Project Portfolio Management (PPM) – Are we using the wrong Terminology?


I believe that clear terminology and efficient communication are important to have effective operations. I also believe that the term “project portfolio management” is an excellent term to describe the function because it explains what the managers should already be familiar with: maximizing value for the organization through optimizing human and financial resources.

When I explain the concepts of project portfolio management, I point out that our projects help accomplish our strategic objectives and that those projects represent investments by the company both in terms of financial resources and human resources. I go on to explain that our project portfolio is also analogous to a financial portfolio where we balance our investments (long-term and short-term, high risk and low risk) and have the same goal—to maximize value.

The key then is to drive maximum value out of those project investments and PPM helps us do that. I finish by discussing our portfolio management lifecycle which consists of four major steps:

1) Selecting the right projects (selected projects must align with the business strategy and meet other important criteria. The result: the portfolio will contain a higher percentage of winning projects)

2) Optimizing the portfolio (All the steps necessary to construct an optimal portfolio given current limitations and constraints)

3) Protecting the portfolio’s value (During the execution of an optimized portfolio, the aggregate project benefits (portfolio value) must be protected. This occurs by monitoring projects, assessing portfolio health, and managing portfolio risk)

4) Improving portfolio processes (Higher portfolio maturity translates into a greater realization of the benefits of project portfolio management)

I have not had any trouble presenting the concepts of PPM, but communicating concepts and getting increased participation are two different things.

I think the problem could be somewhere else however. In a classic portfolio management article by Rachel Ciliberti <http://www.ibm.com/developerworks/rational/library/apr05/ciliberti/index.html#N10094>, she points out that PPM is a blend of management disciplines that combines:

1) A business management focus to ensure that all projects and programs align with the portfolio strategy.
2) A general management focus for managing an organization’s resources and risks.
3) A project management focus for reviewing, assessing, and managing projects and programs to ensure they are meeting or exceeding their planned contribution to the portfolio.

Most good managers will not have any trouble with the first two points. However, a number of managers may not understand the project management language well enough and that may be a stumbling block.

Tim Washington
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Tim Washington

Senior Associate at Point B
I am an Associate at Point B consulting with a professional goal of making companies successful with project portfolio management.

My personal approach is to right-size portfolio management processes to fit an organization's culture and maturity to be effective without creating a bureaucracy. Please contact me if you would like to know more about how project portfolio management (PPM) can help your organization achieve its strategic goals.
Tim Washington
Follow me

Tim Washington

I am an Associate at Point B consulting with a professional goal of making companies successful with project portfolio management. My personal approach is to right-size portfolio management processes to fit an organization's culture and maturity to be effective without creating a bureaucracy. Please contact me if you would like to know more about how project portfolio management (PPM) can help your organization achieve its strategic goals.

2 thoughts on “Project Portfolio Management (PPM) – Are we using the wrong Terminology?

  1. Interesting post, I agree on avoiding jargon. Your 4 step process though assumes a strategy is already in place, that may be true, but often everyone’s view of the strategy is different and so there’s some work to be done to build consensus. Otherwise without clear direction and accountability you end up with a situation like this: http://www.projectcasestudies.com/?p=15

  2. Hi Simon,

    I wholly agree with you that there is an assumption that a strategy has been put in place. This is definitely a big assumption because while many organizations have a “strategy” on paper, few execute upon it. I do touch on this in my overview presentation on PPM under the “PPM Presentations” tab. Thank you for the post.

    Tim

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