When we talk about "projects" in a portfolio, what do we mean by projects? The flavor of a project portfolio management process will depend somewhat on the kinds of projects involved. Although most firms are now heavily involved in projects, the purposes and types of projects vary—for instance:
• The project is for the benefit of an external client. The primary benefit to the project producer is income (profit). Secondary benefits may include making use of surplus resources, building a reputation in a new area, or creating reusable technology or knowledge. Examples of these are architectural, engineering, and construction projects; consulting; temporary labor sources; and professional services organizations.
• The project is for the benefit of the performing company: to create new products and services that will be sold (at a profit). Examples are manufacturing and process companies, software developers, and pharmaceutical firms.
• The project is for the benefit of the performing company: to improve or maintain capabilities required to operate the business effectively. These would include internal information technology projects, manufacturing processes, facilities improvements, or expansions.
• The project is for the benefit of the performing company: to improve a competitive position. All of the previous examples apply here.
We can see that a project portfolio management process for Bech-tel or Halliburton, involved in architectural, engineering, and construction work, would have a different focus from the internal IT department at Citicorp.
Just as traditional project management can be effectively applied to all types of industries and technologies, PPM has a universal applicability. There will be variations in the process and the roles, but the fundamentals are similar. What follows here is equally applicable to new product development, information technology, and dozens of other business areas. With some modification, it is equally applicable to nonprofits and the public sector.
We can also see that the funnel of proposed projects could be filled from many sources. Project requests may come in through the firm's opportunity management program, product managers or other internal requests, or senior management (to support strategic initiatives). The challenge of PPM is to filter the project requests so that the projects that pass through the funnel into the pipeline best serve the long-term interests of the firm.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.