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How to Manage Your Project Portfolio and Increase Business Productivity
Managing your project portfolio means evaluating projects for relevance and priority throughout their lifecycle. As a result, irrelevant or inefficient projects can be stopped before they consume too many resources.
In other words, properly conducted project portfolio management will give you a clear idea of what you should be doing and how you should be doing it.
Here are five important steps of project portfolio management that will help you increase business productivity:
Step 1: Think Capacity
Taking on too many projects can lead to missed deadlines and lost customers.
Rather than having an assortment of projects simultaneously in motion, many of which you might not have the ability to complete, you can align your work with the resources that you have available.
Successful project portfolio management requires a realistic view of your capacity, an awareness of your budget, and a way to evaluate the priority of every project that you consider. You can begin evaluating your projects based on their cost. To do this, you must understand your direct and indirect costs.
Direct costs involve the labor used to produce the deliverables of your project as well as the cost of materials used in production and travel-related expenses. While direct costs may be easy to calculate, the analysis of your indirect costs will require more time, simply because they apply to your entire business rather than to a particular project. In general, indirect costs include overheads, equipment, administration and office space.
When you tabulate your direct costs and allocate a proportionate amount of indirect expenses to your project, you can evaluate whether you have sufficient human resources, materials and equipment to complete a project. Still, the fact that you have the capacity to complete a project does not guarantee that the project is a worthwhile undertaking.
Step 2: Define Business Values and Prioritize Projects
Prioritization of your projects requires you to define the value of every project to your business.
Different businesses use different methods to establish a project’s business value. You can use one or more common value analysis strategies to assess each of your projects.
Payback period analysis, for example, considers how much time you will need to recover your investment in a project. Projects with a short payback tend to have low risk compared to those that have a long payback period.
You can also calculate the accounting read return for a project through dividing its annual net income by its required initial investment. So, a project that is expected to produce a higher rate of return than other projects will have a higher priority.
Similarly, you may choose to compute the net present value of a project by assessing the present value of future cash flows. In addition, some businesses measure a project’s internal rate of return to complement their net present value calculations.
Whichever method you choose to define your projects’ business values, your ultimate goal is to prioritize the projects based on their value.
Step 3: Apply Kanban System
Kanban is a visual signal system developed by manufacturers to manage just-in-time inventory systems.
When workers use a part, they detach from it the Kanban card which is fed into the supply chain to trigger the re-order of that part. Also, some retailers use the tactic to trigger the restocking of store shelves as soon as an item sells out.
You can use the principles of Kanban to help manage your projects by creating visual cues that prevent you from working simultaneously on too many projects. Kanban principles also include finishing a project before beginning another one. This will help you avoid over-allocating your time and other resources as well as improve the speed at which you complete the projects. Kanban will enable you to minimize the impact of interdependencies which can happen when one project is delayed while waiting for another to finish.
Step 4: Use the Right Resources
Digital technology can simplify the management of your project portfolio.
One of the most popular tools for businesses, Microsoft Project can manage multiple projects and all your resources, so you can achieve maximum efficiency. The tool helps you prevent resource over-allocation and gives you an easy-to-use interface that you can use to schedule work, create estimates and manage budgets.
Of course, other project management applications besides Microsoft Project exist, so shop around to find the one that best fits your operation. Spend the necessary time to learn how to use the features of your project management software, so that you can optimize its use to deliver a high degree of efficiency to all your workflows.
Step 5: Share the Same Vision Through Communication
Misunderstandings and poor communication can introduce uncertainty and chaos into your project portfolio, which can cost you much in terms of time and money.
Before launching a project, meet with all its stakeholders to ensure that everyone shares the same expectations. Review all the key indicators, specifications and requirements of the project and encourage feedback from everyone involved.
Despite an excellent start, your project can still veer off course. Make sure all the stakeholders know that the scope, budget and requirements of the project might require adjustment as you progress toward the deadline. Use your strong communication habits and open channels to keep everyone apprised of every deviation from the original plan.
After completing a project, always follow up with the stakeholders to get their feedback on the experience. Doing so will help verify its achievements and implementation. A thorough review of a completed project can also highlight communication and decision-making bottlenecks that you can address in preparation for your next project.
Managing your portfolio by keeping an eye on capacity and prioritizing your work can go a long way toward improving business productivity.
Also, using Kanban and other similar strategies to manage your resources, along with utilizing your project management software will help you create budgets and schedules while having access to robust status reports.
Finally, establishing an accurately shared vision among all project stakeholders will improve the chance of your project meeting expectations. When you properly manage your project portfolio, you will experience impressive productivity and efficiency gains that will also boost your bottom line.
Heather Redding is an avid reader, freelance writer and coffee addict from Aurora, Illinois.
When she isn’t working, Heather enjoys swimming, photography and leisurely walks. You can reach Heather via Twitter.