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Portfolio management is a big-picture approach to handling multiple projects or programs to meet business objectives. Also called Project Portfolio Management (PPM), it helps companies choose and prioritise projects that align with their long-term strategy.
Unlike program management, which focuses on managing related projects, portfolio management looks at all projects across the business to ensure they bring value while using resources wisely.
In this article, we’ll break down what portfolio management involves, its key elements, common challenges, and best practices for success.
The Association for Project Management defines a portfolio as a ‘collection of projects and/or programmes used to structure and manage investments at an organisational or functional level to optimise strategic benefits or operational efficiency.’
What does this actually mean? It means that a portfolio is a collection of projects or programs that are grouped together to help a company manage its investments more effectively. The purpose of organising projects and programs into a portfolio is to ensure that the company maximises its strategic benefits (like achieving long-term goals). Doing so also improves operational efficiency (making processes run more smoothly). Essentially, a portfolio helps a business focuses on the right projects that align with its overall strategy and deliver the most value.
Portfolio management covers a wide range of areas within an organisation. Unlike project and program management, which focus on individual or related projects, portfolio management takes a higher-level view. It looks at how all projects impact the business, not just how they’re executed.
Unlike programs, a portfolio doesn’t require projects to be linked. However, all projects within the portfolio should align with the organisation's overall strategy to ensure they support long-term business goals.
Read more about the distinction between projects, programs and portfolios here.
A portfolio manager is responsible for overseeing and prioritising the projects within the portfolio. It’s a ‘big picture’ role. While a project manager focuses on individual projects, a portfolio manager considers whether the whole portfolio is meeting strategic goals and delivering value.
Key responsibilities:
Managing portfolios is complicated, and portfolio managers face several challenges. Here are four major ones and how to handle them:
Many organisations have a silo mentality, where different departments keep information to themselves. This makes it hard for portfolio managers to get the data they need. It slows decision-making and can lead to teams hoarding resources, making it harder to distribute them fairly. In a survey by PM Solutions, 49% of portfolio managers stated that silo mentality was a ‘pain point’. To fix this, companies should encourage better communication between teams and encourage cross-department collaboration.
Portfolio managers need accurate, up-to-date information to make good decisions. If data is missing or wrong, it can cause budget blowouts, delays, and poor resource management. It also affects communication with stakeholders. In the same PM Solutions survey, 42% of portfolio managers identified unreliable information as the biggest ‘pain point’. Clear reporting systems and regular updates can help avoid these issues.
With multiple projects and programs running at the same time, balancing resources is tricky. If too many resources go to one project, others might suffer. Portfolio managers must monitor resource use and adjust as needed to keep all projects moving.
The more projects and programs in a portfolio, the more risks there are. Projects in the same industry also are susceptible to similar risks. Portfolio managers must look at risks across all projects, not just one at a time.
For example, after COVID-19, the price of building materials skyrocketed, forcing many construction companies into financial trouble. One major company, Probuild, collapsed while managing 18 projects worth $5 billion. Risk management plans help businesses prepare for unexpected challenges.
Want to get better at portfolio management? Here are some best practices:
Every portfolio needs clear, measurable goals that match the company’s long-term plans. These goals help decide which projects to prioritise.
Not all projects are equally important. Managers should rank them based on strategic value, potential profit, and risk level. A scoring system can help compare projects fairly.
Keep up with industry trends and tools by attending webinars, reading reports, and joining online communities.
Portfolio managers constantly make tough choices about which projects to fund, delay, or cut. Practising data-driven decision-making and scenario analysis helps improve judgment.
Managing a portfolio means working with executives, project and program managers, and teams across the business. Communication and leadership skills help align stakeholders and drive collaboration.
Understanding budgets, financial forecasting, and risk assessment is essential for managing a portfolio effectively. Learn how to measure project ROI and mitigate risks before they become major issues.
Stakeholders, from senior executives to team leads, have different priorities. Learning how to negotiate, manage expectations, and balance competing interests will make portfolio management smoother.
Software tools make it easier to track progress, manage resources, and improve communication. They help keep projects and programs within a portfolio on track and aligned with business goals.
Reviewing completed projects helps identify patterns, bottlenecks, and best practices that can improve future decision-making.
Would you like me to expand on any of these?
Earning a portfolio management certification can boost your knowledge and show employers you’re qualified. Many online courses let you learn at your own pace.
Portfolio management helps businesses stay on track by aligning projects with company goals, making the best use of resources, and managing risks effectively. By choosing the right projects, following best practices, and regularly reviewing progress, portfolio managers can add value and drive long-term success.
While portfolio management has challenges, using the right strategies, tools, and frameworks can help overcome them.
Want to learn more about a career in project management? Join our free Project Management Community here.
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