingly. Regular portfolio meetings, conducted by the PMO, are useful at this point.

7. project final evaluation

Every project should go through a clearly defined closing process that includes a final project evaluation including a target/actual comparison of costs and results. It is important to take time to record the lessons learned and to make the experience, knowledge and results gained usable and retrievable for future projects. The project management office and portfolio manager are also responsible for this.

A program consists of several individual projects that contribute to a common goal. Like a project, a program is always limited in time. Program management comprises the initiation, planning, management and controlling of the projects within such a program and is therefore also limited to the duration of the projects concerned.

Project portfolio management, on the other hand, is not limited in time. It is constantly aimed at promoting synergies between different projects, mitigating risks, minimizing conflicts and thus continuously optimizing the entire project operation economically in the long term. Hierarchically, project portfolio management is thus one level above program management.

Multi-project management comprises the initiation, planning, management and controlling of several projects. These projects do not belong to one program - they can therefore pursue different goals in terms of content. The aim of multi-project management is thus to balance out the conflicts between these different individual projects in terms of resources and objectives. In this way, multi-project management establishes a link between the management level and the project level of an organization.

In contrast to project portfolio management, multi-project management does not have to concern itself primarily with the implementation of projects in terms of a company's overall medium- and long-term strategy. Instead, the focus is on coordinating and controlling the projects under management. The projects grouped together in multi-project management can only be a subset of all company-wide projects, which, for example, only include the project list of one company division.

Hierarchically, the term multi-project management is often placed one level above portfolio management, which subsumes program management and portfolio management. The best example of this is the title of DIN standard 69909, but there is no generally applicable definition of the terms. It would also be justifiable to place portfolio management hierarchically above multi-project management, since it relates all project work to corporate objectives and aligns it accordingly.

Suitable software is essential for project portfolio management. Since data from all projects and programs in your company flow together centrally in project portfolio management, you need project management software that integrates PPM tools in addition to functions for project controlling and resource planning. Projektron BCS, for example, has comprehensive functions and views for your project portfolio management.

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Essential for the benefit of portfolio management in companies are its long-term establishment, acceptance and continuous improvements based on experience. This is how the interplay between project management and project portfolio management succeeds. The latter becomes an indispensable bridge between project control and corporate strategy, which makes an immense contribution to the success of your organization.