Achieving company-wide goals can be a challenging task for project and portfolio managers if they are not sure of the nitty-gritty of the trade. One of the most crucial factors to consider while executing a project to meet company goals of profitability and success is project portfolio management.
Project Portfolio Management or PPM is essentially a strategic process that seeks to align projects to company goals. Under this process, all the projects of an organization are evaluated to figure out their fit, purpose, as well as benefits, and how to match the goals of the company. All these projects are classed into different programs based on their similarities and relevance.
Project portfolio management and profitability
There’s no denying that projects are the bread-winners of organizations; they bring in revenue, which remunerates team members and funds the company’s strategy implementations. When carefully performed, project portfolio management increases the ability of companies to achieve superior performance and higher success rates because all projects and portfolios are aligned with their overall goals.
An increase in profitability from project portfolio management comes because of the following reasons:
1. Improves the planning process
Planning forms the foundation of successful project execution. Project portfolio management is seen to improve resource management and capacity planning, both of which have a significant effect on a company’s profitability. These two aspects depend largely on how the project portfolio manager executes the strategy and matches resources to organizational goals. The process can reduce wastage of valuable resources and ensure their proper allocation for achieving the intended objectives.
2. Provides clarity of goals
Besides enabling organizations to execute their strategy at a deeper level, project portfolio management allows them to better understand how projects and portfolio influence their overall vision and mission. The process helps them visualize their profitability goals and allows them to look at the forest for the trees. Broader goals of the company come under the limelight and organizations get clarity of the actions they need to take to increase profitability.
3. Increases overall productivity
Lastly, there’s a close link between productivity and profitability; when the quality of what’s produced is improved, profitability automatically sees an upward tick. Project portfolio management arms managers, teams, and all stakeholders with the knowledge of creating value through various project tasks. When these individuals have a clear understanding of their roles, achieving the larger goals of the company becomes greatly possible with their hard work. The quality of deliverables increases over time—something that directly contributes towards increasing the profitability of the company.
