Project Portfolio Management

Every company has to collect and prioritize their development initiatives. The decision to implement a development initiative as a project is made by Project Portfolio Management. The purpose of the portfolio is to maintain the “big picture” to avoid sub-optimization, double or overlapping development efforts and resourcing conflicts.

The four cornerstones of Project Portfolio Management are

  1. Common classification supporting prioritization and the balancing of risks. Classification helps direct resources to development initiatives of strategic importance.
  2. A Common project phasing model makes for unified project steering and promotes understanding of the whole project portfolio.
  3. Common reporting practices make it easy to follow all developments on the project, program and portfolio levels.
  4. Common evaluation practices enable project-independent value appraisals.


Typically, the project portfolio is managed by the PMO/DMO that is responsible for keeping the project portfolio up-to-date, managing project dependencies, and evaluating new project proposals. The development initiatives in the project portfolio should be evaluated and classified using common criteria and prioritization. The PMO/DMO supports the Project or Development Portfolio Steering Group in deciding which projects are started, stopped or postponed and where the focus in the project portfolio lies.

An essential part of managing the project portfolio and Enterprise Development is assessing how appropriate the project portfolio is and making decisions on it regularly. Every project in the portfolio has to have a valid business justification, and all project dependencies must be identified. The projects in the portfolio often have different Project Managers, so it is very important to identify all project dependencies and communicate changes clearly.


Figure 2.6.1 Changes impact processes and systems to different degrees.

  1. Maintaining the Current State. If there is no real process or system development, the current state is maintained. Small changes might take place in both processes and systems.
  2. Replacing Existing Technology. Changing a version of an application due to technical reasons is an example. Investing in hardware systems also belongs to this same category, unless it involves process changes.
  3. Process Development Project. Business processes can be developed independently without system changes. However, in most cases, process changes require changes to systems as well. Development projects that consist of both process and system changes belong to category 4.
  4. Business Development Project. Implementation projects for IT systems that support the company’s core processes are Business Development Projects. For example, ERP systems and CRM (customer relationship management) projects are included in this category.


Project Portfolio Management can also be organized as a corporate-level function. In this situation, IT complies with the general company-wide principles of portfolio management.

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