There is large number of benefits of Portfolio Management that can provide high value returns in case it is performed on regular basis and implemented properly. There are many companies that aimed to utilize their management efforts on balanced project portfolio for achieving optimal performance and returns for the entire portfolio.
The proper portfolio management ensures the proper mix of projects for achieving the maximum overall returns. The project portfolio comprises of projects that provide values that differ widely from each other. The projects in the portfolio vary in terms of following factors.
· Short- and long-term benefit
· Synergy with corporate goals
· Level of investment
· Anticipated payback
By considering all these factors, PPM focuses on optimization of the returns of the entire portfolio by doing the following activities.
· Executing the most value-producing projects
· Directing the funds towards worthy initiatives
· Eliminating the redundancies between projects
· Saving time and costs
Balancing the Risks posed by Projects
The PPM involves the balancing of the risks posed by the projects in the portfolio. The companies should evaluate and balance the projects’ risks in their portfolios for minimizing the risks and maximizing the returns by diversifying portfolio holdings.
A traditional portfolio may minimize the risk and protect principal; however it also limits the prospective returns. On the contrary, the hard-line project portfolio may provide greater chances of good returns however it also poses considerably higher risk of failure or loss. PPM balances the risks with potential returns by diversifying the project portfolio of the companies.
Optimal Allocation of Resources
The resources are optimally allocated among various projects of the portfolio. As the resources are really limited, all the projects should compete with each other for resources. PPM involves measuring, comparing, and prioritizing the projects in order to classify and implement the most valuable projects only. The conflicts between the projects for resources are resolved by the high level management. The skill sets required for each project and ideal source of these resources are determined by incorporating formal sourcing strategies.
Correction of Performance problems
The performance problems are corrected prior to their development in major issues. Although, PPM cannot completely get rid of performance crisis, however it assists in addressing the performance issues early. The PPM involves identification, escalation and addressing of any issues related to execution and helps in keeping the progress of projects on track.
Aligning projects according to business goals
PPM ensures that projects remain aligned to the business goals during their execution by performing following activities.
· Management oversight and monitoring throughout the project
· Standard communication and coordination
· Regular course correction for checking the project drifts
· Redirecting projects for maintaining alignment and changing business objectives
Executive level Project Oversight
Executives are involved for prioritizing and oversighting the project responsibilities. This ensures that projects receive the required support and they can be completed successfully. Executives have the required business acumen and they can align project by using various business strategies.