A project manager’s guide to portfolio management

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Project portfolio management (PPM) is a means of strategically aligning project portfolios with business objectives. It makes it easier to identify the risk-reward per project or portfolio, forecast returns, and ultimately make smarter business decisions. 

In essence, portfolio management helps you diplomatically allocate and leverage resources to maximize benefits and outcomes. 

Sounds good on paper, but how does it affect project management, specifically?

As it turns out, many project managers claim PPM is crucial for agency success. Without it, agencies can focus their efforts too heavily on minimum value, short-term projects, and goals that don’t contribute to big-picture growth and ROI.

Let’s dive more into what portfolio management looks like on a day-to-day basis and how it can make you a more effective project manager.

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What is project portfolio management (PPM)?

Project portfolio management is the centralized application of processes, methods, and tools to analyze and collectively manage a group of projects within an agency.

PPM requires a deep analysis of where you are vs. where you want to be and how you plan to get there. It includes identifying, prioritizing, authorizing, managing, and controlling the agency’s individual projects to meet strategic goals and objectives.

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Source: Tech Funnel

You need to weigh every project's potential risks, rewards, and performance to determine whether it's worth green-lighting. For already launched projects, PPM helps you assess whether it's worth continuing or scrapping it altogether.

Portfolio managers or the project management office (PMO) provide strategic direction and ensure each project is on track. They do the heavy lifting of identifying and selecting projects, managing stakeholder expectations, and properly allocating resources.

The day-to-day portfolio management

On a granular level, portfolio managers collect data and monitor the performance of all existing projects. They track trends in the market, identify patterns, and decide which projects need to take precedence.

At the same time, they’re available to oversee in-progress projects and uncover any risks that might result in a project being pulled entirely. Monitoring projects collectively allows you to keep a finger on the pulse and track movements at both a high level and on a project-by-project basis.

It also means you can map out projects against your strategy and ensure visibility for key stakeholders. By balancing risk and reward, agencies can improve their performance and, ultimately, their ROI.

The steps involved in project portfolio management

The PPM process will look different depending on company size, industry, and the type of projects you deliver. But, for the most part, PPM involves a strategic series of steps:

1. Identify and clarify business objectives

The first step of portfolio management is to define your business objectives. You need goals and targets to be able to measure performance and decide whether a project is worth investing in. This includes specifying the type of projects you will prioritize and how each aligns with your overall strategy.

  • Do you want to increase the revenue?

  • Expand into new markets?

  • Boost customer satisfaction scores?

  • Launch more products?

  • Improve operational efficiency?

Analyze your project portfolio's financial impact, customer value, and operational efficiency to ensure it aligns with your core business goals and strategic objectives. 

For instance, if your goal is to increase customer satisfaction, prioritize projects with the greatest impact on customer experience. This can include customer service initiatives, product development plans, or process improvements.

2. Collect inventory and establish a strategy

Your agency probably has an extensive portfolio of projects — some already in motion and others ready to be launched. Create an inventory of all projects, tracking costs, timelines, risks, and resources to gain insight into portfolio performance.

Analyze each project to determine its priority level, cost efficiency, resource alignment, and potential risks. This allows you to adjust the project’s course and determine which initiatives will yield the maximum return. 

Establish a clear strategy that covers everything from project planning to resource management, budgeting, risk management, and reporting.

3. Analyze your current portfolio and assess for strengths and weaknesses

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Next, take a deep dive into your existing portfolio to uncover any strengths and weaknesses. This includes an in-depth analysis of budget, return on investment, resource usage, risk management systems, and project progress.

For instance, you might have an impressive portfolio of projects, but if your pricing model isn’t competitive or your resource allocation is off-kilter, you won’t achieve your desired ROI. 

Similarly, having too many projects running simultaneously or lacking resources could hurt the outcome.

Perform a cost-benefit analysis to measure the financial value of each project and weigh it against its potential risks. This helps you decide which projects should continue, be paused, or be terminated.

4. Ensure the portfolio aligns with overall business objectives

The ultimate goal of PPM is to ensure your project portfolio aligns with the agency’s overall objectives. Remember, if any single project fails, this will have a ripple effect on the entire portfolio.

You can use a project selection model to identify projects with the greatest potential for success. For each project, you need to evaluate the cost, timeline, available resources, and risk factors.

To ensure portfolio alignment, consider the “bigger picture” and review all current initiatives.

  • What is the project status?

  • Are workflows running smoothly?

  • Are you hitting milestones and meeting organizational goals?

  • Do you need to adjust your timeline, budget, or resources?

  • Are there any new opportunities for innovation or expansion?

Evaluate your project portfolio against industry trends, competitor moves, and financial projections. Ensure your portfolio is diverse and includes short-term and long-term projects. This will help you hedge against risk, identify opportunities, and adjust your strategy.

5. Manage budgets and resources

Once you’ve identified your portfolio goals, it’s time to get into the nitty-gritty of budgeting and resource management. Determine how much funding each project needs and how you can best allocate resources.

Create a detailed budget for each project, including labor, overhead, and materials. Analyze resource utilization and adjust the workload to prevent resource strain. Track benefit-cost ratios to determine which projects perform best and use this data to guide future investments.

Project portfolio management software can help you keep track of budgets and resources, analyze project performance, and identify potential risks. It provides visibility across the entire portfolio, helping you make better-informed decisions about the future of your initiatives and business strategy.

6. Optimize the process and implement stakeholder feedback 

Finally, optimize your portfolio management process to improve efficiency and performance. Invest in the right PPM software and tools to streamline task management, reduce costs, and enhance collaboration. 

Automation can take a lot of the manual process off your plate, freeing up more time to focus on strategic planning initiatives. Your team members can also access real-time data, allowing them to adjust the course as required.

Remember to solicit and implement feedback from stakeholders regularly. Listen to their ideas, suggestions, and opinions, and use this to inform your decision-making process. Their input can help you zero in on missed areas of improvement, allowing you to refine your portfolio strategy. You will also build a culture of transparency, trust, and collaboration, which is essential for successful PPM.

Why portfolio management is crucial to project success

Managing a handful (or even hundreds) of projects at one time is difficult in itself. 

But worse, imagine that half of the projects you spend valuable time and resources on don’t align with business goals? Or don’t move the needle in terms of revenue, growth, brand awareness, conversions, customer satisfaction, and more?

This is precisely why portfolio management is crucial. If you don’t have an overall strategic outlook, it’s easy to get caught up on a project treadmill without stopping to think: is this actually contributing to our success?

PPM primarily helps agencies:

  • Prioritize projects and make data-backed decisions: PPM provides clear and relevant criteria for selecting projects and ensures you’re allocating the right resources to the right projects.

  • Align projects with business objectives: Good PPM helps agencies align projects with their strategic direction and ensure they focus on the bigger picture rather than short-term goals.

  • Facilitate communication and collaboration: Projects are made up of many moving parts that require transparent communication between teams and stakeholders. PPM provides a network of information-sharing and gives teams an insight into the agency’s current workflow. 

  • Analyze and gain insight: Understanding what’s working and what’s not in existing projects fuels the strategic direction of future projects. PPM helps predict the best upcoming opportunities based on past successes.

Industries and types of companies that benefit from project portfolio management

Project portfolio management benefits almost every type of business, regardless of size, industry, or location. From small agencies just starting out to multinational corporations, PPM provides a clear roadmap to successful project management. Industries that benefit from PPM include:

Marketing and advertising agencies

Marketing and advertising agencies need to juggle multiple projects to meet client expectations. They must manage complex campaigns that involve multiple departments, teams, and stakeholders. 

PPM provides a centralized management platform that tracks a project's life cycle, budget, and resources. Agencies use this data to optimize processes, improve performance, and build better client relationships.

Information technology

The complexities of IT projects often lead to budget overruns, missed deadlines, and lost revenue when mismanaged. PPM helps IT companies prioritize projects, allocate resources, and stay on budget. They can onboard new projects, measure real-time performance metrics, and quickly pivot if something goes wrong.

Consulting firms

Consulting firms provide agencies with professional advice, guidance, and expertise. Consulting firms need a project portfolio strategy to keep up with client demands and maintain their reputation for quality and excellence. 

PPM helps them optimize resources, maximize profits, and deliver projects on time and within budget. They prioritize projects based on performance and profitability, allowing them to scale their operations confidently.

Financial services

The financial services industry is heavily regulated and requires detailed tracking of transactions, investments, expenses, and performance. 

PPM provides an overview of the entire financial portfolio, from budgeting to risk management, helping firms stay compliant, monitor risks, and optimize their operations.

Professional services

Project portfolio management tools help professional service providers such as law firms, accounting firms, and engineering companies prioritize projects, gauge performance, and forecast profitability. This helps them decide on potential projects, adjust delivery models, and devise methodology strategies for successful project execution.


Due to the complex nature of construction projects, contractors often struggle with budgeting, scheduling, and project coordination. 

PPM tools help contractors diligently plan and track projects, allocate resources accordingly, and reduce risks. This helps them deliver projects on time, stay organized, and minimize costly delays.

Portfolio management vs. project management: How they fit together 

While they sound very similar, portfolio and project management are different beasts.

Project management involves implementing and managing individual tasks and resources for each project. Portfolio management oversees projects collectively and ensures they hit the agency’s strategic goals.

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A project manager will assign activities to team members on a project level, while a portfolio manager will dig into data to determine whether a project aligns with the agency’s objectives. 

For example, a project manager on a web design project will outsource brand assets to a freelancer, but the portfolio manager will decide whether the web design project as a whole is worth moving forward with.

What portfolio management involves

Portfolio managers wear a number of different hats. They’re risk assessors, strategists, and financial advisors all rolled into one. As such, the role requires managers to draw on several different skill sets and processes:

  • Change control management: Portfolio managers are tasked with identifying change requests and prioritizing the most important ones based on financial constraints and available resources. 

  • Risk management: Portfolio managers must assess the risk of each project and implement contingency plans if things go wrong. 

  • Financial management: Portfolio managers are in charge of project financial resources and ensuring they can demonstrate how the portfolio relates to the agency’s financial and strategic goals. 

  • Pipeline management: Portfolio managers must assess project proposals and monitor the project pipeline to decide if upcoming projects are worth executing and whether they tie into the overall business objectives. 

  • Resource management: Portfolio managers are tasked with effectively using resources to carry out the selected projects.

Benefits of project portfolio management

Portfolio management provides several benefits to agencies of all sizes, including:

Strategic alignment

Grouping related projects together ensures that projects work together to achieve the agency’s goals. This helps streamline decision processes, identify areas of improvement, and boost profitability.

Resource optimization

Monitoring and analyzing projects as a whole helps agencies optimize resource utilization, reduce operational costs, and increase productivity. Portfolio managers can channel resources to the most important and profitable projects.

Portfolio performance monitoring

Real-time performance monitoring helps portfolio managers quickly assess project progress, flag issues, and adjust resources accordingly. For instance, if a project is running behind schedule, portfolio managers can allocate extra resources to get it back on track to deliver the projects on time and within budget.

Enhanced decision-making

PPM tools provide a comprehensive overview of the entire project pipeline, enabling agencies to make informed investment decisions and prioritize resources. You can identify potential risks and opportunities, forecast future project performance, and make agile adjustments.

5 tips for project portfolio management success

As you can see, there are a lot of spinning plates involved in portfolio management. It’s hard to say “no” to projects, especially if you’re a small startup agency. But, it’s crucial to select the right projects to work on at the right time

Otherwise, you risk carrying out surface-level projects that don’t add value to the agency or move it any closer to its key objectives. 

If you’re dipping your toes into the world of PPM, here are five tips to keep you on track:

Tip 1: Prioritize risk assessment

Carrying out thorough and accurate risk identification and implementing relevant remediation strategies is crucial to long-term success. It's always smart to be ready for what "could" and "should" happen with every project.

This is why it helps to have a holistic view of your entire project timeline, so you can monitor its entire progression from start to finish.

Tip 2: Don’t be afraid to pull projects

If a project isn’t meeting its objectives or bringing value to the agency, don’t be scared to pull the plug on it entirely. A canceled project is better than one that sucks all of your finances and resources but adds nothing to the company. 

Instead of running over budget and pulling a project, use a Financial Budget tool that lets you assign a certain budgeted amount to a project. Teamwork.com's financial budgeting feature allows project managers to track users' billable and non-billable logged time.

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This makes it simple to get a complete view and breakdown of the available funds left in the originally planned budget.

Tip 3: Simplify tasks for team members

Give team members the freedom they need to complete their assigned tasks and monitor time spent on project activities. Complicating the process confuses everyone and can lead to projects running longer than anticipated. 

But not all task management solutions are the same. Sometimes it helps to simplify a project by breaking it up into multiple tasks.

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While general tasks can tell you a lot about the project, sometimes there's a need for subtasks. This allows stakeholders to go further into detail about the task without creating an entirely new one.

Tip 4: Make sure data is easily accessible

Digging around in the bowels of an Excel spreadsheet for relevant data can hinder the decision-making process. Use project management software to ensure accurate data is easy to get your hands on. 

If your team still uses multiple spreadsheets to manage projects and tasks, there's an easier way. Check out our guide on how to break up with Excel for good.

Tip 5: Don’t micromanage

No one likes to feel like their boss is breathing down their neck. Give team members the freedom to do what they do best, but keep a finger on the pulse of what’s happening at all times.

Project management software like Teamwork.com has the resource management features you need to monitor the progression of your projects and users without giving the feeling of micromanagement. It's simple to spot bottlenecks and give a sense of transparency to everyone working on the project.

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By tracking the time each team member spends on a task, you get a much clearer overview of who still needs to do what. It also lets you spot team members who are under or overutilized on your team.

Speaking of project management tools, let’s take a look at how you can leverage them to improve portfolio management workflows.

Using project management software for portfolio management

Portfolio management and project management are two separate activities. But project management software can be an incredibly helpful tool for providing greater transparency as well as real-time data and project statuses.

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A tool like Teamwork.com collects project information on a granular level, which higher-level portfolio managers can access in a visual dashboard. It eliminates the need to do clunky tasks, like exporting insights from Excel or keeping track of endless email threads. 

Get a top-level view of your project inventory and project progress, keep track of funding rounds and project proposals with visual Kanban boards, and create custom dashboards to gain a quick snapshot of your portfolio profitability.

Want to see Teamwork.com in action? Get a free 30-day trial today and see why so many teams use our platform for portfolio management.

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