Portfolio management is a tool that supports decision making by senior executives. The portfolio manager serves as a conduit for vital information about project capabilities, conflicts, and opportunities and provides senior management with the necessary information to make effective resource allocation decisions.
Senior management is expected to know what they want. They’re expected to analyze the marketplace, competition, and corporate capabilities and to make decisions about overall corporate strategy. The project portfolio is the tool that implements corporate strategy.
Can’t Do Everything
Of course there are never enough resources to complete every proposed project; that is, to get everything done that people would like.
The portfolio manager is responsible for keeping senior management informed about what the organization is capable of — to track project capacity and help decide which projects contribute the most to corporate objectives. The portfolio manager assesses how many projects can be accomplished at a given time and their relative contribution to the big picture based on an agreed upon formula. Projects are then ranked in terms of priority by the governance board.
Transparent System of Valuation
In choosing between projects, it’s necessary to have a fair and reasonable basis for setting priorities. All projects must be compared and judged using the same scale.
In order to ensure cooperation from functional managers, it’s necessary for the valuation system to be understood and accepted by everyone. This means that the valuation system doesn’t reward one department over another. It must be neutral.