Portfolio management inspiration
Good principles in portfolio management
There is no single way to approach portfolio management. It is about having a fixed and common way in your company or organization to select and implement your projects. The probability of a good result increases significantly when the good principles are followed:
Portfolio management must reflect the organisation’s challenges in relation to project implementation
- Evaluate yourselves: What are some projects being worked on? Are there many small projects or few large ones? How many of them are cross-organizational? How often do you embark on big changes, or are these typically small, gradual changes building on something existing? How often do you get the desired benefits from the projects? Do project budgets hold? Do employees like to participate in projects – are they queuing up to participate, or should they almost be forced to join?
- When there is a sense of the project landscape and know what it is that typically goes well or bad, then you are much better equipped to know where and when to pay special attention to the project.
Portfolio management must be pragmatic
Portfolio management must be set up to match the maturity, strengths and weaknesses of the company/organization. There are undoubtedly areas where the organization works really well and areas where mistakes are often made. Whether it is a lack of IT systems, structure/goverance setup, management follow-up with more, the main challenges are identified.
The key elements need to be in control
Whether it is simple or more advanced portfolio management, then the key elements of any portfolio management are:
- Clear management support. When management is on target for the strategy, they are also on target for the portfolio.
- Governance structure. Make concrete minimum requirements for the project managers, which they must be able to control and be able to report on their projects. Make sure clear decision-making paths in relation to who can decide what about each project and about the portfolio.
- Reporting and tools. It doesn’t have to be a big fancy solution. A good simple success parameter for a new tool/workflow is whether the employees use it in practice.
The critical areas of Portfolio Management
There are 3 critical areas in portfolio management that need to be in control:
- the selection of the right projects
- the ongoing overview
- the implementation of the projects
You may lose the strategic overview if this is not under control.
Tips for avoiding the critical areas:
How to choose the right projects
You must have a clear and unique process to select your projects. It can be annual, quarterly or monthly, where management selects the most relevant projects in relation to the organization’s challenges, funds and resources.
Important management issues for clarification are:
- Can the project meet one or more strategic objectives and current development needs ?
- What are the project’s expected costs, resource usage, and results?
- Does the project create synergy in the existing portfolio ?
- What are the consequences if the project is not carried out?
How to create an ongoing overview
There must be a permanent follow-up of all projects at relevant intervals. The focus is to follow up on critical parameters such as progress, quality, risks, budget and resource consumption. In this way, you get an overview of all projects and the main risks across all projects. You must also regularly assess the continued relevance of the projects in the portfolio, as things may have changed so that the original idea is no longer relevant to the organization.
How to implement projects effectively
Set clear requirements for the implementation of a project. This requires, among other things, a sharing of responsibilities between the project and management, clear goals for a project’s results, which requires creating methods for measuring profit realization and how to support it in practice.
You are well on your way with portfolio management when you as management can answer these 5 questions without hesitation:
- Is the portfolio in line with the strategy decided?
- Which projects should be started, stopped or not implemented at all?
- What are the consequences of one or more reprioritizations?
- How to optimize the use of limited resources ?
- How and when are resources released for new projects ?