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Project Portfolio Management and the PPM Tools

Madhavi Ghare Sep 26, 2018
Project portfolio management is all about doing the right projects, managing resources, prioritizing or terminating tasks in order to deliver high productivity and survive this economically challenged, risky environment.
The act of evaluating, directing and selecting the process, resources, methods, technology, budget and time is termed as project portfolio management (PPM). This process is followed by the PPM officers and managers in every organization.
Project portfolio management is a term used to describe the different approaches towards treating the various processes in project management as a part of a project investment portfolio.
These concepts were borrowed from established portfolio optimization methods such as the Options Theory, Modern Portfolio Theory and Applied Information Economics from the financial information sector.


  • To identify the fastest, cheapest and the most suitable approach in optimizing the use of resources, finances and time
  • To organize activities in order to achieve the management's set goals
The project portfolio management concepts are quite similar to the IT project management concepts. They are also considered to be a part of the corporate portfolio management concepts, and thus can be used by any corporate segment or group, effectively.

Functions of PPM Tools

How to allocate the right resources during crises? The management usually adopts a formalized format in order to track, allot and manage the set projects and resources in such a given scenario. This is when the project portfolio management tools actually come into picture.
Various PPM tools are used to measure the performance of all the different projects within the organization. Apart from performance analysis, these PPM tools can also help the organization objectively decide things such as:
  • Whether or not the project is contributing to the overall achievement of the organization
  • Whether the project's performance is having a negative impact on other projects
  • Which are the projects in the portfolio that are interdependent
  • Whether or not the project will deliver the desired objective
All these factors are measured in terms of a cost-benefit analysis.
One of the PPM tools which is quite popular is the use of decision tree in formulating business decisions regarding project management. This is very popular, especially with the higher management. The decision nodes in the decision tree use multiple options that optimize against a constraint.
Ideally, the combination of the projects in the project portfolio should yield a certain amount of payoff. If the cost-benefit analysis is not in accordance with the desired results, an opportunity cost analysis is conducted, and that particular project can be discontinued and the resources can be allocated elsewhere.
Thus, resource allocation becomes a very important function of these PPM tools. This includes all kinds of resources and capital. Different stages of planning, budgeting and implementation are included within this function. The 'start' and 'finish' dates for projects are also established. Future projects can also be predicted.
Apart from the various cost and benefit analysis, another function of PPM tools is called pipeline management.
This encompasses an analysis which considers that within the given number of projects happening simultaneously in an organization, and given the limited or finite amount of resources within the organization, how will the different projects in the portfolio be executed in the specified time.
Thus, it can be seen that resource allocation is the first step towards a pipeline management analysis. This ensures a realistic approach of the organization towards the planning processes.

Features of PPM Tools

Based on the points mentioned before, we can compile a list of the various features which a PPM tool should ideally provide. They are:
  • Project evaluation: The project evaluation method needs to be streamlined, systematized and organized in a proper fashion, in order to ensure that the project evaluation becomes a smooth and comprehensive process.
  • Resource planning: As seen before, resources of an organization are always finite. It doesn't make sense for any organization to plan a project portfolio which goes beyond the limits of the resources which they have.
  • Tracking the finances: This ensures that the finances and the actual costs and benefits are recorded and compared, so as to ensure that the logic used for the project portfolio management can be checked and corrected if required. This data can also be used in the future within the organization for creating comprehensive PPM policies.
  • Cost-benefit analysis: This is again a key element in any project management venture. However, within the purview of project portfolio management methods, this analysis can be conducted across all projects held within the organization.
  • Enabling communication: These PPM tools should also include a communication module which will ensure that the relevant data gets communicated to the different operational heads, so that they can bear the organizational goals in mind while executing their projects.
  • Accessibility: This is one of the basic and important functions which must be included, especially in today's world. These PPM tools must be both accessible for the relevant people within the organization and must also cover all IT-related aspects such as web accessibility, cross-platform accessibility, integration, etc.
Based on these features, one can decide if the organization needs to implement such a strategy within their policies or purchase the various PPM tools that are available in the market today.