Project Portfolio Management facilitates measurement of the impact that project management has on cost, procurement, product quality and human resources at the level of the entire organization.

One of the most critical factors that play a role in measuring project portfolio management is ‘demand management’. This essentially refers to a process that is developed by an organization for gathering new projects, ideas and requirements (within the company) while creating a portfolio.

What defines the success of demand management? The organization will know that this tool has been used efficiently when the final product/output is beneficial for prioritizing. The aim of demand management is to capture the true strategic goals of an organization while aligning them with former ongoing activities. This is how demand becomes a contributing factor in developing the right portfolio.

How PPM Has Evolved

A few years back, project executives were interested in only two aspects related to the project:

  • Meeting the project deadline (or when the project will be completed), and
  • The cost of project implementation (or budget)

There is much change in the current scenario of project management. Today, executives are greatly interested in the following issues:

  • The mix of projects that will allow for optimum use of financial and human resources for maximizing long-term growth as well as ROI for the organization.
  • The different ways in which projects contribute to the company’s strategic initiatives.
  • The different ways in which project might affect stock or corporate share value of the company.

It might be helpful to also think of demand management as a critical assessment of the existing/ongoing activities, projects and programs. By an ongoing project we mean a project that was launched in the former portfolio but failed to be completed owing to delays and other factors. Demand management is about selecting a value-adding and strategically aligned project portfolio.

Components of Demand Management

It is crucial to treat demand management as a separate matter of management under the bigger umbrella of portfolio management. The important components of demand management include the following:

  1. New ideas and initiatives that come directly from the defined organizational strategy. These may be recommended by the top management as a basic execution of strategic goals. The new ideas or initiatives could be the best path towards implementing a strategy because they are backed by a well-defined strategic reason.
  2. Evolved requirements of the organization-divisions, employees, directions etc.
  3. New official requests from one division to another (for example, IT to finance).
  4. Ideas and initiatives that were rejected in an earlier process of portfolio selection but are still valuable.

To put it simply, success in demand management is crucial for the efficient management and completion of projects in an organization. PPM is aimed at forecasting/planning for equipment and human resource demand while comparing them to existing resources. This helps the organization get a clear understanding about its capacity to meet current and future needs.