Portfolio Management Continued

3. Review – All project alternatives are evaluated based on their adherence to the company’s prioritization scheme. The projects that offer maximum return based on those priorities are selected and added to the firm’s portfolio.

4. Realignment – Altering the project portfolio by adding new projects necessitates a reexamination of company priorities. Does this new project addition significantly realign the firm’s strategic goals or direction? Does the portfolio now require additional rebalancing? The decision to change the portfolio through new project initiatives requires the concomitant commitment to critically assess the updated project mix in order to gain clues for additional restructuring.

5. Reprioritization – If the results of strategic realignment signal the need to shift the company’s focus, it will be necessary to effect a reprioritization of corporate goals and objectives. In this manner, the project portfolio requires a shared reassessment of the overall company strategy in light of new project initiatives.

Portfolio management represents an important component in strategic project management. At their most basic level, projects form the “building blocks” of strategy, as was noted previously. However, beyond the ability to manage specific projects well, organizations are routinely faced with the need to establish a strategic direction for firm profitability, often through the strategic management of projects. One of the most effective methods for establishing strategic direction lies in the proactive development of a project portfolio, or integrated family of projects, usually with a common strategic theme or purpose. Such a portfolio supports a degree of overall strategic integration, rather than simply moving from project opportunity to opportunity, without operating with regard to an overall theme or direction.