PMcrunch

Project Portfolio Management, like Investment Portfolio Management, is a balancing act that requires constant monitoring and adjustment over time.  Whereas an individual may have the right balance of risk, return, income, growth and others represented in an investment portfolio, a project portfolio is similar in many ways.  Risks, returns, resources required, and alignment with overall strategy are just a few of the factors that must be kept in balance over time.

Investment Portfolio Rebalancing
You have carefully weighed the alternatives and have allocated just the right amount of your assets to stocks versus fixed-income investments. You feel comfortable with the growth/income and risk profile of your investment portfolio, and you have carefully diversified your assets over all the investment categories, and even within each category. Then, inevitably, the market jumps up or down, and your investment portfolio is thrown completely off balance.

Project Portfolio Rebalancing
Similar to an Investment Portfolio, Project Portfolios must be rebalanced when conditions change.  Here are some basic information needs and how they can be used to rebalance or adjust a portfolio of projects:

• Risks - Feedback from the project team can provide information or changing risk levels, including schedule risk, cost risk, or quality risks, such as not being able to provide the deliverable originally envisioned for the project.  It may also be that project risks have not changed appreciably, but the organization’s tolerance for those risks has changed!
• Returns - "Returns" refers to the expected benefits from the project.  Like an investment that is expected to earn a 12% annualized return, there are similar expectations for a project.  However, changing conditions could influence the expected benefits of the project, and it may be better to speed up, slow down, or even cancel a project as a part of the portfolio adjustment process.
• Resources required - Outside conditions may be in alignment with expectations, but resources required to achieve the project’s objective may have changed.  Adjusting resources deployed to the project will need to be considered.
• Alignment with overall strategy - When overall organizational strategy changes, each project in the portfolio needs to be reviewed for alignment with the new strategy.  It is easy to imagine that some projects may no longer be needed, whereas other projects that previously did not "fit" in the portfolio will now, and perhaps even other projects that were previously not considered may emerge as clear possibilities.

PPM Is and Action Sport!
PPM is an ongoing process, and not one that is complete at the formation of the initial portfolio.  As with investment portfolios, project portfolios need to be monitored and adjusted over time.  With investment portfolios, information is pretty easy to come by, and well suited for the kind of analysis that must be done.  In the case of PPM, however, the information is not necessarily easy to grab, and thus systems must be devised and implemented to get the feedback required.  With the right feedback, adjustment of project portfolios is possible in a similar way to investment portfolios.
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John Reiling, PMP
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