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The complete guide to portfolio management in 2021

All of us at monday.com
All of us at monday.com

    Portfolio management ensures that an organization can successfully select, manage, and execute projects on a grand scale.

    According to the Project Management Institute, it’s “a way to bridge the gap between strategy and implementation.” 

    Strategy drives business decisions. It helps organizations identify strengths and weaknesses, and ensure resources are appropriately allocated.

    But without the implementation piece, the strategy is useless.

    Your organization needs a bias towards action.

    One that keeps up with the constant flurry of changes and adapts accordingly. That’s where portfolio management saves the day.

    In this article, we’ll define portfolio management, suggest some best practices, and show you why deploying portfolio management software is essential for your organization to take action and ultimately thrive.

    What is portfolio management?

    A portfolio is a general term used for grouping things. In project management, a portfolio refers to a group of projects and programs.

    The process of portfolio management is the selection, prioritization, and control of an organization’s projects and programs. That centralized management and oversight help establish a standard of governance across the organization.

    Put plainly, project portfolio management assigns responsibility, so the organization always has someone, or a group of people, closely monitoring the performance of the company’s project investments.

    If a project is aligned with the company’s strategies, values, and long-term goals and it’s performing well, then it’s more likely to get funded and prioritized.

    If it’s risky, underperforming, or misaligned to the company’s greater strategy, then it’s probably going under the microscope to either pivot or get scrapped altogether.

    Essentially, portfolio management puts you back in the driver’s seat, where you can make more educated decisions about your portfolio’s direction.

    What’s the difference between portfolio management, project management, and program management?

    In the world of portfolio management, think of a project as a unique investment. Portfolio management keeps tabs on each investment decision and ensures they’re consistently aligned with strategic objectives.

    With that in mind, project management is all about executing projects right, and portfolio management is about executing the right projects.

    Program management fits somewhere in the middle.

    It’s managing multiple different but related projects. These related projects are connected and require a higher level of monitoring, auditing, and strategizing than a single project would.

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    Strategic goals are everything and with portfolio management, you can ensure your programs and projects are aligned with them.

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    It’s in the execution where things tend to get complicated because the line between all 3 is often blurred. Many organizations will attempt to do all 3 under the guise of project management.

    What does a portfolio manager do?

    As with most things in life, there’s no one-size-all fits answer to what a portfolio manager does all day. It’ll largely depend on the organization they work for and the industry they’re in. That being said, there are some tried and true project portfolio practices you’ll often see.

    For starters, portfolio managers absolutely treat planned and in-progress projects across the organization as individual investments, much like a financial manager would treat bonds and stocks as investments. From the lens of an investor, they’re carefully considering the company’s risk tolerance and weighing the overall performance of said investments.

    Much like a financial portfolio manager, the goal of project portfolio management is to maximize the value of multiple projects by carefully balancing risk and reward.

    Day-to-day, a portfolio manager is responsible for gathering data, monitoring project performance, closely watching marketing conditions, and influencing the organization on which decisions to make and which projects to prioritize.

    Additionally, portfolio managers track in-progress projects and elevate any known risks or issues which may result in pausing a project or pulling the plug on them entirely.

    If a project isn’t on track to achieve the forecasted value originally promised, then sometimes it’s best to cut losses vs. infusing more cash and resources into it.

    Portfolio management best practices

    Much like the day-to-day, portfolio management best practices will naturally vary. Each individual project will have its own unique needs, just like every portfolio will as well.

    In an effort to simplify, we’ve gathered some tried and true methods that are applicable to most industries.

    Perform a hands-on, detailed project inventory

    Taking stock of all your projects provides a level of understanding you won’t get by delegating the task to other project management professionals.

    Include the project’s title, timeline, estimated costs, business objectives, potential ROI, and how it benefits the business.

    That way, you have somewhat of a “cheat sheet” that always gives you the high-level information needed to provide investors with updates or simply make better on-the-spot decisions.

    Portfolio management in monday.com provides a visual way to easily oversee active and inactive projects.

    Now, it’s technically possible to do this by hand or in Excel, but then you’ll miss out on all the advanced features a true portfolio management system provides.

    monday.com, for example, offers in-depth boards and dashboards rich with automation and colorful visuals that make it incredibly simple to simultaneously track your entire investment strategy. More on all that in a minute.

    Evaluate projects through a strategic lens

    The core criteria for deciding on which individual project or “investment” will get funded or prioritized is determining how closely the project meets the company’s strategic objectives for the year.

    For your investment portfolio to succeed, it must align with the overall organizational strategy. Otherwise, you’re making short-term progress and forgoing long-term gains. As an investor, that’s a risky strategy and one that won’t likely pay off in the long run.

    Other factors to consider are how risky a project is and whether the project will involve massive reengineering. To put it plainly, if the investor deems that the project negatively impacts a large number of people or is subject to enormous restructuring, then it may be deprioritized.

    Ultimately, a good portfolio manager will identify overlapping project proposals early and cut off any projects with poor business cases upfront, so there’s better alignment between management and stakeholders.

    Prioritize, categorize, and fund projects

    Upon completion of the evaluation, most companies have more projects than they can actually prioritize and fund. Cash flow is a finite resource, and meeting your financial goals requires strict financial planning.

    Here’s where a thorough scoring and categorization process comes in handy. Start by pooling projects together by cost and by stakeholder priority. Then decide upon a simple scoring system. For example, you could use 1-5:

    • A project that scores a 5 could be the least risky with the highest benefits.
    • A project with a score of 3 might be more challenging because it requires a change in processes.
    • A project with a score of 1 is uncharted territory that the company doesn’t have a track record of successfully completing or even attempting before, which elevates the risk profile.

    Naturally, you’ll have to draw the line based on how many projects your budget and existing resources can support, but a scoring system can make that process much easier.

    Thoroughly review and manage your portfolio

    A first-rate evaluation and prioritization process is essentially all for nothing if the portfolio isn’t actively managed after creating the approved project list.

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    monday.com helps you create in-depth dashboards which makes reviewing and managing your portfolio easier.

    Investing in monday.com streamlines this process by allowing you to oversee the status of each project on a beautiful dashboard. The clear visual makes it easy for everyone to stay on the same page and get the information they need when they need it.

    At a minimum, portfolio managers should be monitoring asset performance at a quarterly level but preferably more frequently. Many portfolio managers request progress updates from their project managers monthly or bi-monthly.

    With updates in hand, the portfolio manager will often input the data into their project portfolio management software and assign a status.

    For instance, in monday.com, you can assign a project as green, which signifies it’s on track or yellow, meaning it’s becoming riskier and should be monitored more closely. Or red, meaning imminent intervention is likely required.

    During the review process, portfolio managers and stakeholders will often meet to discuss which initiatives to provide additional funding to or which ones to pause or stop altogether.

    Portfolio management challenges

    Portfolio management is highly effective, but it requires a serious commitment from both the portfolio management team and stakeholders.

    Often those leaders aren’t used to having investment decisions scrutinized and are now having decisions decided via group consensus.

    It’s important not to let a couple of detractors pull focus from the group. A group of 12 will almost always make better decisions under consensus then 1 or 2 that make unilateral decisions for everyone.

    Getting good, reliable information on a consistent basis isn’t easy. It takes dedication from the bottom to the top and as much transparency as possible to keep projects on course. Only through constant monitoring can a portfolio manager quickly react to market changes.

    Time constraints are real and affect everyone. Busy executives to project managers spread too thinly are the norm. Just about every organization is stretching people and resources.

    The workload view and timeline view in monday.com can help tremendously here by providing clear insights into who’s overbooked and who may have capacity.

    Get a high-level overview of your portfolio and a more granular view with timeline and workload views.

    While there’s no true all-in-one software for portfolio management, there are some that come close. Often the best choice is one that is highly customizable and full of integrations that make it as close to all-in-one as possible.

    Why you need a portfolio management platform

    Keeping track of project status, funding, investment rounds, ownership, and communication is hard enough when people are stretched thin. Without a portfolio management platform, you might as well be making slightly educated guesses.

    With one, your organization benefits from greater transparency, up-to-date investment data, and real-time project statuses.

    The best tool is one that also serves your project managers since the data and performance will easily trickle up to higher-level portfolio managers and their corresponding boards and dashboards.

    That’s right. No manual data transfers or cumbersome status update meetings. Everything’s in the cloud at your fingertips.

    It’s important to remember that there’s no single “right” way to track your portfolio.

    Every organization will have a unique way of doing business, which is why flexibility is key. Off-the-shelf software is always an option, but the ability to customize your software is priceless.

    monday.com lets you do that.

    How monday.com brings it all together

    monday.com is a Work OS that allows you to build a custom portfolio management platform that’ll fit your needs better than any off-the-shelf “what you see is what you get” software.

    Investing in monday.com checks off all the best practices:

    • Perform a hands-on, detailed project inventory with a portfolio management board that provides a high-level overview that’s easily connected to a more granular project view that your project managers keep up to date.
    • Evaluate projects through a strategic lens with custom columns that make it easier to track funding rounds, funding status, resources invested, estimated current value, and last evaluation.
    • Prioritize, categorize, and fund projects based on custom columns that show priority and custom project scoring.
    • Thoroughly review and manage your portfolio with custom dashboards that provide a snapshot of the overall profitability and health of the portfolio.

    The ability to assign ownership, so you always have a go-to person provides greater insight into performance and makes it easy to manage any potential risk when it occurs.

    Get the transparency you need

    We know that every investment matters to your leadership team, which is why we’ve provided next-level customization with 30+ column types, unlimited automation capabilities, and dozens of integrations that help you curate your workflow in a digital form.

    monday.com provides the oversight needed to create and maintain your bias for action.

    You can easily import data by copying and pasting from a spreadsheet or existing list and jump right into managing your portfolio with our Portfolio Management Template.

    You have everything to gain and nothing to lose. What are you waiting for? Try monday.com today.

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