Project portfolio management is an effective decision‐making, disciplined, and structured approach designed to achieve strategic goals by selecting, prioritizing, assessing, and managing projects, programs, and other related work based on their alignment and contribution to your organization's strategies and objectives. Taking a project portfolio approach will enable you to categorize, evaluate, and prioritize initiatives and manage your resources to enhance the value of existing investments. This approach will also enable you to align your organization's spending with its business priorities and achieve an optimal balance of risk and reward.

In the portfolio management circle, we have items such as leading a business, business goal alignment, the value of the business alignment, program selection, and portfolio optimization. It's really all about creating business value. We can ask the question: Are all the things that we're doing as an organization delivering the value that the organization needs while delighting its customers and creating raving fans? At the portfolio management level, it is about business processes, which are usually conducted at the highest level of the organization. At this level are the decisions about which products, programs, or other initiatives are undertaken at a given period. Criteria are created to select those initiatives, activities, the active management of those initiatives, and whatever benefits those activities promise. Through this process, you're able to realize what those criteria are and trace if the benefits were being delivered.

And also if any projects within the organization need to be terminated. Organizations often struggle with being able to decide whether a project needs to be terminated and instead continue throwing good money after bad because they don't have a process in place to determine what is a bad investment. They don't have anything to compare it to, or they don't have the systems in place.

The portfolio in this story is the symphony. The task of the symphony is to create a season of music for its patrons to enjoy. These include symphony concerts, small ensemble concerts, school programs, and special events like their collaboration with the choral society for their holiday concerts.

At the next level, the program level is what we would call the stakeholder value level. It is where you're thinking of things along the line of sponsors. This happens at the business level, where there are multiple projects that have to be done together. You can't just deliver one of the projects, and everything works; you have to deliver the three, four, five, or even ten products together to get the real benefit to the organization.

It is about who owns the benefits that were promised, that after we invest all this money and deliver all these projects, those projects are going to work.

It's also about the coordination of those projects, because a lot of times those projects are using some of the same resources and some of the same key individuals. And one of the challenges with having poor portfolio management, or program management, is when you start burning out your critical constraint resources, or the people who have the greatest demand and who have really unique skill sets. We can actually burn them out if we don't manage all the work that's coming at them.

At this level, it is also about the alignment of all the projects that are going on and the coordination of management activities across a series of projects over time. And in order to accomplish the overall business goal and objectives that an individual project couldn't do by itself. All those products together deliver some benefit to the organization and its stakeholders; there needs to be some kind of governance process in place to manage all of that. And that's not at the project level or even at the portfolio level; it exists at the program level.

Think of systems that you have at your job where you can't make just one change in one system. If you make a change in one system, then four or five other systems have to be changed as well. That's a program, and if you don't manage it correctly, it can really cause a lot of havoc in the organization.

The programs are the seasonal schedule. What concerts are going to be played, what is the budget for the season, and who will be the soloists and the quartet in residence that year?

At the program level, it's about the benefit of all the products together, and at the portfolio level, it's about the business value that's being created. Finally, there is the project level. This is about delivering quality deliverables, whether that deliverable is a product, a software system, a process document, a solution, an SaaS (software as a service) product, or a symphony concert. The delivery of projects looks at the scope, the cost, and the schedule. It's about being responsible for the quality of the deliverable and the application of knowledge, skills, tools, and techniques to deliver projects on time and on budget.

Finally, there is the project management piece, which is the individual concerts, which is where Jerry will be spending the most time and effort because each concert will have its own challenges. He also has the contracts, hiring, and payroll for each concert to manage as well.

The value of project portfolio management comes from creating positive changes in an organization and how the organization, or the company, performs overall because portfolio management is about managing all those investments, projects, and work that are going on within the organization. Project portfolio management also increases the organization's capability to be more effective and efficient with its resources. It's because you're making more strategic decisions, and you're also making sure that the things that you are investing in are aligned to your strategy, goals, objectives, and where the organization is trying to go. The organization is able to make better decisions and engage with executives to create better executive engagement and employee engagement because the executives know why they invested in the things that they're investing in, and that they are aligned to the strategy, and the employees know that what they're working on is actually going to move the needle.

A report from the Project Management Institute (PMI), “The Pulse of the Profession,” is an in‐depth dive into portfolio management based on a global survey of more than a thousand project, program, and portfolio managers. They found that 62% of projects that organizations themselves describe as “highly effective in project portfolio management” met or exceeded their expected return on investments of various projects that they selected. Also, among those organizations that described their project portfolio management procedures as “highly effective,” 89% of the respondents said, “Senior management understands portfolio management at least moderately.” In other words, they were much more engaged in the process. A key takeaway from the report was that organizations could obtain the full benefit of portfolio management by making it a fixed part of their day‐to‐day culture. And really, when you implement portfolio management, it enhances and improves your organization's culture.

The key to making all of these projects work is finding the right people to manage them. The committee that hired Jerry was confident they had hired the right person, and Jerry needed to find competent musicians to hire for the orchestra to produce outstanding concerts.

So once you have a successful implementation of a project portfolio management capability, here are some questions you have to think about:

• Are we investing in the right things?
• Are we optimizing our capacity?
• How well are we executing our projects?
• Can we absorb all the changes we are implementing?
• Are we realizing expected returns and benefits?

You'll want to make sure that the projects are being done properly and that your project management processes are robust enough, but at the same time light enough, not to get bogged down while getting things done, get the project started, get the solutions implemented, get the team on board, and get the solutions and the processes and the deliverables delivered in a timely manner.

One of the things that portfolio management helps organizations with is making sure they're not taking on too much. Think about it like going to a restaurant and ordering everything off the menu; there's no way you can eat it all. Portfolio management gives you that filter that says, “Wait a minute, you can't have the pizza, and the hamburger, and the steak, and the lobster, and the swordfish, and the tofu. There are a few things that you can have, but you can't eat all of them at one time. But maybe you can come back once a week and have something else.”

It really helps think about whether the organization can absorb all those changes. Are we really seeing the promised benefits, where everyone says, “Hey if we invest in this project, all these great things are going to happen”? Portfolio management helps you to determine these questions, ask these questions, and develop the answers to these questions.

Jerry had his hands full working through these levels, from portfolio management and program management all the way to project management, while maintaining his position as one of the performers in the symphony. The implementation guide that follows gives you a bottom‐up approach. You will find the critical steps and strategies for implementing a portfolio management capability in your organization, just like Jerry did with the symphony.

STEP 1: DEVELOP A PROJECT INVENTORY AND CONDUCT ASSESSMENT

The purpose of this task is to create a comprehensive project list of all the projects in your organization, to assess the current state of project management, and to baseline the project management processes and maturity level with the intent to elevate the project management maturity level of the organization. This task includes the following key activities:

• Collect and compile a comprehensive list of all projects in the organization.
• Prepare for the assessment.
  • Define materials to be reviewed based upon the assessment preparation process.
  • Determine appropriate stakeholders to be interviewed.
  • Define the interview schedule in order to establish specific dates, interviewee names, interview location, and specific start and stop times.
  • Review materials and conduct assessment interviews.
  • Review the materials listed in the assessment preparation document.
  • Conduct the interviews according to the agreed‐upon interview schedule.
  • Document the results of the materials review and interviews in preparation for the next subtask.
  • Develop an assessment report and present it to stakeholders.
  • Document findings of the current project portfolio management maturity level of the organization and organize them into the project management maturity model.
  • Draft an assessment report.
  • Perform gap analysis between the current state and the desired future state.
  • Prioritize identified gaps.
  • Incorporate the sponsor's feedback and produce the final draft of the assessment report.
  • Confirm the contents of the final draft of the assessment report with your sponsor(s) and solicit feedback.
  • Incorporate final feedback and produce the final assessment report.
  • Present the final assessment report to your stakeholders.

STEP 2: IMPLEMENT A PORTFOLIO MANAGEMENT STATUS REPORTING PROCESS AND PROJECT MANAGERS LUNCH‐AND‐LEARN PROGRAM

The purpose of this task is to implement a weekly status report process with templates to gain a clearer understanding of the key portfolio elements, programs, projects, milestones, deliverables, benefits, risks, and issues that are impacting the project portfolio management environment.

This task includes the following key activities:

• Develop a draft project portfolio management status reporting process and project management status report template.
• Review the draft status report process and templates with the leadership and executive team and solicit feedback. If needed, facilitate prioritization of requirements (“must‐have” versus “optional”) with stakeholders, and balance those against the deliverables within the scope of the project.
• Incorporate feedback and produce the final project management status report process and template.

STEP 3: IMPLEMENT ONE‐ON‐ONE COACHING AND REVIEW ALL ACTIVE AND FUTURE PROJECTS IN THE PORTFOLIO PIPELINE

The purpose of this task is to implement and provide one‐on‐one mentoring and coaching to develop a project portfolio management center of excellence with the current project management team.

This task includes the following key activities:

• Provide expert‐level project portfolio management mentoring and coaching to designated group(s) of project managers and stakeholders.
• Assist project managers and stakeholders with the implementation and application of PM industry best practices; with the effective use and adoption of the organization's project management and software development methodologies when developed; and with the integration of best‐practice theory, methodology, and tools in an effort to drive consistent delivery of projects, improve project outcomes, and increase organizational project management maturity.

STEP 4: SET UP A PROJECT PORTFOLIO OFFICE

The purpose of this task is to develop a high‐level understanding and set the requirements of the key components for the current project portfolio management office environment.

This task includes the following key activities:

• Using the session notes, whiteboards, and flipcharts, draft a document setting out the requirements for a high‐level project portfolio office.
• Review the draft high‐level project portfolio office requirements document with the sponsor and solicit feedback. If needed, facilitate prioritization of requirements (“must‐have” versus “optional”) with stakeholders, and balance those against the deliverables within the scope of the project.
• Incorporate feedback and produce the final high‐level project portfolio office requirements document.

STEP 5: PLAN THE PROJECT PORTFOLIO OFFICE LOGISTICS, POLICIES, AND STANDARDS

The purpose of this task is to document and analyze the requirements for an initial set of project portfolio management methodology standards to support the maturation of the organization's existing project portfolio management practices.

This task includes the following key activities:

• Facilitate a series of requirements‐gathering sessions with the organization's staff focused on gathering the necessary information so that those requirements can be translated into a draft requirements document for the project portfolio management methodology.
• Develop a draft project portfolio management methodology requirements document from the session notes, whiteboards, and flipcharts. The draft requirements document will specify the processes to be analyzed as well as the documents, templates, and checklist to be developed.
• Review the draft project portfolio management methodology requirements document with the leadership sponsor and solicit feedback. If needed, facilitate prioritization of requirements (“must‐have” versus “optional”) with stakeholders to ensure that all critical project management processes and procedures are captured.
• Incorporate feedback and produce the final project portfolio management methodology requirements document.

STEP 6: IMPLEMENT A PROJECT PORTFOLIO MANAGEMENT REPOSITORY

The purpose of this task is to configure a pilot project portfolio management solution based upon requirements identified in a configuration requirements process.

This task includes the following key activities:

• Conduct requirements‐gathering sessions and document business requirements.
• Perform portfolio solution installation.
• Configure and construct the portfolio solution.
• Conduct training.
• Implement a fully configured pilot solution.
• Perform an online review session of the initially configured solution with the organization, and document appropriate in‐scope modifications.

STEP 7: CONDUCT A POST‐IMPLEMENTATION REVIEW

The purpose of this task is to review the implemented project portfolio environment and lessons learned throughout the engagement.

This task includes the following key activities:

• Conduct a “lessons‐learned” review of the engagement's impact on your organization's project portfolio environment.
• Develop a draft of a lessons‐learned document from the session notes, whiteboards, and flipcharts.
• Review the draft of the lessons‐learned document with the engagement sponsor and solicit feedback.
• Incorporate feedback and produce the final lessons‐learned document.