Look anywhere in the corporate environment today and you’ll see projects in the works and underway — or past deadline. With dozens or even hundreds of projects in motion across an organization, the need for project portfolio management has become as necessary as the traffic signals and signs that keep roads from becoming a frenzied mess. Project portfolio management software is the equivalent of those signs and signals. PPM software provides capabilities to optimize resources, manage risk, improve project performance and cut costs while hitting project goals. The first step on that road to more efficient and effective projects across your organization is laying out your PPM requirements.

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What Is Project Portfolio Management?

Project management … project portfolio management — they sound similar. So what’s the difference? Hint: “portfolio” tells you everything you need to know.

That word probably brings to mind a physical portfolio where an artist or graphic designer keeps several samples of their work. Taking that illustration further, you could consider project management as one of the drawings, while project portfolio management is the means to keep each drawing organized.

PPM software is how project managers oversee a variety of current and future projects within an organization. The goal of project portfolio management is to provide a comprehensive view of details from financials to resources and show how projects relate to each other. This gives executives and managers a bird’s-eye view so they can compare and prioritize projects based on business strategies.

It’s kind of like hopping on Google Maps and zooming out so you can see the entire globe. You get a feel for how the countries, continents and oceans fit together to create the big picture.

Project management software, on the other hand, helps you manage individual projects. PM solutions are like the offensive and defensive coordinators on a football team — they have one specific focus rather than running the overall strategy.

PPM Requirements Checklist: Core Software Capabilities

You’ll notice a lot of overlap between PPM software and project management software. However, there are differences. Most major systems, such as Microsoft Project, include tools for both needs. Smaller systems, though, may only provide functionality specific to project management.

Before we get started, I want to stress that this is a general list. Not every software will have each element.

Furthermore, when it comes to choosing the right PPM software for your company, it’s important to focus on what requirements will meet your specific needs instead of looking for a do-it-all solution. Don’t let the vendor or a list of features make the decision for you. Take time to internally discuss and understand what you need out of a system.

Hopefully, this list will be a helpful guideline so you know which PPM requirements to take into consideration.

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Risk Management

According to Bilbo Baggins, stepping out your door is risky business. In the business world, not properly assessing and managing potential risks is the real danger.

Risk management is a critical component of PPM software. You need to understand how each project, whether it’s in progress or planned, impacts the overall portfolio. Grouping projects lets you quickly assess which ones present too much risk, or whether certain aspects of an individual project raise red flags.

So, what tools help you do that?

This Gantt chart shows a task-by-task breakdown for greater visibility into potential risks.

Visualization tools are particularly helpful in showing potential project risks that could affect the larger portfolio. Gantt charts give you a high-level view of the project’s individual components.

By showing phases and task dependencies, they let you identify gaps or concerns and take the steps necessary to mitigate any risks present. You can monitor the progress of each task to keep an eye on the overall health of the project.

The risk register is another useful risk management tool. You could opt to create one, such as a spreadsheet that details possible risks, and then load it into the software. The downside however, is that risks aren’t static, which means you’d need to constantly update your tracker accordingly.

You’re better off using a tool that’s already integrated. That way, your whole team can access, edit and add attachments with ease.

PPM software also lets you build matrices to look at risks from a qualitative standpoint. In other words, it shows the probability and impact of a risk on a scale, usually from low to very high.

For example, say your team is building a new website and needs to migrate all your content from the old site. The development team is swamped with other assignments, making the on-time delivery of a test site highly unlikely. And because the other tasks can’t begin until the developers finish the test site, it impacts the rest of the project.

It’s important to quickly see risks that are highly probable to happen and have a major impact on the project. Such insights let you can take measures to reduce high-risk situations. They also help prioritize which risks need urgent attention and which don’t.

Get comprehensive insight into the status of multiple projects with dashboard views like this one.

Finally, reports and templates organize and summarize information. One example is Mavenlink’s Project Health Report which helps manage risks by tracking a project’s status for key factors like schedule, budget and scope. You can also view historical insights to monitor a project’s trends.

And with Smartsheet, you can use the pre-built Risk Analysis template to assess and organize all the risks affecting a project.

Gantt charts
Risk register
Risk matrix
Reports
Templates

Financial Management

Projects are notorious for two things: taking longer than planned and blowing through the budget. Scale that out to include every current or planned project and you can see why managing the portfolio’s finances is so critical.

Dashboards are one excellent way PPM software helps you keep tabs on your financial status. They display information in visual, colorful ways using pie charts, graphs and more. With dashboards, it’s easy to get an overview of critical KPIs and metrics.

Planview PPM provides an overview of key portfolio financial metrics.

Budgeting and forecasting tools are another fundamental part of controlling your finances. These capabilities allow you to plan and estimate future projects, timelines and expenses by tracking project budgets, bids and current expenses. Depending on the solution, you can use out-of-the-box templates or turn to third-party plugins to get the job done.

Part of budgeting is tracking time and expenses. PPM software provides timesheets where employees can log their hours, and some systems will update the budget automatically, giving you a real-time view. You’ll also have control over approving billable and nonbillable hours, setting rates and more. And integrations with apps such as Xero and QuickBooks provide additional accounting functionality.

Finally, project billing is another element under the budgeting umbrella. The typical PPM solution provides options so you can set different rates — project vs hourly, for example. Other capabilities include showing projected and actual expenses, such as with Monday.com, and generating reports so you’re always on top of your finances.

Dashboards
Pie charts
Bar charts
Graphs
Budgeting
Timesheets
Project billing and invoicing
Accounting
Forecasting
Projected vs actual expenses

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Pipeline Management

Managing your pipeline is like making sure you give your lawn the right amount of water. Too little and everything dries up. Too much and it floods the ground.

The same goes for your organization’s projects. You can’t afford to ignore the pipeline (a.k.a. projects that are in the works) if you want to keep the entire portfolio running smoothly. Add too many and you might run into resource issues, where there aren’t enough qualified workers to tackle all the tasks required. Your budget and teams aren’t unlimited, so it’s important to strategically generate the right number of project proposals while ensuring they contribute to overall business objectives.

PPM tools can help in a couple main ways.

First, with request forms. These let you monitor all incoming requests. Details such as proposed start and end dates, as well as expected benefits, help you prioritize the requests that are most critical to your business.

Example of a timeline that allows you to view multiple projects at once.

Visual layouts are also useful. Timelines, charts and calendars all provide you with a zoomed-out view of your pipeline in easy-to-digest formats. You can track the status of each proposal or current project to help regulate the flow throughout your organization. No matter which specific feature you use, they all serve as a centralized hub where you can watch the flow of your projects.

Request forms
Timelines
Charts
Calendars

Resource Management

Projects can’t happen without people to execute them and equipment or materials to carry out the tasks. That’s why managing resources is a chief requirement for PPM tools. While resource management (also known as resource distribution) can encompass everything from people to equipment to finances, for our purposes we’ll focus on the former two.

To illustrate the importance of properly managing your workforce, picture a busy construction site. The crews are in the middle of erecting a new apartment building and you’re in charge of overseeing the operations. Each element (electrical, plumbing, etc.) is its own project.

The beauty of PPM tools is that they let you perch above the worksite so you can see everything that’s happening rather than having a limited view from the ground. From that vantage point, it’s much easier to keep tabs on each project and assign workers to the most pressing ones first.

When you’re managing several projects at once, it’s vital to make sure you’re not overloading team members. Equally important is the need to allocate resources based on project priority. With charts, calendars and other visual layouts, you can accurately conduct capacity planning and update information in real time as projects progress.

One example is the Portfolio add-on for Jira. Its scope, team and releases sections enable you to add task dependencies, prioritize issues, manage teams and individual members, schedule releases, and more.

Resource utilization charts
Calendars

Change Management

What happens when you need to make a change to a project? Depending on the scope, it could cause ripple effects throughout your portfolio, delaying other projects and straining budgets.

Tools for change management will equip you to deal with such situations without jeopardizing every related project.

A fundamental part of managing change requests is communicating back and forth. PPM tools provide a platform where you can keep all communication in a single location. Some solutions integrate with mobile devices and email to provide even greater collaboration.

With requests flowing in from multiple projects, keeping them organized is a tall order. PPM software offers a central repository so you can spend your time managing requests instead of trying to keep track of them all. You can then decide whether to approve requests and update the portfolio information accordingly.

And don’t worry about being in the dark as new requirements, project adjustments and more crop up. You’ll have full visibility of how changes impact budgets and timelines so you can address any issues proactively.

Real-time messaging
Document management
Collaborative workspaces
Email and mobile integrations
Request repository
Real-time monitoring

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Reporting and Analytics

The goal of project portfolio management is to optimize every project in your portfolio. Therefore, it’s essential to be able to analyze data and efficiently generate reports.

We’ve touched on a number of different purposes for reports, but they’re worth mentioning again. Think of them like a thermometer — they give you a clear reading on the state of your portfolio at any given time.

The real power of reports is the ability to summarize business-critical information using visual tools. This makes it easy for executives, managers and other stakeholders to look under the hood of a portfolio and drill down into specific KPIs such as ROI, CPI (cost performance index) and resource capacity.

By checking in at regular intervals, you’ll gain insight into trends. For example, if a specific type of project shows a historical tendency to run over budget, you’ll know to identify it as a higher risk or allocate more budget space. The result? Smarter planning and better decision making.

Analytics tools give you deeper understanding of your projects.

Business intelligence tools are the fuel that keeps your reports running and enables you to build those check-ins. Analytics capabilities help you make sense of all the raw data flowing through your portfolio and streamlines the analysis process. That’s especially crucial for large portfolios where manually tracking everything would amount to juggling eggs in a hurricane.

Financial reports
Capacity reports
Burndown charts
Scope reports
Business intelligence
AI and machine learning

Implementation Challenges

Project portfolio management software is great — but as with any software implementation, it’s not without challenges. One thing to be aware of is that a number of issues stem from people problems rather than intricacies or shortcomings of the system you’re implementing. Here are some to keep in mind:

Configuration

Managing a portfolio of projects is complex. That means the software you use needs to be up to the task of handling numerous variables. PPM tools are powerful and come with a range of capabilities. Unfortunately, this means they can be hard to configure.

Given that a solution is only useful if you can shape it to your needs, this can cause implementation roadblocks. And if you need an enterprise-level solution, it makes the configuration game that much more difficult.

Collaboration

Portfolio management brings all your projects under one roof. That includes the various managers for those projects, along with the portfolio managers. Throw in departments like Finance and PMO (project management office) and you have a lot of cooks in the kitchen.

Chances are, they all have their own expectations and ways of doing things. Getting everyone on the same page in order to execute effective project portfolio management can be a challenge.

Communication

Or rather, a lack thereof. Your teams need to know why your company has chosen to make changes and how those changes matter to them individually.

Let’s say you want to be upfront about the changes and the reasons behind them. You could explain how the new PPM system will enable your organization to increase project efficiency and cut costs by 15 percent. In turn, you share how that will free people from working under stressful task loads and create budget space for a quarterly company outing.

Without a communication plan in place, you could easily end up with a host of organization problems. And those can be harder to fix than a software bug.

Change

We’re naturally inclined to resist change. If you’re rolling out a new system, it can be difficult to get everyone on board. That’s why the step above is important. It’s also why you need to put plans in place on how to successfully navigate change at an organizational level.

Current Practices

The success of your implementation depends in large part on the state of your current project management. It’s important to have solid PM practices in place before making the leap to managing an entire portfolio. PPM software gathers the data from the sublevels of your individual projects, so you need to ensure you’re capturing the right information in an organized way.

Cost

Depending on the size of your organization, the cost of a PPM system could present challenges. A robust solution that seamlessly handles hundreds of projects won’t come cheap. And training and maintenance are ongoing expenses you should take into consideration when looking at the TCO of the software.

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Conclusion

PPM software extends the capabilities of project management tools to give your company complete control over all your projects from inception to close. With rich features such as reporting, dashboards, and planning and financial tools, you can mitigate risks, align projects with key business strategies, effectively prioritize and more.

The goal of this PPM requirements checklist isn’t to give you a bunch of boxes to tick off on your search for a solution. Rather, it’s to draw an outline that will help inform your search.

To help you pick the right system that best matches your company’s demands, check out our free requirements template. Use your priorities to customize the template and cut down on the time it takes to pair the right PPM tool with your unique needs.

Did we miss any major PPM requirements? Let us know in the comments!