In an earlier article, we explained how programs, projects and portfolios relate to each other, and where they can best start with project portfolio management. What are the benefits for companies?
1. Smarter decision making
One of the most obvious advantages of project portfolio management is better decision making. Logical: all data about projects and programs are available in a centralized and visualized way. In addition, initiatives are linked to strategic objectives and classified into categories that are important to the company. This makes it much easier to prioritize projects and to support decisions from a strategic, financial and operational perspective.
2. Greater chance of success
Moreover, project portfolio management increases the chance that projects will succeed. Because for many organizations it is the order of the day: projects that fail due to budget overrun, poor planning, lack of clear scope, technical limitations, the lack of a clear link with the strategy and a general lack of overview. Having this makes a world of difference. Research by the Project Management Institute (PMI) shows that good project portfolio management can ensure at least 30 percent more simultaneous projects, if supported by applications with strategic planning, financial controlling and operational management functions. In some organizations, the chance of failure therefore falls by as much as 60 percent!
3. Better risk management
It is important that the risks are balanced within one portfolio. If the risk is too high, the chance of success becomes at least unpredictable, and nothing can be achieved at all. On the other hand, there should not be too little risk, because that can lead to a difficult time lagging behind the competition. It is therefore important that organizations choose a risk level that fits their organization. Project portfolio management also makes this easy for companies: they have sufficient insight into the available resources, up-to-date insight into project status, etc.: all things that normally cause budget overruns. Forrester calculated that budget overruns are reduced by an average of 10 percent through the use of project portfolio management applications.
4. Faster project lead times
But it’s not just about limiting budget overruns. Project portfolio management also substantially shortens project lead times: also by an average of 10 percent. A structured process that periodically evaluates the position of a project in the larger portfolio helps to make faster decisions, which optimizes project flow. A shorter lead time also ensures that the individual contribution of projects to the strategy increases. In this way, companies increase the competitive edge.
5. Transparency and better communication
Excel is the big friend of most companies. An understandable choice, because the application is extremely powerful. However, it is not designed as a tool to work together. As a result, various project lists often circulate very quickly, all in their own form, and the search for that one, all-transcending overview is always updated. Transparency about the project portfolio is crucial to be able to make the right decisions, but also to be able to manage current projects properly. Access to the various initiatives at a central location not only simplifies reporting on the project portfolio, but at the same time increases the understanding of employees about what the organization is doing. That is a great thing!