Project portfolio is a basket of projects, programs and other work performed to achieve strategic business objectives of the organisation.
Project portfolio management comprises of the following steps;
1) Understanding the business goal, strategy of the organisation
Organisations have limited funds to invest in order to achieve their business goals. They have to pick up the right projects, which are in true alignment to their business strategy and goals. For this, the portfolio manager must have an in-depth understanding of the business goals to be accomplished and the business strategy to be followed to achieve it.
2) Project selection
Once the business goals and the strategy is clear, the next step is to select the right projects which are in true alignment to the organisation’s strategy for growth. How do we select the right projects?. From the probable list of projects we select the right ones by applying the ratios like Net present value (NPV), Benefit cost ratio (BCR), Payback period , Opportunity cost etc.
3) Project execution
The shortlisted projects are executed. During execution the portfolio manager must have a close watch on the cost and the validity of the assumptions made while selecting the project. Business conditions are dynamic, and based on the ever changing business conditions. Due to changed market conditions (raw material price changes, obsolete technology, better opportunities etc), sometimes we may have to kill certain projects as well.
4) Post execution
After completing the projects, one must track the returns from the project, and see whether they match with the forecasts made while selecting those projects.
The whole process of selecting, aligning and tracking the benefits of projects selected as part of the portfolio to achieve strategic business goals is known as project portfolio management (PPM).
Here is a link to my video about project portfolio management
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