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Getting To Know The Objectives Of Portfolio Management

Getting To Know The Objectives Of Portfolio Management

Portfolio management has so many advantages. And with that being said, more and more organizations in the business industry benefit from it. From project success to reaching the business objectives, portfolio management is a key player for organizations. But what does portfolio management want to achieve? Sure, you have all the advantages and functions, but why does portfolio management exist in the first place? The objectives of portfolio management are far and wide, but they basically fall into a singular logic. And regardless the size of an organization, the objectives of portfolio management can be applied.



The Objectives of Portfolio Management and Their Importance

The entire mechanics of portfolio management is focused in governing projects and at the same time ensuring that they are organized and meet the business objectives. If a project fails to return a profit or it’s deemed redundant, it should be disposed from the portfolio. Project portfolio management, not just solely focus on the fate of the projects operating within; it also enables the members to come up with a decision for those projects and utilize existing resources. There are also processes involved such as assessment and monitoring—all made possible by portfolio management.

We might be fully aware of the objectives of portfolio management: to help teams decide clearly, to conserve time and resources, and all that jazz. Granted, we take these at face value, but pinpointing the specifics will expand more potential for portfolio management. How each of these objectives of portfolio management function is the first step to understanding their existence.

The following aspects below are the objectives of portfolio management :


  • Alignment

It is no surprise that projects must be aligned to the organization’s business objective. Otherwise, the projects that are not parallel to it are just purposeless. One of the concepts of project portfolio governance is alignment and it’s one of the efficient strongholds of the objectives of portfolio management.

Everytime a company’s objective changes, so do its existing projects. It doesn’t matter if half of the projects are long-term, and the others are short-term. A project that exists in that organization must be align to the business objective. On the other hand, projects that no longer contribute to the objective must be re-aligned or removed. It’s a tough and daunting decision for the people involved, but it means freeing up the constraints that bind the company and disrupt the process of other projects that are doing well.


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  • Prioritization

Another one of the primary objectives of portfolio management is prioritization. Project portfolio managers (PPMs) typically oversee the available resources and ensure that they are properly utilized and distributed in the existing projects. Of course, not all projects receive the same resource treatment—the PPMs must evaluate the projects that need to go and separate them from projects that need the resources.

You ask, “how about we share resources?”. Good idea, but it doesn’t mean that shared resources are effective. They are often the gateway to disaster since some projects will run out of resources if they share it with other projects. There will also be issues among team members such as a number of resources to be shared. “Sharing is loving” doesn’t always work in the world of resource allocation.


  • Allocation of Resources

You may have successfully utilized and conserved the provided resources, but how do you manage and maintain them once they are sent to the projects within the portfolio? This is another challenge PPMs have to face because the executives need to see the status of the resources and how the project is keeping up with these resources. The objectives of portfolio management also mean monitoring the resources from start to finish.

This means that project portfolio managers need to submit a periodic report of the project status and investment to the executive. It is still up to the latter on how frequent these reports are. The objective of portfolio management is not just simply deliver the project and be done with it—it should satisfy both the clients and stakeholders and reap value and return.


  • Balance

The objectives of portfolio management are no stranger to balancing. In fact, it’s one the advantages of having portfolio management around in an organization. Balance is not only an objective but a principle as well. When an organization identifies the balance of their projects, they will be able to steer their projects and portfolio in the right direction. It’s as simple as identifying long-term versus short-term projects or projects that have higher or lower risks. Besides these factors, organizations also need to understand how the projects will keep up with the trends in the market, cost reductions, technologies, and product classifications.


  • A Sense of Direction

Ask yourself: “Where is my portfolio going?” If you immediately answer “success” or “more prospects”, then you need to evaluate your portfolio more. Yes, success is one of the main reasons why portfolio management is embedded in the organization. But your direction should create not just a goal, but also an identity on your portfolio. In that case, regardless of the size and duration, the projects must successfully align the company’s business goal. This is a certain direction that you will always keep in mind and one of the objectives if portfolio management that you need to instill in your team.


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  • Preventing the Overwhelming Number of Projects

Too many projects can clog up the portfolio and can cause a wide array of problems in the future. When you have limited resources, you have to make best of it—not add more projects to the roster. This also means that if you choke your roster with too many projects, it will take ages for them to be put out on the market. Not to mention this will be awfully time-consuming. More doesn’t always mean the merrier. Learn to balance these projects and ensure that resources are not being pulled apart by other projects. The objectives of portfolio management also ensure the right number of projects and prevent a chaotic process.


Knowing More Objectives of Portfolio Management

The objectives of portfolio management are not limited; in fact, they have infinite possibilities to boost project success and enable organizations to achieve their business goals. Even if your company is a huge superpower or a humble start-up, portfolio management aims to be a sturdy fortress that houses your organizational structure, existing projects, and even your team hierarchy. Hopefully you will start venturing in portfolio management universe and if you do, always remember that objectives of portfolio management as your guide in the journey.


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Management Square

Management Square is a service provider company specializing in Strategy Execution, Business Transformation, and Portfolio, Program and Project Management. Our mission is to create high quality trainings through professional excellence, and to provide a consultancy of choice through extensive learning experiences.


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