Organizations can benefit from using Project Portfolio Management (PPM) practices. In fact, PPM allows companies to allocate resources, schedule, analyze, and manage projects and business. At the same time, there are problems companies face when using PPM.
What type of problems do companies face using PPM?
Let’s analyze the root cause, which is often these three main problems that organizations need to deal with when managing projects using PPM practices:
- Lack of Project Portfolio Management expertise
- Lack of connection to the company’s strategy
- Difficulties in balancing resources allocation
Lack of Project Portfolio Management expertise
One of the problems that companies face when using PPM is that Portfolio Managers see some portfolio evaluation techniques to be too difficult to use. They fail to recognize the connection between projects and resources.
It is pretty common to find managers who do not have the right skills to manage project portfolios. To manage portfolios effectively, managers need to have a combination of abilities. First, they should know the market they currently serve, the organizational objectives, and the competitors extremely well. Then, there are other skills that are also important: how to manage projects, how to balance resources, how to deal with political problems, and how to communicate effectively.
As you can imagine, it is challenging to find managers that excel in all these abilities. Abilities that are crucial to choosing the right projects for the portfolio.
Lack of connection to the company’s strategy
To achieve strategic objectives, companies have first to develop a strategic plan. Afterward, to fulfill the strategic plan objectives, they have to select and prioritize their projects. It is crucial to create the right combination of different types of projects, such as innovative projects, process improvement projects, and maintenance projects.
To support the strategic plan, companies need to launch and complete a variety of projects. Companies need to consider a balance of projects to be launched that allow them, once they have been completed, to achieve the strategy.
Another problem that companies face when using PPM is that most of the time, there is a lack of connection between projects and strategy. Studies report that project managers complain about the fact that the majority of projects are not linked to the company’s strategy. As a result, employees feel that they work on too many unneeded projects.
This happens when Project Portfolio Management is applied in the wrong way. Basically, when managers select projects that have no strategic objectives, they create portfolios that contain irrelevant projects that are not aligned with the organization’s strategy. Consequently, companies find themselves spending money on projects that do not reflect the strategic priorities of the business.
Creating a portfolio that reflects the company’s strategy is challenging and critical for companies. To reach this goal, they should start by defining a clear long-term strategy and vision.
Difficulties in balancing resources
The last problem we want to analyze here is that it is difficult to allocate and manage resources for every project without having a shortage of resources for the entire portfolio.
Studies report that resource allocation should be one of the primary activities in Project Portfolio Management. In addition, resource allocation has to be done according to the strategy of the company.
It is demanding for companies to balance resources according to skill and priority within the portfolio. One of the reasons for failure in resource allocation is that project managers usually tend to emphasize the project priority in order to have better resources assigned.
Keep in mind
We have seen that organizations can encounter problems when using Project Portfolio Management practices. It is also true that they can improve their performance and results by working on gaining more expertise, reducing the gap between projects and strategy, and being more pointed in allocating resources on projects.
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