A new wave of management

Historically, project portfolio management has been understood as the management concerns associated with running multiple projects. Portfolio management is, in fact, much more than management of a mere collection of projects or multi-project management.

A portfolio of projects needs to be structured and assessed in terms of business value and alignment to strategy and should be designed to achieve the maximum risk-adjusted value contribution to an organisation.

If project management is about managing within the defined constraints (usually expressed in terms of time, cost, resource and quality), then portfolio management is about the management of the constraints. That is to say, the specific management of: those factors that will tend to constrict or limit throughput, cause bottle-necks and therefore reduce the flow (using a systems analogy) of projects in a given portfolio.These factors are referred to as the “critical resources” and need to be managed at portfolio level. These include but are not limited to the following: 

• Key personnel (required by multiple projects); 
• Project interdependencies 
• Approval gates

By removing these from the control of the individual projects, the process of portfolio management will therefore cause significant change to individual project plans which are individually concerned with achieving their own stated objectives. In other words, portfolio management brings “big picture” management in order to achieve maximum value delivery to the orgainisation. As with any system the flow rate or throughput is determined by the bottlenecks – that is the specific concern of portfolio management.