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Project Portfolio Management Essay

2613 words - 11 pages

Project Portfolio Management

Project Portfolio Management is a methodology to manage a company’s projects in a similar way that financial manager manages the company’s cash flow and related finances. According to Rouse (2013), “PPM (project and portfolio management) is a strategic prioritization methodology employed to analyze and manage current or proposed projects within an organization”. The purpose is to determine the best available sequence and group of projects to achieve organizational strategic objectives from concept to conclusion. Project Portfolio Management aims to align the projects, investments and resources with organizational priorities. Project Portfolio Management is a ...view middle of the document...

In their report, Perry and Hatcher (2008) conducted a survey to identify the benefits to 13 companies as a result of employing Project Portfolio Management. According to them, benefits included 35% increase in number of project managed, 37% reduction in cost per project, 78% decrease in redundant projects, 14% increase in staff productivity and drop in project failure rate by 59%.

Middle East Aeronautics (name changed for confidentiality), a public sector aeronautical rebuild and overhauling facility, takes a mixed approach to management of project by assigning functional managers from within the company as project managers. In such a case, functional managers would become project managers while performing their routine duties in parallel which Kerzner (2010) described as common practice during 1960s. One of the major reason for such an approach to project management in Middle East Aeronautics was that individual projects were launched within the departments as individual initiative without considering their alignment with organizational business strategy. Due to company internal politics, even the project were kept hidden until announced completed which impacted the working of other department and effective utilization of project deliverables. Thus Nguyen (2001) stresses the need for regulating the middle managers’ abilities of creativity and innovation. Every department seemed competing to portray their projects as success while remaining adopted a criticizing approach to discourage any innovative approach without considering the overall impact of the project which was a clear indication of lack of understanding from top management. In absence of a clear approach, there were duplications among the projects and ineffective utilization of resources to achieve project objectives.

Although one advantage of this approach is expanding the experience in project management and enhancing the skill set; however, in absence of a formal training on project management, there exists a risk of non-standardized approach and lack of essential tools and techniques to manage the projects. For example, risk management is a reactive approach rather than proactive as the project manager fails to appreciate the significance of risk assessment, risk response planning and risk mitigation action to protect project from external and internal factors that negatively influence the project success. Similarly, not developing a communication plan can lead to misunderstanding and confusion between project team and stakeholders resulting in project schedule delays. A more critical scenario is when company is managing more than one project without undertaking project portfolio management processes which is a disadvantage to the company on best utilization of resources especially when decision making is relies on critical factors tightly bounded to each other. According to Kerzner (2010), “portfolio management is critical to ensure that companies are spending their limited...

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