Project Management Institute

The sum of its parts

break down the big picture of portfolio management to illuminate each component's value

Break down the big picture of portfolio management to illuminate each component's value.

BY TERESA (TERRI) KNUDSON, PMP, PgMP

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During the course of studying for the Portfolio Management Professional (PfMP)® certification, I've come to see portfolio management as a puzzle with many pieces that need to be put together to create a complete picture. Each piece is important, but it takes all of them together to provide value to organizations. So what pieces do I see?

The first piece is standards. This is what provides a solid framework for portfolio management. The Standard for Portfolio Management supplies guidance in the areas of strategic alignment, governance, portfolio performance, portfolio risk management and communications management. While this is an important piece of this puzzle, it's definitely not the only one.

The next piece is the project portfolio itself. Obviously, you can't manage a portfolio unless you have one. This piece ultimately represents how much management the portfolio needs in terms of the scope, content and leadership structure that executes programs and projects.

Two other big pieces of portfolio management are the money and the people. These components are absolutely necessary to accomplish anything within the portfolio. But they also tend to be the pieces that limit the level to which project portfolio investments can be made.

The money puzzle piece represents the financial management component of portfolio management. It's important to consider what funds are available to invest in the portfolio, and the type of funds: capital or operating expenses. It's also important to consider the ongoing costs of the project and the long-term funding implications.

The people piece is required to get projects done. Resource management is a major factor in portfolio management. As a portfolio manager, you need to assess the number of people needed, the required roles and skills, and manage the schedule and availability of these resources. But employees within most organizations are limited in number, have variable skill sets and levels of expertise, and typically have concurrent assignments that require their time and attention.

The final piece to the portfolio management puzzle is the one that I've found to be the most difficult to put in place: portfolio decision making. This piece involves weighing strategic value, benefits realization, organizational readiness, external market environment and other factors to determine the portfolio's priorities. In addition, if your portfolio is big and complex, decision making will require expertise in forecasting, modeling and analysis.

It's important to understand that each of these pieces must be in place for portfolio management to be possible and effective. With any of them missing, you have an incomplete picture and will have gaps in the processes and information necessary to optimally manage a portfolio.

At any organization, it takes time and effort to put the full puzzle together. Doing so can be quite challenging, because many of the pieces might be new to your organization. Nevertheless, it's also intriguing and fun, because when the puzzle is complete, you can take a step back and see the full picture. PM

At any organization, it takes time and effort to put the full puzzle together. Doing so can be quite challenging, because many of the pieces might be new to your organization.

img Teresa (Terri) Knudson, PMP, PgMP, is the director of the enterprise portfolio management office at the Mayo Clinic, Rochester, Minnesota, USA. She can be reached at knudson.teresa@mayo.edu.
This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

OCTOBER 2015 PM NETWORK

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