Essential Steps to Building a Profitable Portfolio Process

Now that we are well into the New Year, many organizations are realizing the importance of a critical step in the Project and Portfolio Management discipline – Portfolio Planning. For the average business, Portfolio Planning may be a process well beyond their organizational maturity; however, it is a major component that should not be overlooked, in order to increase the probability of reaching your business objectives. The structure in which you execute this discipline may indeed vary depending on maturity, but the basic steps can be followed regardless of the complexity of the processes behind them.

Before we dive into the essential steps to Portfolio Management, there is one question that must be understood; why define a portfolio? Organizations will always have projects, they will always have limited resources and they will always need to meet business objectives in order to remain a successful business. If you are not implementing the RIGHT projects and work to meet strategic objectives, the value you are bringing to the business may be much smaller than its potential. In today’s competitive marketplace, businesses must bring maximum value to survive.

Once again, Project Portfolio Management is about identifying and selecting the RIGHT work to achieve business objectives and maximize business value. Effectively identifying, planning, sequencing and managing the right work initiatives can be cumbersome and formally required heavy analytics tools. In today’s innovative world, technology is getting smarter, making simple project portfolio managementa reality. The key is to combine what can be a complex discipline, project portfolio management, with an intuitive end user interface that makes portfolio planning simple.


You can see from the image above that the PPM process is a continuous cycle in which demand is captured and selected based on key metrics and analytics, then planned, executed and managed.  As new demand comes in, the process starts all over again. 

In the Portfolio Management cycle, the following general questions will be asked for every item in your portfolio:

  • Does this project or work initiative align with the organization’s strategic objectives/goals? 
  • Based on defined key performance indicators and probable risks, does this project or work initiative meet the requirements for portfolio inclusion?
  • Does it still meet the requirements for portfolio inclusion when compared to other competing portfolio items also in consideration?

Let’s talk about the process for the process. Many organizations do not have a Portfolio Management process. In order to create a process where no process exists, the right steps must be taken. 

  1. Define a portfolio management organization structure.
  2. Define a Portfolio Management Plan
  3. Define Key Evaluation Metrics

Once you have a process down for defining, selecting and executing your portfolio, you are ready for the essential steps to Portfolio Management. There are many published standards and white papers for achieving Portfolio Management within your organization. For the purposes of this article, we will be defining the 10 most essential steps based on our implementation experience over the last 12 years. More mature organizations may introduce additional steps into the process.

    1. Identify Portfolio Items
    2. Define Portfolio Items
    3. Evaluate Portfolio Items
    4. Select Your Portfolio
    5. Reassess Portfolio
    6. Approve Portfolio
    7. Transition to Project or Work Initiative
    8. Communicate. Track and Report
    9. Accommodate and Adjust for Changes
    10. Begin at Step 1
For more information on this discipline check out our latest webinar, “Building a Portfolio Management Process From The Ground Up,” or read this white paper, “10 Essential Steps to Portfolio Management.”