This “Mini Wiki” is an easy, high level go-to resource intended to be a nice overview to all that is Portfolio Management. As portfolio managers, we need to be rockstar’s across many domains, and in this article we use the domains listed in PMI’s Exam Content Outline for the Portfolio Management Professional (PfMP)® exam. If you wish to better understand what Portfolio Management is, then read about this practice here.
[1] Strategic Alignment
Strategic Alignment is the process of ensuring that every project, program, and operation within a portfolio is directly connected to the overarching goals and objectives of the organization. This alignment is not a one-time task but an ongoing process that requires constant evaluation, adjustment, and communication to ensure that all portfolio components contribute meaningfully to the organization’s strategic vision. See: Connecting the Dots from Strategy to Tactics to Ops
Task 1: Evaluate Organizational Strategic Goals and Objectives
Objective: To accurately understand and interpret the strategic priorities of the organization.
Explanation: The first step in strategic alignment is to gain a deep understanding of the organization’s strategic goals and objectives. This involves thoroughly reviewing all relevant documentation, such as the organization’s strategic plan, mission statements, and business objectives. However, reading documents alone is not enough. It is essential to engage with key stakeholders—executives, department heads, and other decision-makers—to gather insights that might not be fully captured in written documents. These conversations help to clarify priorities, uncover underlying motivations, and ensure that you have a comprehensive understanding of what the organization aims to achieve.
In practice, this means setting up interviews, workshops, or meetings where these leaders can discuss their vision, challenges, and expectations. As a portfolio manager, your role is to listen actively, ask probing questions, and synthesize this information to form a clear picture of the organization’s strategic landscape.
Task 2: Identify Prioritization Criteria
Objective: To develop a framework for making informed decisions about which portfolio components should be prioritized.
Explanation: After understanding the strategic goals, the next step is to establish the criteria by which potential and existing portfolio components will be evaluated and prioritized.
An organization may not have prioritized components, but may have an inventory of work that could develop into a portfolio. This inventory could thus serve as starting point for portfolio development, ensuring that the potential components are in alignment with strategic goals, which is crucial for achieving the intended outcomes of the portfolio. Additionally, understanding and documenting component interdependencies is vital for an efficient portfolio, as it helps minimize the effort required to meet component objectives.
Prioritization criteria might include factors such as return on investment (ROI), strategic fit, legal or regulatory requirements, and stakeholder expectations. These criteria are essential for ensuring that the portfolio not only aligns with the organization’s strategy but also maximizes value and minimizes risk.
The process of identifying these criteria involves analyzing the organization’s strategic documents, consulting with stakeholders, and using your judgment as a portfolio manager. You might also need to look at industry standards and benchmarks to see how similar organizations are prioritizing their portfolios. Once established, these criteria will serve as a guiding framework for all portfolio decisions, helping to ensure consistency and alignment with the broader organizational strategy.
To support your prioritization decisions, utilize financial formulas such as Net Present Value (NPV) and Return on Investment (ROI). These metrics provide quantitative insights that help ensure your portfolio components are not only strategically aligned but also financially viable.
Task 3: Rank Strategic Priorities
Objective: To create a clear, actionable ranking of strategic priorities that will guide the portfolio management process. See: How to Do the Right Projects at the Right Time.
Explanation: With prioritization criteria in hand, the next step is to apply these criteria to rank the organization’s strategic priorities. This involves both qualitative and quantitative analysis. You’ll need to work closely with stakeholders to ensure that the ranking reflects the organization’s true priorities and is not skewed by individual biases or short-term thinking.
This task often requires balancing competing interests and making difficult decisions about which projects or programs should be given precedence. It is important to consider not only the potential financial returns but also the strategic importance of each initiative, its alignment with long-term goals, and the risks associated with delaying or deprioritizing certain components.
The outcome of this task is a ranked list of strategic priorities that will guide the allocation of resources and the sequencing of portfolio components. This list should be revisited regularly to ensure it remains aligned with the organization’s evolving strategy.
Task 4: Identify Existing and Potential Portfolio Components
Objective: To identify all current and potential portfolio components that could contribute to the organization’s strategic goals.
Explanation: Identifying portfolio components involves a comprehensive review of the organization’s current projects, programs, and operational activities, as well as potential new initiatives. This task requires a keen understanding of the organization’s strategic direction and the ability to recognize opportunities for new projects or programs that could enhance the portfolio.
To identify existing components, you will need to review business plans, project proposals, and operational reports. This involves not just cataloging what is already underway but also assessing how well these components align with the strategic goals identified in previous steps. For potential components, you might conduct market research, engage in scenario planning, or consult with stakeholders to identify new opportunities that could be added to the portfolio.
This task is important for ensuring that the portfolio is comprehensive and that all potential avenues for achieving strategic goals are considered. It also sets the stage for the next step, where these components will be evaluated and prioritized.
Read these 2 articles:
Task 5: Create Portfolio Scenarios
Objective: To evaluate and compare different portfolio scenarios to determine the most viable options.
Explanation: Once you have a list of potential portfolio components, the next step is to create and evaluate different portfolio scenarios. A portfolio scenario is essentially a possible configuration of the portfolio, including which components are included, how they are sequenced, and how resources are allocated.
Creating portfolio scenarios involves a detailed analysis of each component’s potential impact, risks, and benefits. Techniques such as SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), financial analysis, and risk analysis are commonly used to assess each scenario. The goal is to understand the potential outcomes of different portfolio configurations and to compare these scenarios against the prioritization criteria established earlier.
This task is helps ensure that the portfolio is not only aligned with strategic goals but also optimized for risk, resource allocation, and overall value creation. The result of this task is a set of portfolio scenarios that can be presented to the governance body for further evaluation and decision-making.
Tip: Utilize SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) when evaluating portfolio scenarios. This tool helps you assess the internal and external factors that could impact your portfolio, ensuring that the scenarios you develop are robust and aligned with strategic goals.
Task 6: Recommend Portfolio Scenario(s) and Related Components
Objective: To provide the governance body with a well-supported recommendation for the optimal portfolio scenario.
Explanation: After evaluating different portfolio scenarios, the next task is to recommend one or more scenarios to the governance body. This recommendation should be based on a thorough analysis of how each scenario aligns with strategic goals, the risks involved, and the expected returns.
When making a recommendation, it is important to present a clear rationale for your choice. This involves explaining why the recommended scenario is the best fit for the organization’s strategic objectives, how it optimizes resource use, and what the expected outcomes are. It is also important to address any potential risks or challenges associated with the scenario and to propose mitigation strategies.
This task requires strong communication skills, as you will need to convey complex information in a way that is understandable and persuasive to decision-makers. The goal is to ensure that the governance body has all the information it needs to make an informed decision that aligns with the organization’s strategic direction.
Incorporate visual tools like bubble charts to assess the balance between risk and reward across your portfolio. These charts can help visualize the impact of your prioritization decisions and ensure that your portfolio remains aligned with both strategic and financial objectives. Consider implementing a Stage-Gate process for evaluating and advancing portfolio components. This tool provides a structured approach to decision-making at critical points in a project’s lifecycle, ensuring that only the most viable projects progress through the portfolio.
Task 7: Determine the Impact of Changes in Strategic Goals
Objective: To continuously assess and respond to changes in the organization’s strategic goals and objectives.
Explanation: Organizations operate in dynamic environments where strategic goals and objectives can change due to various factors, such as market conditions, regulatory changes, or shifts in leadership. As a portfolio manager, it is your responsibility to continuously monitor these changes and assess their impact on the portfolio.
When strategic goals change, you must evaluate how these changes affect the existing portfolio components and whether adjustments are needed. This might involve re-prioritizing projects, reallocating resources, or even discontinuing certain initiatives that no longer align with the new strategic direction.
This task ensures strategic alignment — always. It requires a proactive approach, where you are constantly scanning the environment for changes and ready to adjust the portfolio as needed. The goal is to ensure that the portfolio remains relevant and continues to drive the organization toward its strategic objectives, even as those objectives evolve.
Task 8: Create High-Level Portfolio Roadmap
Objective: To develop and communicate a high-level roadmap that outlines the sequencing, dependencies, and strategic alignment of portfolio components.
Explanation: The final task in strategic alignment is to create a high-level portfolio roadmap. This roadmap serves as a visual and strategic guide that outlines how portfolio components will be sequenced and how they interconnect to achieve the organization’s strategic goals.
Creating this roadmap involves collaborating with key stakeholders to understand the dependencies between different portfolio components and to ensure that the sequencing aligns with the strategic priorities established earlier. The roadmap should clearly communicate the overall direction of the portfolio, including key milestones, timelines, and resource allocations.
This roadmap is not just a planning tool; it is also a communication tool that helps ensure that all stakeholders are on the same page and that everyone understands how the portfolio will be managed to achieve strategic objectives. It should be regularly updated to reflect any changes in the portfolio or strategic direction.
[2] Governance
Domain 2: Governance
Governance in portfolio management involves the establishment of structures, policies, and decision-making frameworks that ensure the portfolio is managed effectively and in alignment with the organization’s strategic goals. Good governance is the backbone of any successful portfolio, providing the rules and processes that guide decision-making, risk management, and performance monitoring.
Here’s a quote from PMI’s Portfolio Management Standard:
“Portfolio Governance is a set of practices, functions, and processes within a framework based on a set of principles that are the fundamental norms, rules, or values that guide portfolio management activities in order to optimize investments and meet organizational strategic and operational goals. The term governance framework includes oversight, decision making, control, and integration functions, by which governance processes and tasks are directed toward the achievement of portfolio governance objectives.”
Moreover:
“Governance is associated with decision making, oversight, control, and integration, whereas management is described as working within the limitations set by the governance framework with the overall aim of achieving the organizational objectives.”
Tip: Use a RACI Matrix (Responsible, Accountable, Consulted, Informed) to clarify roles and responsibilities within your governance framework. This tool ensures that everyone involved in the portfolio management process understands their specific duties, reducing ambiguity and enhancing decision-making efficiency.
Task 1: Define and Establish a Governance Model
Objective: To create a governance structure that supports effective decision-making and aligns with the organization’s strategic goals.
Explanation: The first step in establishing portfolio governance is defining the governance model itself. This model outlines the structure, roles, and responsibilities necessary to manage the portfolio effectively. Key components of the governance model include steering committees, governance boards, and the decision-making roles assigned to various stakeholders.
Establishing this model requires a deep understanding of the organization’s strategic objectives, as well as its operational realities. The governance model should reflect the organizational culture and be designed to facilitate clear, efficient decision-making. It must also define the rights and authorities of those involved in the portfolio management process, ensuring that decisions can be made at the appropriate levels and that there is a clear escalation path for issues that require higher-level intervention.
In practice, this task involves working closely with senior leaders and other stakeholders to agree on the governance framework. This might include drafting charters for governance bodies, defining decision-making processes, and establishing communication channels that ensure transparency and accountability across the portfolio.
The portfolio Initiation process group is where the long term roadmap is created. We are setting up the governance framework, communications planning, prioritization criteria, portfolio performance metrics, portfolio risk management, and looking at stakeholder definition and roles. Take note that it’s during initiation that we create:
- Portfolio Roadmap
- Portfolio Governance Plan
- Portfolio Charter
Task 2: Determine Portfolio Management Standards, Protocols, and Best Practices
Objective: To standardize portfolio management practices across the organization, ensuring consistency and efficiency.
Explanation: Once the governance model is in place, the next step is to determine the standards, protocols, and best practices that will guide portfolio management. These standards should be based on organizational assets—such as existing information systems and subject-matter expertise—as well as industry standards and best practices.
The goal is to create a consistent approach to portfolio management that can be applied across all portfolio components. This includes defining how performance will be measured, how risks will be managed, and how decisions will be documented and communicated. By standardizing these practices, you create a framework that ensures all portfolio components are managed in a way that aligns with the organization’s strategic goals.
In practice, this task involves reviewing existing processes and identifying areas where standardization is needed. It may also involve developing new protocols and training staff on how to apply these standards consistently across the portfolio. The end result should be a set of documented practices that are easy to follow and that support the effective management of the portfolio.
Task 3: Define and/or Modify Portfolio Processes and Procedures
Objective: To establish or refine the processes and procedures that will guide portfolio management activities.
Explanation: Effective portfolio management requires clear, well-defined processes and procedures. These processes govern everything from benefits realization and performance management to communication, risk management, and stakeholder engagement. The goal is to create a set of procedures that are tailored to the specific needs of the portfolio and that support the efficient and effective management of all portfolio components.
This task involves either defining new processes from scratch or modifying existing ones to better align with the governance model and the organization’s strategic objectives. It’s important to ensure that these processes are flexible enough to accommodate changes in the portfolio, while still providing the structure needed to manage the portfolio effectively.
In practice, this might involve working with process improvement teams, conducting process mapping exercises, and consulting with stakeholders to ensure that the processes you establish are both practical and aligned with the organization’s goals. The result should be a set of documented processes that provide clear guidance for managing the portfolio, while also allowing for continuous improvement over time.
Task 4: Create the Portfolio Management Plan
Objective: To develop a comprehensive plan that outlines how the portfolio will be managed and governed.
Explanation: The portfolio management plan is a key document that brings together all aspects of portfolio governance. It includes details on roles and responsibilities, governance structures, escalation procedures, risk tolerances, change control processes, and key performance indicators (KPIs). The plan also outlines the prioritization model that will be used to evaluate and rank portfolio components.
Creating this plan involves synthesizing all the information gathered in the previous tasks and structuring it in a way that is clear and actionable. The plan should provide a roadmap for how the portfolio will be managed on a day-to-day basis, while also allowing for flexibility as the portfolio evolves.
In practice, this task requires close collaboration with all key stakeholders to ensure that the plan is comprehensive and aligns with both the governance model and the organization’s strategic objectives. The plan should be a living document, regularly reviewed and updated to reflect changes in the portfolio and the broader organizational context.
Taking inspiration from ITIL’s Continual Improvement model, it’s important to treat your portfolio management plan as a living document. Regular reviews and updates ensure that the portfolio remains agile and aligned with evolving business strategies.
Task 5: Make Recommendations and Obtain Approval for Portfolio Decisions
Objective: To secure the necessary approvals for portfolio components, plans, and budgets, ensuring that the portfolio can be executed effectively.
Explanation: The final task in portfolio governance is to make recommendations to the governance body and obtain their approval for key portfolio decisions. This might include decisions about which components to include in the portfolio, how the portfolio budget should be allocated, and what the overall portfolio roadmap should look like.
This task ensures that all portfolio decisions are aligned with the organization’s strategic goals and have the necessary support from senior leadership. It also provides an opportunity to communicate the value of the portfolio and to ensure that all stakeholders are on board with the portfolio management plan.
In practice, this task involves preparing detailed reports and presentations that clearly outline the rationale for each recommendation. It also requires strong communication and negotiation skills, as you may need to address concerns or objections from stakeholders. The goal is to ensure that all portfolio decisions are well-supported and that the portfolio is positioned for successful execution.
Tip: If you are a PMI.org member, download the Governance Guide. There is a lot of great info in there, especially on page 52-53 and in Annex A1.
[3] Portfolio Performance
Portfolio Performance involves the continuous monitoring, management, and adjustment of the portfolio to ensure it remains aligned with strategic objectives and delivers the expected value. This domain focuses on the practical aspects of executing and maintaining the portfolio, ensuring that all components are performing as expected and contributing to the overall goals of the organization.
Task 1: Initiate the Portfolio
Objective: To activate the portfolio and authorize its components based on the established portfolio roadmap.
Explanation: The initiation of a portfolio is the first step in translating strategic plans into actionable projects and programs. This task involves formally authorizing the portfolio structure and the individual components within it. The portfolio roadmap, developed during the strategic alignment phase, serves as the foundation for this task. It outlines the sequence and interdependencies of portfolio components and provides a high-level view of how these components will contribute to the organization’s strategic objectives.
Initiating the portfolio requires coordination across multiple levels of the organization. You will need to ensure that all necessary resources—financial, human, and technological—are allocated appropriately and that each component has the approval to proceed. This task also involves setting up the governance structures that will oversee the portfolio’s execution, ensuring that decision-making processes are in place and that stakeholders are aligned on the portfolio’s objectives and priorities.
In practice, this means conducting kickoff meetings with key stakeholders, finalizing resource allocations, and ensuring that all components have clear charters or project initiation documents (PIDs) that define their scope, objectives, and deliverables. The goal is to ensure that the portfolio is launched with a clear direction, sufficient resources, and strong governance, setting the stage for successful execution.
Task 2: Collect and Consolidate Key Performance Metric Data
Objective: To measure the health of the portfolio by gathering and analyzing performance data.
Explanation: Once the portfolio is initiated, the next step is to establish a system for collecting and consolidating performance data. This data is essential for monitoring the health of the portfolio and ensuring that all components are on track to achieve their intended outcomes. Key performance metrics might include financial performance, schedule adherence, resource utilization, risk status, and benefits realization.
To collect this data, you will need to establish reporting mechanisms that allow for regular updates from all portfolio components. This might involve setting up dashboards, utilizing performance management software, or conducting regular status meetings with project and program managers. The data should be consolidated at the portfolio level to provide a comprehensive view of overall performance.
In practice, this task requires close collaboration with the teams managing individual portfolio components. You will need to ensure that data collection processes are standardized and that the metrics being tracked align with the organization’s strategic objectives. The goal is to create a clear and accurate picture of portfolio performance, which can then be used to inform decision-making and guide any necessary adjustments.
Task 3: Monitor Portfolio Performance
Objective: To ensure the ongoing effectiveness and efficiency of the portfolio by regularly reviewing performance data.
Explanation: Monitoring portfolio performance is an ongoing task that involves the regular review of performance data to ensure that the portfolio is on track to achieve its strategic objectives. This task requires a proactive approach, where potential issues are identified and addressed before they can impact the portfolio’s success.
Monitoring involves more than just reviewing reports; it requires analyzing trends, identifying variances from the plan, and understanding the root causes of any performance issues. This might involve using tools such as variance analysis, trend analysis, and earned value management (EVM) to assess how well the portfolio is performing against its objectives.
In practice, this task involves setting up regular performance reviews, which might include monthly or quarterly portfolio review meetings with stakeholders. During these meetings, you will review key metrics, discuss any issues or risks that have arisen, and make decisions about any adjustments that need to be made to the portfolio. The goal is to ensure that the portfolio remains aligned with the organization’s strategic goals and that any necessary corrective actions are taken promptly.
Tip: Implement the Balanced Scorecard as a tool for monitoring portfolio performance across multiple dimensions—financial, customer, internal processes, and learning/growth. This approach ensures a holistic view of your portfolio’s performance, aligning it with the organization’s strategic objectives.
If you are a PMI member, you can download this template.
Task 4: Manage and Escalate Issues
Objective: To address and resolve issues that arise within the portfolio, ensuring they do not impact overall performance.
Explanation: Issues are an inevitable part of portfolio management, and the ability to manage and escalate them effectively is important for maintaining portfolio performance. This task involves identifying issues as they arise, assessing their impact on the portfolio, and determining the best course of action to resolve them.
Some issues can be resolved at the portfolio management level, while others may require escalation to higher levels of governance or to specific stakeholders. The decision to escalate an issue depends on factors such as the severity of the issue, its potential impact on the portfolio, and the level of authority required to implement a solution.
In practice, this task involves setting up clear protocols for issue management, including defining who is responsible for identifying, assessing, and resolving issues, and when and how issues should be escalated. Regular communication with stakeholders is also essential to ensure that they are aware of any significant issues and the steps being taken to address them. The goal is to resolve issues quickly and effectively, minimizing their impact on portfolio performance.
Task 5: Manage Portfolio Changes
Objective: To maintain strategic alignment and improve portfolio performance by effectively managing changes within the portfolio.
Explanation: Change is a constant in portfolio management, and the ability to manage changes effectively is essential for maintaining portfolio performance. This task involves overseeing changes to portfolio components, such as scope adjustments, budget reallocations, or shifts in resource availability, and ensuring that these changes are aligned with the organization’s strategic goals.
Managing changes requires a structured approach, where proposed changes are evaluated based on their impact on the portfolio’s overall performance and alignment with strategic objectives. This might involve conducting impact assessments, reviewing change requests with stakeholders, and updating the portfolio roadmap to reflect approved changes.
In practice, this task requires strong change management processes, including a formal change control process that ensures all changes are documented, reviewed, and approved before implementation. Regular communication with stakeholders is also essential to ensure that everyone is aware of any changes and their potential impact on the portfolio. The goal is to manage changes in a way that enhances portfolio performance and maintains alignment with the organization’s strategic objectives.
Task 6: Balance Portfolio and Prioritize Portfolio Components
Objective: To optimize resource utilization and achieve strategic objectives by balancing and prioritizing portfolio components.
Explanation: Balancing the portfolio involves ensuring that resources are allocated in a way that maximizes the value of the portfolio and supports the organization’s strategic goals. This task requires a careful analysis of resource availability, including financial, human, and technological resources, as well as an understanding of the interdependencies between portfolio components. It involves evaluating each component based on factors such as strategic fit, risk, return on investment, and resource requirements. The goal is to ensure that the most valuable components are given priority and that resources are allocated in a way that supports the overall portfolio strategy.
In practice, this task might involve conducting resource capacity planning, scenario analysis, and trade-off analysis to determine the optimal allocation of resources across the portfolio. It also requires regular reviews of the portfolio to ensure that priorities remain aligned with strategic goals and that resources are being used effectively. The goal is to maintain a balanced portfolio that is aligned with the organization’s strategic objectives and capable of delivering the expected value.
Here is a great article from pmi.org that will help you with prioritization (covers Analytic Hierarchy Process). And this is a great article that shows you an very handy priority matrix:
Task 7: Analyze and Optimize the Consolidated Allocation/Reallocation of Capacity
Objective: To ensure portfolio efficiency and effectiveness by optimizing the allocation and reallocation of resources.
Explanation: Optimizing the allocation and reallocation of resources is essential for maintaining portfolio performance. This task involves continuously analyzing the availability and utilization of resources across the portfolio and making adjustments as needed to ensure that resources are being used effectively.
This task requires a deep understanding of the organization’s capacity, including its human, financial, material, and technological resources. It also involves analyzing the interdependencies between portfolio components to ensure that resources are allocated in a way that supports the successful execution of all components.
In practice, this task might involve conducting regular capacity and resource planning sessions, using tools such as resource leveling and resource smoothing to optimize the allocation of resources. It also requires the ability to make quick decisions about reallocating resources in response to changes in the portfolio or in the broader organizational context. The goal is to ensure that the portfolio is resourced effectively and that any capacity constraints are addressed proactively to maintain portfolio performance.
See:
Task 8: Update and Refine Existing Portfolio Roadmaps
Objective: To facilitate the reallocation of organizational resources by updating and refining portfolio roadmaps.
Explanation: As the portfolio evolves, it is essential to keep the portfolio roadmap up to date to reflect any changes in strategy, resource allocation, or portfolio components. This task involves regularly reviewing and refining the portfolio roadmap to ensure that it continues to align with the organization’s strategic goals and provides a clear path forward for the portfolio.
Updating the roadmap requires a detailed understanding of the current status of the portfolio, including the performance of individual components, the availability of resources, and any changes in the organizational context. It also involves working closely with stakeholders to ensure that any changes to the roadmap are communicated effectively and that all parties are aligned on the revised plan.
In practice, this task involves conducting regular roadmap reviews, where the current roadmap is assessed against the organization’s strategic goals and any necessary adjustments are made. This might include re-sequencing portfolio components, reallocating resources, or adjusting timelines to ensure that the portfolio remains on track. The goal is to maintain a dynamic and flexible roadmap that supports the successful execution of the portfolio and the achievement of strategic objectives.
Task 9: Measure the Aggregated Portfolio Performance Results
Objective: To demonstrate progress towards the achievement of business or strategic goals by measuring aggregated portfolio performance.
Explanation: Measuring the aggregated performance of the portfolio is essential for understanding how well the portfolio as a whole is contributing to the organization’s strategic objectives. This task involves collecting and analyzing performance data from all portfolio components, then aggregating this data to provide a comprehensive view of overall portfolio performance.
This analysis typically includes key performance indicators (KPIs) that reflect the portfolio’s financial performance, schedule adherence, resource utilization, risk management, and benefits realization. By aggregating this data, you can assess whether the portfolio is on track to achieve its goals, identify trends and patterns, and make informed decisions about any necessary adjustments.
In practice, this task requires a robust data collection and analysis process. You will need to ensure that data is collected consistently across all portfolio components and that the metrics being tracked align with the organization’s strategic objectives. The aggregated performance results should be presented in a clear, actionable format, often through dashboards or executive reports, that enables stakeholders to quickly understand the portfolio’s performance and make informed decisions. The goal is to provide a comprehensive assessment of the portfolio’s contribution to the organization’s strategic goals and to use this information to guide future portfolio management decisions.
Task 10: Maintain Records by Capturing Portfolio Artifacts
Objective: To ensure compliance with organizational policies, regulatory requirements, and portfolio management standards by maintaining accurate records.
Explanation: Maintaining accurate and comprehensive records is an important aspect of portfolio management. This task involves capturing and documenting all portfolio artifacts, such as approvals, prioritizations, decisions, and other key actions. These records are essential for ensuring that the portfolio is managed in compliance with organizational policies and regulatory requirements, and they provide a clear audit trail that can be reviewed if necessary.
Portfolio artifacts might include documents such as project charters, governance decisions, performance reports, risk registers, and change logs. These artifacts should be stored in a central repository that is accessible to all relevant stakeholders, ensuring that everyone has access to the information they need to manage the portfolio effectively.
In practice, this task involves setting up and maintaining a document management system that supports the secure storage and retrieval of portfolio artifacts. It also requires establishing clear processes for documenting decisions and actions, ensuring that all records are accurate, up-to-date, and compliant with organizational and regulatory standards. The goal is to create a comprehensive and easily accessible record of all portfolio activities, providing transparency and accountability throughout the portfolio management process.
[4] Portfolio Risk Management
Portfolio Risk Management involves the identification, assessment, and management of risks across the portfolio to ensure that the portfolio remains aligned with the organization’s risk appetite and strategic objectives. Effective risk management helps to minimize potential negative impacts on the portfolio and maximize opportunities that could enhance its value.
Tip: If you are a PMI.org member, download the Risk Management Guide. There is a lot of great info in there, especially in Appendix D.
Task 1: Determine Acceptable Level of Risk for the Portfolio
Objective: To align the portfolio’s risk profile with the organization’s risk tolerance and strategic objectives.
Explanation: Determining the acceptable level of risk for the portfolio involves assessing the organization’s risk appetite—its willingness to accept risk in pursuit of strategic goals—and translating this into specific risk tolerances for the portfolio.
Understanding the organization’s risk tolerance requires engaging with key stakeholders, including executives and governance bodies, to discuss their views on risk and how it should be managed within the portfolio. This task also involves reviewing the organization’s strategic objectives and determining how risk should be balanced against the potential rewards of portfolio components.
In practice, this task involves conducting a risk assessment at the portfolio level, identifying potential risks and categorizing them based on their likelihood and impact. The results of this assessment should be used to set risk thresholds for the portfolio, defining the levels of risk that are acceptable and those that require mitigation or escalation. The goal is to ensure that the portfolio’s risk profile is aligned with the organization’s strategic objectives and that any risks that could threaten the achievement of these objectives are managed proactively.
Task 2: Develop the Portfolio Risk Management Plan
Objective: To establish a comprehensive plan for managing risks across the portfolio, in alignment with organizational guidelines and best practices.
Explanation: The portfolio risk management plan outlines how risks will be identified, assessed, managed, and monitored across the portfolio. This plan should be aligned with the organization’s overall risk management framework and should be tailored to the specific needs and characteristics of the portfolio.
Developing the risk management plan involves identifying potential risks that could impact the portfolio, categorizing these risks, and developing strategies for managing them. This might include risk mitigation strategies, such as avoiding, transferring, or accepting risks, as well as contingency plans for responding to risks if they materialize.
In practice, this task requires collaboration with risk management experts, project and program managers, and other stakeholders to ensure that all potential risks are identified and addressed. The plan should include detailed procedures for monitoring risks, reporting on risk status, and updating the plan as new risks emerge or existing risks change. The goal is to create a robust and flexible risk management plan that enables the portfolio to respond effectively to risks and maintain alignment with strategic objectives.
Complement your dependency analysis with a Risk Breakdown Structure (RBS). This hierarchical tool categorizes potential risks, making it easier to identify, assess, and manage interrelated risks across the portfolio.
You can also incorporate Monte Carlo simulation into your risk assessment process. This statistical tool allows you to model the probability of different outcomes and better understand the potential impact of risks on your portfolio. This level of analysis is crucial for creating a comprehensive risk management plan.
Task 3: Perform Dependency Analysis
Objective: To identify and monitor risks related to the interdependencies within the portfolio and across other portfolios.
Explanation: Dependencies within and across portfolios can significantly impact risk levels, as the success or failure of one component can affect others. Performing a dependency analysis involves identifying these interdependencies and assessing the risks associated with them. This analysis helps in understanding how changes in one part of the portfolio could ripple through and affect other components.
Dependency analysis involves mapping out the relationships between portfolio components, identifying critical paths, and assessing how risks in one area could impact others. This task also involves monitoring these dependencies over time, as changes in the portfolio or external environment could alter the risk landscape.
In practice, this task requires a detailed understanding of the portfolio’s structure and how its components interact. You may need to work closely with project and program managers to map out dependencies and assess their impact on the overall portfolio. The goal is to identify potential risk points in the portfolio and develop strategies to manage these risks, ensuring that dependencies do not compromise the portfolio’s ability to achieve its strategic objectives.
Task 4: Develop, Monitor, and Maintain Portfolio-Level Risk Register
Objective: To provide a centralized view of risks at the portfolio level, enabling effective risk management and decision-making.
Explanation: The portfolio-level risk register is a key tool for managing risks across the portfolio. It provides a centralized view of all identified risks, including their likelihood, impact, and status, and is used to track the management of these risks over time. The risk register should include risks that are specific to individual components as well as those that impact the portfolio as a whole.
Developing and maintaining the risk register involves identifying risks, categorizing them, and assigning them to appropriate owners for management. The register should be regularly updated to reflect new risks, changes in existing risks, and the status of risk management activities.
In practice, this task requires ongoing collaboration with project and program managers, as well as other stakeholders involved in risk management. The risk register should be used as a living document, regularly reviewed and updated to ensure that it accurately reflects the current risk landscape of the portfolio. The goal is to provide a clear and actionable view of portfolio risks, enabling proactive management and decision-making.
Enhance your risk management approach by integrating tools like a detailed risk register and dependency analysis. These tools allow you to proactively identify and address potential risks, ensuring that your portfolio remains resilient and adaptable.
Task 5: Promote Common Understanding and Stakeholder Ownership of Portfolio Risks
Objective: To ensure that stakeholders are aware of portfolio risks and are actively engaged in managing them.
Explanation: Effective risk management requires the active involvement of stakeholders at all levels of the organization. This task involves promoting a common understanding of portfolio risks and ensuring that stakeholders take ownership of the risks that affect their areas of responsibility.
Engaging stakeholders in risk management involves regular communication and education about the risks facing the portfolio, the potential impacts of these risks, and the strategies in place to manage them. It also involves fostering a culture of risk awareness, where stakeholders are encouraged to proactively identify and report risks, rather than waiting for them to become issues.
In practice, this task requires strong communication skills and the ability to build relationships with stakeholders across the organization. You may need to conduct risk workshops, develop training materials, or use other engagement strategies to ensure that stakeholders understand their role in managing portfolio risks. The goal is to create a shared sense of responsibility for risk management, ensuring that risks are identified, communicated, and managed effectively across the portfolio.
Task 6: Provide Recommendation and Obtain Approval for Portfolio Management Reserve
Objective: To optimize the portfolio’s strategic goals and objectives by securing a management reserve to address aggregate portfolio risk.
Explanation: A portfolio management reserve is a budget set aside to address unforeseen risks that could impact the portfolio. This reserve is used to cover the costs of responding to risks that were not identified during the initial risk assessment or that have escalated beyond their expected impact.
Recommending a portfolio management reserve involves assessing the overall risk exposure of the portfolio and determining the appropriate amount of reserve needed to mitigate these risks. This task requires a detailed understanding of the portfolio’s risk profile, including the likelihood and potential impact of high-risk events, as well as the organization’s risk tolerance.
In practice, this task involves presenting a well-supported case to the governance body or other decision-makers for the establishment of a management reserve. This might include detailed risk assessments, financial analyses, and scenario planning to demonstrate the potential impact of risks on the portfolio and the need for a reserve to address these risks. The goal is to secure approval for a management reserve that provides a financial buffer against unexpected risks, ensuring that the portfolio can continue to achieve its strategic objectives even in the face of unforeseen challenges.
[5] Communications Management
Communications Management in portfolio management involves the processes and activities necessary to ensure that information is effectively exchanged among stakeholders. This includes understanding stakeholder needs, managing their expectations, and ensuring that all parties are engaged and informed about the portfolio’s progress and any issues that arise. Effective communication is essential for building trust, managing conflicts, and ensuring that the portfolio remains aligned with strategic objectives.
Task 1: Analyze Internal and External Stakeholders
Objective: To identify stakeholder expectations, interests, and influence on the success of the portfolio.
Explanation: The first step in effective communications management is understanding who the stakeholders are and what they need. Stakeholders can include anyone who has an interest in the portfolio, from executives and project managers to external partners and customers. Each stakeholder group will have different expectations, levels of influence, and information needs.
Analyzing stakeholders involves identifying all relevant internal and external stakeholders and assessing their roles, interests, influence, and potential impact on the portfolio. This task might involve conducting interviews, surveys, or workshops to gather insights into stakeholder needs and expectations. You should also consider the level of engagement each stakeholder requires and how best to communicate with them.
In practice, this task requires the development of a stakeholder analysis matrix, which categorizes stakeholders based on their power, interest, and influence. This matrix helps to prioritize communication efforts, ensuring that the most influential stakeholders are engaged appropriately and that their needs are addressed. The goal is to build a clear understanding of who the stakeholders are, what they expect from the portfolio, and how they can be most effectively engaged.
Task 2: Create the Aggregate Communication Strategy and Plan
Objective: To develop a comprehensive communication strategy and plan that ensures effective communication with all stakeholders.
Explanation: Once you have a clear understanding of your stakeholders, the next step is to develop a communication strategy that outlines how information will be shared throughout the portfolio’s lifecycle. The communication strategy should be comprehensive, addressing all aspects of communication, including methods, frequency, and the specific needs of different stakeholder groups.
The communication plan is a more detailed document that operationalizes the strategy. It includes specific communication activities, timelines, responsible parties, and the tools or channels that will be used to deliver messages. The plan should be tailored to the unique needs of each stakeholder group, ensuring that the right information is delivered to the right people at the right time.
In practice, creating the communication strategy and plan involves close collaboration with stakeholders to ensure that their needs are met. This might involve setting up regular meetings, developing newsletters, or using digital platforms to facilitate ongoing communication. The goal is to create a clear, structured approach to communication that keeps all stakeholders informed and engaged, reducing the risk of misunderstandings or conflicts.
Task 3: Engage Stakeholders
Objective: To ensure stakeholder awareness, manage expectations, foster support, and build relationships and collaboration for the success of the portfolio.
Explanation: Engaging stakeholders is about more than just keeping them informed; it involves actively involving them in the portfolio management process. Effective engagement helps to build support for the portfolio, manage expectations, and ensure that stakeholders feel valued and heard.
Stakeholder engagement requires ongoing communication and relationship-building. This might involve regular updates, face-to-face meetings, or other forms of interaction that help to build trust and ensure that stakeholders are aligned with the portfolio’s objectives. It’s also important to listen to stakeholders, addressing their concerns and incorporating their feedback into the portfolio management process.
In practice, this task requires a proactive approach to stakeholder management. You might set up steering committees, hold regular check-ins, or create forums for stakeholders to share their views and contribute to decision-making. The goal is to create a collaborative environment where stakeholders are actively engaged in the portfolio and where their input is valued and used to guide decisions.
Task 4: Maintain the Communication Strategy and Plan
Objective: To ensure the ongoing effectiveness of the communication strategy and plan by evaluating and updating them as needed.
Explanation: Communication needs can change over time, and it’s important to regularly review and update the communication strategy and plan to ensure they remain effective. This involves evaluating the current communications capabilities, identifying any gaps, and making adjustments to better meet stakeholder requirements.
Maintaining the communication strategy and plan requires ongoing monitoring of communication activities and outcomes. This might involve gathering feedback from stakeholders, reviewing communication metrics, and assessing whether the plan is achieving its objectives. If issues are identified, such as stakeholders not receiving the information they need or communication channels not being effective, adjustments should be made promptly.
In practice, this task involves regular reviews of the communication plan, which might be done quarterly or as needed based on the portfolio’s progress and stakeholder feedback. You should be prepared to make changes to the plan to address emerging needs or to improve communication effectiveness. The goal is to ensure that the communication strategy and plan continue to support the portfolio’s success and that stakeholders remain informed and engaged.
Task 5: Prepare and/or Facilitate Stakeholder Understanding of Portfolio Management-Related Processes, Procedures, and Protocols
Objective: To promote a common understanding and application of portfolio management processes among stakeholders.
Explanation: Effective communication involves not only sharing information but also ensuring that stakeholders understand the processes, procedures, and protocols that govern the portfolio. This task involves educating stakeholders about how portfolio management works, what their roles are, and how they can contribute to the portfolio’s success.
Facilitating stakeholder understanding might involve developing training materials, conducting workshops, or providing ongoing support to help stakeholders navigate the portfolio management process. It’s important to ensure that stakeholders are aware of the governance structures, decision-making processes, and communication protocols in place, so they know what to expect and how to engage effectively.
In practice, this task requires a strong focus on education and support. You might need to create user guides, hold orientation sessions for new stakeholders, or provide one-on-one coaching to ensure that everyone is comfortable with the portfolio management processes. The goal is to create a shared understanding of how the portfolio is managed and to ensure that all stakeholders are aligned and equipped to contribute effectively.
Task 6: Verify Accuracy, Consistency, and Completeness of Portfolio Communication
Objective: To maintain credibility and satisfaction with all stakeholders by ensuring that all portfolio communications are accurate, consistent, and complete.
Explanation: The final task in communications management involves ensuring the quality of all portfolio communications. This means verifying that all information shared with stakeholders is accurate, consistent with other communications, and complete, providing a clear and comprehensive picture of the portfolio’s status and progress.
Verifying communication accuracy involves checking facts, figures, and other details to ensure that they are correct. Consistency means ensuring that the messaging aligns with the portfolio’s objectives and that there is no conflicting information being communicated. Completeness involves making sure that all relevant information is included and that stakeholders have all the details they need to understand the portfolio’s progress and make informed decisions.
In practice, this task requires a rigorous review process for all communications, whether they are reports, presentations, emails, or other forms of communication. You might need to establish protocols for reviewing and approving communications before they are shared with stakeholders. The goal is to ensure that all communications enhance the portfolio’s credibility, build trust with stakeholders, and support the successful management of the portfolio.
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