What is a Project Portfolio?
In very simple terms a Project Portfolio is a list of all the projects and programmes past, present and future in your business, all collated together in one place. See our free Project Portfolio template below as a good example. It is the primary source of data in a Project Portfolio Management System.
Who is responsible for creating and managing the Project Portfolio in a business?
In small businesses, this often sits with Finance or IT but in medium to large businesses you will find they have a Project Management Office (PMO) that reports to the CFO, COO or CEO and occasionally CIO.
The case for PPM being an IT Function if you don’t have a dedicated PMO
In my experience, IT is involved in almost every project and programme in a business. They also have Business Analysts and Project Managers who have the right skills and mindset to run the Project Portfolio. The downside of IT running this is that they can then appear to be involved and control the prioritisation and selection of projects. Care therefore needs to be taken to ensure that IT are only facilitating the Project Portfolio Management Process and that it is the Board, Executive or Senior Management Team making the decisions.
Having the PPM function within IT means the role can be part-time and covered by an existing member of staff.
The case for PPM being a Finance Function if you don’t have a dedicated PMO
All projects in a business have some financial benefit or cost. Finance normally owns budgets and forecasts and a Project Portfolio can be thought of as a budget or forecast. Finance can also be seen as independent but also works with all business functions in the same way as IT. They tend to have the training and discipline to make decisions based on data rather than emotion.
Having the PPM function within Accounts means the role can be part-time and covered by an existing member of staff.
The case for PPM sitting in a dedicated Project Management Office (PMO)
A PMO, or Project Management Office, is crucial for large businesses because it ensures that projects are executed efficiently and effectively. It does this by standardizing project management practices such as ensuring a Project Initiation Document is completed, facilitating communication across various projects, and providing strategic guidance.
Usually, they will recruit and manage all the Project Managers and often Scrum Masters and Business Analysts in the business and they will report to the PMO.
PPM, or Project Portfolio Management, is important as it helps the business align its projects with its overall strategic objectives. It involves selecting and managing a portfolio of projects in a coordinated way, ensuring that resources are optimally allocated and that the projects contribute to the overall goals and success of the business.
The PMO will normally impose Project Reporting standards and ensure weekly or monthly project progress reports are produced, approved and circulated. For example, see our Project Summary on a Page template. They will also ensure that all project documents and assets are stored and archived properly, see our Project Folder Structure template.
The downside of a PMO is the overhead cost. It will need as a minimum a couple of full-time staff to operate the PMO and coordinate projects and programmes across the business.
Free Project Portfolio Management (PPM) Template
To get you started with PPM we have created a free-to-download and use Excel Project Portfolio Management Excel template. For most small to medium-sized businesses this is all you need to get started and you can quite easily manage your portfolio like this. A simple Excel template also has the benefit of being cheap and easy to operate as you no doubt already have Excel and the skills to use it. That then avoids the cost of acquiring new software or paying monthly subscriptions. More importantly, you won’t have the learning curve that comes with new software.
Click here to download our Excel Project Portfolio Management Excel template.
In your business, you can save this to Sharepoint or OneDrive and then give key stakeholders read-only access to this.
You can with a little work also create a Sharepoint form to allow staff to propose new projects and then have these added automatically to the end of this spreadsheet.
How to use the PPM Template:
From left to right the columns are
Project Code – just pick a sensible sequential code, for example <Year><Project Number 1 to 9999>
Description – This is a short description of what the project is due to deliver.
Project Sponsor – This should be the lead sponsor. Some projects may have multiple sponsors but this should be the most senior sponsor who will have the final say on any decisions. Try and avoid the CXX being the sponsor here unless they are going to be able to attend all the Project Board meetings and actively participate. If they can’t be involved it is better to delegate this.
Project Stage – This is a list of the stages that a project typically goes through (Not Approved, Approved, Scheduled, In Progress, User Acceptance Testing, Service Transition, Complete). In our template, this is a validated list. You can change the allowed values by highlighting these cells and then using the Data > Data Validation option and editing the comma-separated list of values.
BRAG Status – This is the traffic light value for how the project is performing. See, What is a RAG and BRAG status here. The Excel sheet uses conditional formatting to change the cells background colour automatically when you enter Blue, Red, Amber or Green.
Target Completion Date – People are going to want to know at the outset when you expect the project to be completed.
Actual Completion Date – When the project is completed, capture the actual completion date. This will help you improve estimation and planning in the future. It’s also useful for retrospective reporting of projects delivered in a given period, which may be needed for Accounting purposes.
Next Major Action – You don’t need to call out every little action on a project, just pick the most relevant next major action that you want to communicate to senior management. They can look at the weekly Project Status Report if they want more information. This should come from the Project Manager.
PMO Comments – This comment is added by the PMO and is most relevant to pre-project projects before a full-time PM (Project Manager) is assigned. For example “Robin is drafting the PID”.
Project Budget – How much do we expect the project to cost? If this is an approved project, this should be the approved budget for the project.
Actual Committed Spend to date – If the project is cancelled tomorrow, how much have we spent or committed to and will have to spend and potentially write off? People will also want reassurance that the project is on track to be delivered on budget (ie for the agreed cost). The PM should track all Purchase Orders and Invoices for the Project. Larger projects may have a Project Accountant assigned.
Revenue Generation or Cost Saving or Revenue Protection next 2 years Budgeted – This is critical to allowing projects to be prioritised. The project sponsor needs to say how much revenue (Sales) will be generated, or Protected, or how much cost will be saved if the project is delivered. I would make this mandatory and not allow projects to be submitted without this.
ROI % – This is the Return on Investment. It’s the difference between the cost of the project and the Benefit it will deliver expressed as a percentage of the cost. When picking projects, it can be useful to sort the spreadsheet by this figure.
Don’t stop there, make this your own by adding other useful data points. For example, you might want to add Likelihood or risk and apply that to the ROI to create a new ranking factor.
- Project Management Institute (PMI): “Strategic priorities and PMO functions in project-based firms.” This article discusses the role of PMOs in supporting the management of projects and project-based organizations. PMI Article
- CIO.com: “What is a project management office (PMO)? The key to…” This article, referencing PMI, highlights the essential role of a PMO in centralizing and coordinating the management of projects in enterprises. CIO Article
- Programme Management Office Roles Demystified. – This is an article we created to help explain the various roles within a PMO.
- Harvard Business Review: “Close the Gap Between Projects and Strategy.” This article discusses the challenges in effective project portfolio management and the importance of aligning a company’s projects with its strategic goals. HBR Article
- Harvard Business Review: “Manage With a Portfolio Mindset.” This article talks about the application of systematic tools in portfolio management for reducing risks and maximizing returns on investments. HBR Article