Manage Your Project Portfolio

1. Effective project portfolio management optimizes organizational value

You can do it all. Just not all at the same time.

Balance and prioritize. Project portfolio management is about organizing, seeing, and ranking all the work your organization needs to do. It allows you to focus on the most valuable projects while postponing or eliminating less critical ones. By aligning projects with strategic goals, you can maximize the return on your organization's time and resources.

Increase throughput. A well-managed portfolio reduces multitasking, eliminates "bright shiny object" syndrome, and prevents constant fire-fighting. Teams can focus on completing high-value work without interruptions. This leads to faster project completion, increased productivity, and a calmer work environment.

Adapt to change. Regular portfolio reviews allow you to reprioritize work based on changing market conditions or organizational needs. This flexibility ensures you're always working on what matters most, rather than blindly following outdated plans.

2. Collect and evaluate all work before ranking projects

If you're working on just one project, especially if your project is using timeboxes of up to four weeks and you work feature by feature so you finish valuable work at the end of each timebox, this is a trivial step. However, even if you're working in an agile way or if you're working on several projects, collect all your work anyway. You need to see what other people expect of you.

Be comprehensive. Gather all work across the organization, including:

• Ongoing operational work
• Maintenance and support tasks
• New product development
• Internal improvement initiatives
• Customer-facing projects

Categorize work. Organize collected work into meaningful categories:

• Projects vs. ongoing work
• Strategic vs. tactical initiatives
• Revenue-generating vs. cost-saving efforts
• Short-term vs. long-term investments

Initial evaluation. Before ranking, assess each piece of work:

• Does it align with organizational strategy?
• Is it still relevant and necessary?
• Are there dependencies or synergies with other work?
• What resources would be required?

3. Rank projects based on business value and strategic alignment

You collaborate on a portfolio for this reason: to make decisions at the organizational level—the highest level—not the lowest level.

Define value criteria. Establish clear metrics for assessing project value:

• Financial return (ROI, NPV, etc.)
• Strategic alignment
• Customer impact
• Risk reduction
• Regulatory compliance
• Innovation potential

Use consistent ranking methods. Choose appropriate techniques:

• Weighted scoring models
• Forced ranking
• Pairwise comparison
• Cost of Delay analysis

Consider constraints. Factor in resource limitations, dependencies, and timing:

• Available skills and capacity
• Budget restrictions
• Technology constraints
• Market windows or deadlines

4. Collaborate across the organization to make portfolio decisions

If you can't fully commit to a specific project, don't start it in this time period.

Break down silos. Portfolio decisions impact the entire organization, so involve key stakeholders:

• Senior leadership
• Product management
• Finance
• Marketing
• Technology leaders

Build trust and transparency. Foster an environment of open communication:

• Share portfolio data widely
• Explain decision rationale
• Address concerns and resistance

Facilitate effective meetings. Structure portfolio review sessions for productive outcomes:

• Prepare data in advance
• Set clear agendas and decision points
• Use visual aids to illustrate trade-offs
• Document and communicate decisions

5. Iterate on the portfolio regularly to adapt to changing priorities

When you manage the portfolio, reviewing the progress made on running, tested features by your teams, you don't need a serial life cycle, because you don't need the early milestones to attempt to gauge progress.

Set a review cadence. Establish a regular rhythm for portfolio evaluations:

• Monthly for fast-moving environments
• Quarterly for most organizations
• Align with budgeting and strategic planning cycles

Monitor project progress. Between reviews, track key indicators:

• Completed features or milestones
• Resource utilization
• Changing market conditions
• Emerging risks or opportunities

Make incremental adjustments. Use reviews to fine-tune the portfolio:

• Reallocate resources between projects
• Accelerate or decelerate timelines
• Add or remove projects as needed

6. Visualize the portfolio to improve communication and decision-making

Consider which visualization approach you need for a team's, group's, or organization's work. There is no right answer.

Choose appropriate visualizations. Select formats that resonate with your audience:

• Gantt charts for timelines
• Kanban boards for work in progress
• Bubble charts for comparing multiple factors
• Roadmaps for long-term planning

Highlight key information. Ensure visualizations clearly show:

• Project priorities and rankings
• Resource allocation
• Dependencies between projects
• Progress against goals

Keep it current. Regularly update portfolio visuals:

• Automate data collection where possible
• Make visualizations easily accessible
• Use real-time dashboards for dynamic views

7. Scale portfolio management across the enterprise

Do not try to "scale" the project portfolio using either one mode or the other. You need the details to discriminate among each project at the group or business unit level. You need the mission or strategy at the enterprise level to make large decisions.

Start small, then expand. Begin with a single team or business unit:

• Prove the concept
• Refine processes
• Build buy-in across the organization

Establish a hierarchy. Create a tiered approach to portfolio management:

• Team-level backlogs
• Department or product-line portfolios
• Enterprise-wide strategic portfolio

Maintain consistency. Ensure alignment across levels:

• Use common evaluation criteria
• Standardize reporting and metrics
• Create clear escalation paths for decisions

8. Evolve towards lean and agile portfolio approaches

If you don't have to think about projects anymore, you can use lean and agile approaches to making the portfolio decisions.

Focus on value delivery. Shift from project-centric to value-stream thinking:

• Organize work around customer-facing value streams
• Prioritize based on business outcomes, not project completion

Embrace incremental funding. Move away from annual budgeting:

• Fund initiatives in smaller increments
• Tie funding to demonstrated progress and value
• Allow for pivots based on learning

Implement pull-based systems. Use Kanban principles at the portfolio level:

• Limit work in progress (WIP)
• Pull new work only when capacity is available
• Visualize flow across the entire portfolio

9. Measure project and portfolio progress with meaningful metrics

Since you need to know what progress the team has made since the previous portfolio evaluation, you need to see current velocity and historical velocity.

Focus on outcomes. Prioritize metrics that demonstrate business value:

• Revenue generated or costs saved
• Customer satisfaction improvements
• Market share gains
• Innovation metrics (patents, new products launched)

Track team productivity. Use agile-friendly metrics to gauge progress:

• Velocity (story points completed per iteration)
• Cycle time (time from start to completion of work items)
• Throughput (number of items completed per time period)

Monitor portfolio health. Assess overall performance:

• Resource utilization across projects
• Alignment with strategic goals
• Balance of project types (innovation vs. maintenance)
• Risk profile of the portfolio

Last updated: August 20, 2024