What is portfolio management in project management?


What is portfolio management in project management?

Every company’s goal is to maximize its profits, minimize costs and optimize its resources in the best possible way. In order to achieve this, businesses need to face the challenge of managing different projects simultaneously. To avoid chaos and improve productivity within the company, more and more businesses around the world are implementing project portfolio management solutions. Thanks to PPM, organizations are able to manage many different projects at once while also optimizing the resources, costs, and workforce. However, the key to success with PPM is choosing the most aligned portfolio that will allow the company to achieve its strategic goals.

In this article, we will explain what project portfolio management is and why it plays a vital role in every business. We will also explain how project portfolio management works in five simple steps.

What Is Portfolio Management in Project Management?

First of all, let’s take a closer look at the terms “project management” and “project portfolio management.” Although these two concepts may seem very similar, there are a few key differences between them.

Project management is a term used to describe the process of managing one single project at a time. It is a series of strategies meant to help the team complete the chosen project effectively, deliver the best results to the customers, and achieve its strategic goals. On the other hand, project portfolio management is a process that helps companies manage multiple projects at the same time while allowing for better allocation of resources, budget optimization, and improved teamwork. A project portfolio is like a wallet with different amounts of various currencies. For example, someone who goes on a business trip to a few selected countries may need different amounts of foreign currencies in their wallet to better prepare for the trip. Similarly, a portfolio of projects is simply a group of projects chosen by the organization to be completed simultaneously.

Why Is Project Portfolio Management Important?

Portfolio management in project management is necessary because it allows the organization to choose the most suitable projects to implement at a given time. It is natural for businesses to have various projects waiting to be completed. However, there are not enough resources, money, or time to complete all of these ideas most of the time. Portfolio management in project management helps companies complete only the specific projects that best align with their strategic goals. Thanks to implementing various project portfolio strategies, the managers and teams can confidently turn down projects that do not align with the company’s objectives. Project portfolio management also facilitates decision-making and allows for better task delegation, significantly improving overall teamwork and productivity.

5 Steps to Project Portfolio Management

Even though project portfolio management is a complex process, it can be summarized in five main steps. These few steps present the main actions that need to be taken to create an effective and well-structured portfolio of projects.

  • Generate and collect project ideas

Suppose a company wants to achieve its strategic goals more efficiently while also significantly impacting the market and standing out from its competition. In that case, it is crucial to come up with creative and well-thought-out projects. The better the ideas that the company develops, the more chances it has for competitive advantage and customer satisfaction. It is true that not all ideas are implemented by an organization at all times, but having a bank of creative project ideas can be an effective strategy for the future. Every organization that manages many projects simultaneously needs an efficient process to collect, evaluate and track these project ideas. This can be done by using a simple spreadsheet or an online project management tool.

  • Choose projects that are aligned with the company’s strategic goals

The key to effective portfolio management in project management is choosing the right projects to be implemented at a given time. Every company has specific goals that it wants to achieve. To ensure that these goals are met, the projects that form part of the portfolio should be closely aligned with the company’s strategic objectives.

  • Define the project portfolio

The next step in the PPM process is to define the company’s project portfolio. The projects in the portfolio should be assessed and scored according to specific criteria, such as the budget needed for the development of the project, the time required to complete it, or the projected return on investment. These parameters can help managers choose the projects that best align with the company’s strategic objectives.

  • Optimize the portfolio

When choosing the projects for the portfolio, it is essential to evaluate how much time and work each project requires. This is important because choosing the wrong projects for the portfolio may cause significant losses for the company. If many projects get started but cannot be completed within a specified timeframe, it can result in a negative ROI. Analyzing the investment of resources, time, and money required to complete every project in the portfolio will help managers prioritize project ideas and balance the portfolio.

  • Monitor the portfolio regularly

Project management is not a linear process. Many unexpected changes can happen during the implementation phase of each project. As a result, the project portfolio needs to be corrected and adapted to the changes regularly. Doing this may result in some projects getting canceled, conflicts being resolved, or resources being re-allocated in the most optimized way. This is why it is crucial to monitor and manage the project portfolio continuously. It can help the organization ensure that the projects in the portfolio are still aligned with their strategic objectives.


Portfolio management in project management is essential for every company that manages multiple projects at the same time. The key to successful project portfolio management is choosing the right projects to complete, prioritizing them accordingly, and balancing the portfolio. Implementing the proper project portfolio management process will ensure that the right projects are being conducted, resources are being optimized in the most effective way, and the company’s strategic goals are being met at all times.


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