It’s not unusual for businesses to face greater demand in terms of projects and have lesser resources to handle the same, at their disposal. Keeping the project portfolio aligned with the capacity and demands is where project portfolio optimization comes in. Let’s take a look at the need and working of project portfolio optimization.
Why do you need project portfolio optimization?
The project portfolio of your businesses cannot just be an errant collection of random projects. It is important that your project portfolio is aligned with the core strategies and goals of your company. This is where optimization of project portfolio can be of assistance. Also, if you have noticed certain projects to be open beyond the duration they were allocated, and which are hogging some of your most valuable resources in the process, then it is time to re-evaluate your project portfolio and optimize it. PPO can help evaluate the risk profile, return on investment and business value of existent and proposed projects. It also puts businesses in a better position to be able to tweak their portfolio to the changing market.
It is essential that businesses make PPO an integral part of their annual planning, so they get a better overview of the direction in which the business is oriented in the bigger picture, and can thereby make changes to line-up their project portfolio and the associated resources to meet the core objectives of the organization.
While the PPO model varies from one business to another, the core ideas and motives remain the same. Project assessment is a key step in the PPO process, as it helps realize the performance, risks, resources and red flags of the project, thereby shedding light on the timeline, trends and value that it brings to the business portfolio. Following the assessment of projects at hand, it is important to balance the portfolio so it is aligned with corporate goals and strategies, while being within the boundaries of risk allowance set by the senior management. Often times, it is seen that some of the most rewarding, high-level projects are accompanied with an equal amount of risk. It is important that you strike a good balance between investing in rewarding projects and the associated risk levels.
Prioritization of projects is where you actually get down to realizing the core strategies of the business by clarifying the priority level of individual projects. This is when projects with incomplete charters, projects with little business value, projects that are redundant in nature and projects with misaligned objectives are moved to the bottom of the table. Once the prioritization of projects is done, it is a matter of strategically allocating the resources at hand, for the most optimal results. By employing a more consolidated approach toward building a project portfolio, it becomes easier to set realistic goals for innovation and development in the short or long run. This should help in meeting the revenue targets of the business, without compromising on the strategic objectives.