Part 2 of our series “PPM in Germany: Why project portfolio management determines success”. To part 1
“All projects are green. So why is the company still heading in the wrong direction?”
We hear this question regularly in initial consultations. It is not a contradiction. It happens when companies manage their projects professionally, but not their project portfolio. Anyone who ignores this difference ends up making the wrong strategic decisions.
Two different questions
Project management and project portfolio management sound similar and are often used interchangeably. Yet they answer two different questions.
Project management answers the question: “How do we bring this one project to a successful conclusion?” It is about deadlines, budget, resource planning, risks and quality, but always in relation to a single initiative. The project manager is responsible for making sure their project delivers.
Project portfolio management answers a completely different question: “Are we, as a company, doing the right projects at all, and in the right order?” It is not about delivering a single initiative, but about steering all projects as a whole: Which ones contribute to the strategy? Where do projects compete for the same scarce resources? Which project should be stopped, even though it is technically “on track”?
An image we often use in customer conversations: project management is the view of a single chessboard. PPM is the view of the whole room full of chessboards and the decision about which games should be played at all, when and by whom.
Why this distinction is more than semantics
Whether an initiative is delivered in a classic, agile or hybrid way makes no difference to this separation. Scrum, Kanban or SAFe structure operational delivery. But they do not answer the company-wide question of which initiatives should be funded, prioritised or ended.
In practice, confusing the two levels leads to three typical problems.
1. Successful individual projects, failing overall portfolio
A company can deliver ten projects on time, on budget and to a high standard and still fail strategically, because these ten projects were not the ones that actually had priority. Good project management can then even mask a poor portfolio, because all the traffic lights are green.
2. Resource conflicts become visible too late
Without a portfolio view, companies often only find out in the current quarter that three projects need the same SAP specialists or the same development capacity at the same time. The conflict does become visible at individual project level, but it cannot be resolved there across projects.
3. There is no authority that can say “no”
Project managers are responsible for making their project a success, not for questioning it. Without a PPM level, there is often nobody who systematically checks whether a running project still makes sense once the strategy has changed.
Where PPM comes in
At portfolio level, we typically work with customers on the following questions:
- Prioritisation: Which initiatives take precedence, based on their strategic contribution, their risk, their capacity requirements or regulatory obligations?
- Capacity and resource planning: Who is working on what and when, and where do bottlenecks arise across all projects?
- Transparency for decision-makers: A consolidated, reliable view of the status of all running initiatives, not 40 individual status reports in different formats.
- Governance: Clear rules on when a project is started, paused or stopped, and who decides.
Only at this level does it become clear why PPM is more than a collection of project plans, and why companies need an overarching data, governance and steering layer for it. Platforms such as OpenText Project & Portfolio Management provide exactly this layer.
PPM does not replace project management, it complements it
One important point to finish, because it is often misunderstood: PPM does not make classic project management redundant. On the contrary, good PPM needs good project managers who deliver cleanly at individual project level.
Project management ensures that projects are delivered right. PPM ensures that the right projects are delivered, because the most efficient project is a bad investment if it is the wrong project.
Companies that separate the two levels cleanly and run both professionally create an advantage that shows less in the success of a single project than in the performance of the entire portfolio.
In the next part, things get concrete: what does it actually cost a company in euros when project portfolio management is missing or only half-heartedly practised?
Where does your portfolio stand?
For more than a decade, provalida has been advising on and implementing project portfolio management solutions for companies with complex IT and digitalisation portfolios. Find out more on our line Project Portfolio. You can get an initial assessment in two minutes with our PPM Check, anonymous and without sign-up. If you would like to talk about the status of your portfolio management, get in touch. The initial consultation is free of charge.
This article was first published on LinkedIn.