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Single or Multiple Project Portfolios?
April 22, 2009 | Author: PM Hut | Filed under: Project Portfolio Management
Single or Multiple Project Portfolios?
By Miley W. Merkhofer
A single project inventory can be constructed containing all of the organization’s ongoing and proposed projects. Alternatively, multiple project inventories can be created representing project portfolios for different departments, programs, or businesses. Since project portfolio management can be conducted at any level, the choice of one portfolio versus many depends on the size of the organization, its structure, and the nature and interrelationships among the projects that are being conducted. It might not, for example, make sense to force a centralized project portfolio on an organization that practices decentralized decision-making.
The key is to group projects using common resources so as to leverage knowledge and expertise needed for portfolio management. If multiple project portfolios are defined, related projects should be organized into common portfolios. Portfolios of highly interrelated projects are often referred to as “programs”—groups of projects that must be selected and managed in a coordinated way in order to maximize success. The figure below illustrates the relationships that may exist among portfolios in a large organization.
Portfolio groupings should be organized so as to be as independent of one another as possible. Decisions about what projects to conduct within one portfolio should not depend in a significant way on the projects that are conducted within any other portfolio. The decision of how to allocate resources among the various project portfolios can then be made at a higher level, based on estimates of the how the value of each portfolio depends on the funding that it receives.
Miley W. (Lee) Merkhofer, Ph.D., is an author and practitioner in the field of decision analysis who specializes in assisting organizations in implementing project portfolio management. He has served on advisory panels for several government agencies and has received grants and research awards for work in the area. Lee is an editor of the journal Decision Analysis.
Prior to becoming an independent consultant, Lee was a Partner of PriceWaterhouseCoopers, where he founded that organization’s capital allocation and project prioritization business practice. Lee is a founding partner of Folio Technologies LLC, a provider of web-based, project portfolio management software.
Lee received his Ph.D. in engineering economic systems from Stanford University. He is the author of the book Decision Science and Social Risk Management and co-author of the book Risk Assessment Methods..
Additional papers on project portfolio management can be found on Lee’s website, www.prioritysystem.com. E-mail: lmerkhofer@prioritysystem.com.
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