Project Portfolio Management

Project portofolio management: delivering projects to meet collective business objetives.

Different types of portfolio exist in the business world – financial, system, service and project portfolios are common examples. This guide focuses on project portfolio. Project portfolio management is about identifying, assessing, selecting and committing to implement the right projects. The right projects are projects which are in alignment with the organization’s strategic goals. Projects are created to facilitate the development of new or enhanced products and services. Project management is about executing the right projects right. Implementation of the right projects fulfilled the strategic goals. Portfolio management provides the linkage between the business strategy and project management.

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Figure 5 shows the relationship between portfolio, program and projects. A program may contain other programs or sub-programs, projects and other activities (for example, procurement services for supporting the program). The arrows show the directions of the information flow and interactions. Program, in project context, composed of multiple projects to be delivered to achieve common program or strategic goals, which could not be achieved otherwise.Fulfilling strategic goals require a well planned and managed project portfolio or set of portfolios. Programs, projects and other operational activities are components of a portfolio. Portfolio management facilitates establishing priority across initiatives and determines how best to allocate resources to the initiatives in order to fulfill the organization’s strategic goals.

A major activity of portfolio management is the opportunity assessment. Opportunity assessment is the evaluation of every project, group of projects or programs in alignment with the strategic agenda of the organization. Opportunity assessment also considers how the project of interest may impact or relate to other projects, a larger project or program. This assessment uses some key parameters like NPV (Net Present Value), ROI (Return on Investment) and Payback. Also, it considers other factors like impact on jobs, overall economy and social-cultural implications. Definitions of these parameters are provided in the glossary section. Sometimes a project or group of projects may be evaluated in the context of a fundamental business change (i.e. business re-engineering).

  Figure 5 – Project Portfolio, Program and Project Overview


Project Portfolio Management

Project Portfolio Management


Governance is the harmonization of processes, roles and responsibilities, and resources to facilitate the successful delivery of projects and other organization activities, including service delivery and customer support. Organizations establish governance at different levels of responsibilities to facilitate service excellence and free information exchange.

Figure 6 shows a governance overview at the corporate, strategic business unit, portfolio, project and operational levels, and the relationship between them. A well thought-out governance facilitates successful delivery of projects. Effective, performing and value driven organizations ensure that governance at different levels have clearly defined interfaces with unambiguous roles and responsibilities. The goal is to maximize scarce resources and reduce product delivery turn-around time or time to the market.Leadership discipline across the organization facilitates value creation and organization effectiveness.

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A project manager should understand the established organization governance in order to manage project effectively. Also, to enable the successful delivery of projects, ensure the establishment of steering groups with authority to make timely decisions. A typical project governance is shown in Figure 35 (see page 127)

.Figure 6 – Governance Overview


Project Portfolio Governance

Project Portfolio Governance

Gating – Overview and Importance

Gating provides a process for tracking the performance, value and current relevance of a project or group of projects vis-à-vis the current strategic reality, which is influenced by the organizational and environmental factors. It is critical to the realization of the business strategic goals. Dynamic organizations will assess the viability of projects, in terms of cost and benefits, on a regular basis. Figure 7 shows a typical gating process for the project portfolio management.Each organization may have its own customized version of the gating process. The important thing to know is that gating provides a practical approach to consistently evaluate and validate the credibility, relevance and viability of projects during the product development stages.

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 Figure 7 – Project Portfolio Management Gating Overview

Project Portfolio Management Gating

Project Portfolio Management Gating


Figure 8 shows the gating process specific to the product delivery management, particularly for new products.



Figure 8 – Product Delivery Management Gating Overview

Product Delivery Management Gating

Product Delivery Management Gating


The product delivery management gating can be described as follows:

Gate 1 – the initial screening determines the ideas strategic fit.

Gate 2 – the preliminary assessments of the ideas to determine technical and market feasibility.

Gate 3 – the more detailed version of gate 2. The main activity following gate 3 is the design and development of the product and a marketing plan.

Gate 4 – deals with the assessment of the product performance, the likely market acceptance of the product, and whether the degree of the market acceptance is sufficient to justify further development.

Gate 5 – the product is subjected to a test market (laboratory or field test, cash permitting) or pilot. The outcome of the testing or pilot determines the ‘go/no-go’ commercialization decision.Most initiatives or ideas are stopped at the initial stage, a less costly undertaking than stopping the initiatives at a later stage. Gating provides a practical way to prevent committing much resource to projects that may never make it to the commercialization or production stage. Gating can be used to optimize scarce resources, maximize profit or minimize losses.

Business case and marketing plan will be briefly discussed next. Other key deliverables for the gating process will be discussed in the project management and product delivery management sections. Business case or marketing plan provides key information for developing other deliverables, mainly project charter and integrated project plan.


A consice guide on project portfolio management.


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