See a Demo
menu

Managing The Project Portfolio To Improve Profits

November 2014 | Nick Castellina, Research Director, Business Planning and Execution

Report Highlights

  • Top performers look for ways to balance their project portfolios to better allocate resources, as well as align the project mix with overall organizational and financial goals and forecasts.
  • Best-in-Class organizations are 26% more likely to have implemented Project Portfolio Management (PPM) tools.
  • Organizations with PPM are 50% more likely to have the ability to perform profitability analysis.
  • Organizations with PPM are nine times as likely to have a holistic view of data across multiple projects.

This report, based on a survey of 135 respondents, outlines the challenges that organizations are facing in managing project portfolios, as well as the benefits that Project Portfolio Management (PPM) solutions help to provide.

Effective PPM requires a holistic understanding of an organization's current and future projects in order to optimize profits through project selection and resource allocation. As the project portfolio grows, this becomes increasingly difficult. Top performers rely on technology to improve visibility into ongoing projects and make decisions that will result in profits.

Successful project management that delivers profitable projects is a difficult task that requires careful planning, communication, and execution. But success in project management starts long before the work begins. In order for a project to be successful, it needs to have the right foundation. The potential costs must be lower than the potential revenue, and the resources to attain goals must be available. This foundation is defined as Project Portfolio Management (PPM).

Effective PPM requires a holistic understanding of an organization's current and future projects in order to optimize profits through project selection and resource allocation. As the project portfolio grows, this becomes increasingly difficult. Top performers rely on technology to improve visibility into ongoing projects and make decisions that will result in profits. This report, based on a survey of 135 respondents, is intended to help you understand the challenges that organizations face in managing project portfolios and better harness the benefits that PPM solutions can provide.

Searching For Profits

Aberdeen's 2014 Project and Portfolio Management Benchmark Survey uncovered the top challenges that organizations face in Project Portfolio Management.

Many of these issues stem from the leading challenge: a lack of visibility across multiple projects. Organizations have difficulty understanding where projects stand, the costs that are occurring, and how resources are being utilized. This makes resource management extremely difficult when employees, cash, and materials are limited. Further, a lack of visibility leaves organizations with the potential to be blindsided when it comes to the impact of risk factors. How can the organization properly manage projects individually and holistically if it is not aware of the challenges facing certain projects that could impact other projects?

Risk also plays a significant factor in selecting projects to bid and embark on. There is always the potential of selecting a project that has little chance of being completed profitably. In order to price projects effectively, organizations need insight into potential costs and lessons learned from similar projects. Portfolio optimization is a crucial aspect of PPM that requires enhanced visibility and risk identification and management.

In order to combat these pressures, Best-in-Class organizations utilize available information to make decisions that lead to profits.

Aberdeen Maturity Class Framework

The Aberdeen maturity class framework is comprised of three groups of survey respondents. This data is used to determine overall company performance. Classified by their self-reported performance across several key metrics, each respondent falls into one of three categories:

  • Best-in-Class: Top 20% of respondents based on performance
  • Industry Average: Middle 50% of respondents based on performance
  • Laggard: Bottom 30% of respondents based on performance

Sometimes we refer to a fourth category, All Others, which is Industry Average and Laggard combined. In Aberdeen's 2014 Project and Portfolio Management Benchmark Survey, organizations were ranked on the following criteria:

  • Percentage of projects delivered within budget: