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A project portfolio management system is an essential part of an enlightened organization, although all organizations would benefit from some form of such a function. Project portfolio management (PPM) involves a logical and formalized selection of projects and a methodical execution of these projects to their logical and successful conclusion.
An effective project portfolio management system process serves to identify, analyze, and quantify project value on a regular basis; to prioritize projects; and to identify which projects to initiate, reprioritize, or terminate.
The objective of PPM is to select and prioritize projects to deliver the highest value in accordance with the preestablished portfolio management business decisions and priority criteria. Priority should be based on both individual project benefits and overall impact to the organization. In addition, the resulting portfolio mix must not exceed the organization's resource capacity and capability.
The simple view - and one of the earlier views - of project management is that it is a process whereby each project is approved and managed independently. In this case, the focus is on a single project and the triple constraint - scope, time, and cost, of that project separate from other projects. Typically, the project manager is responsible for evaluating the performance of the project in the light of its approved objectives. At times, given the importance of the project, the project might be reviewed by the upper executives, again in isolation of other projects.
The primary benefit of a project portfolio management (PPM) system is that only the right projects will be selected and/or continued. The projects in the pipeline will be fully aligned with the strategic business goals of the enterprise. However, to some people, PPM might appear to add a level of complexity to managing projects. This notion is partially correct in that projects will no longer be conducted as floating islands in the enterprise. In most cases, the barriers to establishing a PPM system are the magnitude of the efforts involved in changing the organizational environment to support a formalized process, the possible training involved, and the initial investment necessary for the development of the required procedures and tools. On the other hand, the benefits of having a formalized and fully effective PPM system are better competitive positioning, an...