Years ago, I was doing some research on the project management office (PMO) of a multi-billion-dollar media company, which had just invested in project management software. One of the findings that was most surprising to me was that this organization – a well-known consumer brand – was using spreadsheets for its portfolio planning. I had assumed that such a well-established company would have a project portfolio planning system in place to ensure their portfolio delivered the highest strategic value; but the years that have followed have shown me this company’s circumstance is far from unique.

While simple work and task management solutions are pervasive today, many companies have yet to invest in PPM, even though doing so is proven to enable the PMO to deliver a portfolio with higher strategic value. Here are three ways the investment in portfolio management can have a strategic impact on your organization:

Project Prioritization

A recent survey conducted by KeyedIn revealed that 80 percent of project leaders say they don’t have enough resources to deliver the projects they’ve been tasked with. That means some projects won’t make the cut. But which ones? Without the objective analysis offered by a project portfolio planning system, project prioritization usually comes down to which project sponsor yells the loudest, which initiative is the CEO’s pet project, or a simple first-in, first-out process. Not exactly a recipe for the highest strategic value. A project portfolio planning system enables a PMO to evaluate the merits of a project request based on objective measures like revenue growth, cost savings, strategic alignment or customer impact. Then you can stack rank the projects based on this scoring and quickly identify those with the highest strategic value. Portfolio planning software also allows the PMO to model scenarios – possible groupings of portfolio projects – to ensure budget and resources are maximized.

Capacity Planning

As a kid sitting at the dinner table scooping a heaping helping of whatever was on the menu, it wasn’t uncommon for my mom to caution, “Be careful that your eyes aren’t bigger than your stomach.” Resource capacity is similar. According to analyst firm Gartner, in its November 2019 report, Resource Capacity Planning for PPM Leaders: Crawl Before You Walk, “Organizations tend to overestimate the amount of capacity available in their resource pool and overcommit resources for pending initiatives.” In other words, the PMO’s eyes are sometimes bigger than its stomach.

Overcommitting resources can have a serious impact on a project portfolio. From the same Gartner report we learn, “Insisting that initiatives start on time when the right resources aren’t available can actually extend the end date of a four-month initiative to as long as a year.” The best way to avoid this risk is for a PMO to leverage portfolio planning software to assess a team’s real capacity based on all the other work, as well as vacations and holidays, in play. Plus, the software looks beyond just a nameless pool of resources to take into account unique skillsets or even individual contributors who may be in high demand and can’t easily be replaced by another resource – all in the interest of ensuring resources are dedicated to the project mix with the highest strategic value.

Scenario Modeling

As mentioned previously, a project portfolio planning system also enables the PMO to model a variety of different project combinations to find the portfolio that delivers the most strategic value. While this capability is helpful in portfolio planning, it can also enable the PMO to navigate the political landmines that are inevitable when working with the business leaders it supports.

Rather than trying to explain why a certain project didn’t make the cut to a passionate (sometimes fanatical) project leader, scenario modeling allows the PMO to quickly identify the tradeoffs necessary to accept the project in question. When viewed through the lens of multiple portfolio scenarios, and the strategic initiatives that the less-valuable project would cause to be delayed, most project sponsors will concede to the PMO’s better judgment.

A Strategic Choice

Investing in a project portfolio planning system is one of the cornerstones of a mature, effective PMO, because it simplifies the PMO’s primary purpose: Deliver the most valuable mix of projects as efficiently as possible. Offering capabilities to prioritize projects, plan resource capacity and model possible scenarios, portfolio planning software can help ensure that every project portfolio delivers the highest strategic value.

Back to the Business and Benefits of PPM.

Rachel Hentges
PMO Influencer
Read Bio >

Rachel Hentges

Rachel Hentges is challenging PMO leaders to think differently about their role. Rachel is the author of key industry related surveys, reports, blogs and more that challenge the status quo of today’s PMOs.