Project portfolio management (PPM) is a process of selection, analysis, prioritization, and organization of projects for a given company, and it’s designed to maximize profitability while improving project-by-project efficiency. Obviously, you’ll want the highest-priority projects to receive the majority of your current resources, and you’ll want to put lower-priority projects on the back burner until more resources become available.
But if you’re new to PPM, or if you’re used to one style of PPM, you may neglect the full spectrum of variables that you should use to make those determinations. So how, exactly, should you go about deciding how to prioritize projects?
The Most Important Variables
Your first job is to become acquainted with the most common and telling variables about a project’s value and its place in your organization—and of course, choose a platform that allows you to see all those variables at once. These are some of the most important:
- Profitability. First, you’ll need to look at the project’s profitability. Is this a high-value project where the revenue will far outweigh the costs? If so, it should take some priority over a similar project with less value or higher costs. The more profitable projects you take on, and the faster you complete them, the more money the company’s going to make—and that should be one of your biggest bottom-line goals. It isn’t the only thing you should keep in mind when choosing projects, however.
- Available resources. You’ll also need to look at how many resources you currently have available. If you’re experiencing a slow period, and some of your top talent is currently unoccupied, you won’t have a problem assigning the resources you need, but if there’s a shortage of available staff, you may need to apply stricter criteria when choosing projects to take the spotlight.
- Resources required. You’ll also need to consider which resources (and how many resources) are required for a given project. For example, if you have two projects, one of which can be handled by anyone and one of which can only be handled by your most skilled employee, the latter should be your priority when assigning your most skilled employee. Similarly, you’ll need to consider whether a project can start with a small number of resources and scale, or whether it needs a full team from the outset.
- Client considerations. Profitability isn’t the only measure of a project’s value to your organization. You’ll also need to consider what the project means to your client; for example, a project with razor-thin profit margins might be worth prioritizing if there’s a potentially massive client behind it. By contrast, a super-profitable project might not be worth investing in if it looks to be a one-time-only deal.
- PM considerations. If you’re working with a team of project managers, you’ll need to consider not only their current workloads, but also their strengths and weaknesses. Some of your PMs will specialize in certain types of projects; finding a way to allocate PMs to their strongest and best-suited projects is a core skill necessary for successful PPM.
- Project urgency. Not all projects have the same level of urgency, either. If a client is working with a strict deadline and needs an app to launch in one month, no matter what, that project is going to take priority over one that doesn’t have a deadline at all, such as an internal project. This variable is especially difficult to track and measure, since a project’s relative urgency can change at the drop of a hat.
- Cash flow. Finally, you’ll need to consider your business’s cash flow, and whether there are any urgent needs that a closed project could fix. For example, a marginally profitable project that can be completed in the span of a few days might take priority over a larger, more urgent client project that will take a month to complete because it could give your business a boost in revenue it needs to clear an important hurdle, or to reach a goal for the end of the quarter.
Aggregating and Ranking
None of these variables should, independently, decide how you should move forward with a given project. Instead, you must consider these variables in tandem, for all current and prospective projects that you’re currently juggling. The real challenge is finding a way to stitch these pieces of information together in a way that allows you to determine the most important projects for your company.
There are a handful of ranking formulas you can use to make those determinations, but ultimately, the value of each variable will depend on your company’s needs and your personal philosophy—both of which will likely change gradually over time.