What is Portfolio Management - Invensis Learning

A recent study conducted in 2019 stated that the global portfolio management market was valued at $4.2 billion, which will further increase by 13.4% in the next seven years. This aspect of project management is becoming more and more widely accepted over time and holds significant value for organizations. Is portfolio management similar to project management? To understand the basics of what portfolio management is with respect to project management and the important concepts involved, read the article below.

What Is A Portfolio?

All organizations have a number of programs and software they use to complete and manage their projects, and these companies also have a number of ongoing projects at the same time. This means the larger an organization is, the more complex the project management system gets. Keeping track of all the projects and processes at the same time becomes difficult over time, which is why many companies create a portfolio.

A portfolio is a place where all the projects, programs, and software that are used by an organization are collected. These can include the processes and programs used to manage other projects, operations, or functions. A portfolio is created to help companies coordinate their processes and projects on a larger scale to make sure the projects get deployed successfully and on time. It helps improve the efficiency of all resources and optimization of the programs that the organization has invested in. It is a tool to help enterprises achieve maximum value for their investments.

There are many factors involved in making a portfolio. These include the skill and ability of the portfolio manager, the sponsor, the visibility of all the programs and projects, the ability of the organization to accept the strategic implementation of changes, and the level of alignment towards governance.

What Is Portfolio Management?

Now that there is a clear understanding of what a portfolio is, one can start discussing more about portfolio management more. The portfolio management of an organization with respect to project management includes their biggest assets such as their projects and programs. These programs and projects are selected, prioritized, and managed in a way that they are always aligned with the main business goals of the company. 

The main goal of portfolio management for any company is to make sure that the business operates and functions normally while there are new changes in programs being implemented across the organization. The main goal is to keep working at the same level (or improved) of productivity and optimize the ROI on the implemented changes at the same time.

The programs and projects are considered to be investments for the company. They need to be carefully managed so that they can continue to deliver optimal value to the enterprise. Portfolio managers are the ones in charge of managing the portfolio and they are responsible for understanding the strengths and weaknesses of the organization’s investments.

Why Is Portfolio Management Important?

There are many challenges that occur when project management strategies are implemented ineffectively. According to a recent study, these challenges have cost organizations up to $109 million in project investments out of every $1 billion. This is more than 10% of the overall expenditure in a project, and these challenges can even lead to failure in said projects.

This is where project portfolio management comes into the picture. Portfolio management can prove to be a valuable asset to a company because it can help organizations plan their future strategies and keep track of how their current strategies are working. It keeps the risk tolerance of an organization as well as its budget and ROI in mind before making future investments. It also provides a holistic view of all current and past projects, which helps companies improve their risk management strategies and predict future risks before they can occur.

Portfolio management also helps organizations gain a better understanding of their resources and see if they have enough to take on any new projects. This helps in the management of the existing projects so that all of them get delivered on time and are of high quality.

It helps align the goal of each individual project with the overall organizational goals and helps in the improvement of flaws in the processes within the company.

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Types Of Portfolio Management

There are three types of portfolios created to help organizations achieve optimal operational efficiency as well as success in their projects. These three types of portfolios are designed to address different problems that project in an organization face. Generally speaking, the types of portfolios are:

  • Project portfolios that focus on value creation for the company’s projects with the help of strategic and company-wide projects.
  • Project portfolios that are focused on improving operational efficiency in an organization.
  • Portfolios that are focused on completing the projects necessary to maintain compliance regulations for organizations as well as their projects.

Also read the benefits of using Agile in project portfolio managemnet!

How Does Portfolio Management Works?

The portfolio management process starts with defining all the projects in a portfolio and dividing them into categories. After all the projects have been identified and categorized, they get validated to see if they are aligned with the organization’s business objectives. Then the projects get prioritized and a schedule is created. The portfolio also includes a uniformed data bank for all organizational resources which is created as the next step.

All resources from this bank get allocated to the projects depending on their priority, availability, and requirements. Then the budgets are compared to see if all project needs are being met monetarily in the portfolio and arrangements and rearrangements are made to sort out any problems that may arise. 

Once all the above-mentioned steps have been completed, the projects are managed individually and overseen as a whole in the portfolio. This process gets repeated on a regular basis to make sure all projects are working optimally.

What are the Objectives of Portfolio Management?

Portfolio management provides an overview of all the existing projects, programs, processes, and organization resources. This means that it oversees the company’s general operations and makes sure that all the resources are prioritized and appropriately allocated in the enterprise. Portfolio management also makes sure that the company remains compliant with all governmental rules and regulations and their projects.

Some of the objectives of portfolio management for organizations are as follows:

  • Help keep the stakeholders informed of the progress in each project and implement the feedback received.
  • Help improve the overall communication in the organization.
  • Improve decision-making for project strategies and overall business strategies, especially when it comes to taking informed risks.
  • Properly allocate all the resources to each project.
  • Help align the goals of individual projects to meet the overall business goals of the company.
  • Accurately measure the bandwidth of each employee in the teams that are working on the projects in the company and align it with the amount of work that needs to be done for each project.
  • Help improve the return on investment for each project by predicting the value that will be generated from it.
  • Improve the overall prioritization process for all the projects in the company.

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The Portfolio Management Process/ Phases

Project portfolio management needs to be a regular process. This way, organizations can quickly determine any flaws in their processes or programs and fix them to ensure optimal delivery of all projects and their organizational operations. There is a lot of program management software that makes managing a portfolio much easier. This portfolio management process has four main steps involved, which are:

  • The inventory phase
  • The analysis phase
  • The alignment phase
  • The management phase

The Inventory Phase

The inventory phase is where all projects are successfully categorized and listed in a consolidated place. Teams can use Excel sheets to perform this task. Here, all ongoing projects are listed and categorized. This step does not need to have all projects listed. The minor ones can be excluded to make the job easier. 

The inventory should include the following:

  • Project name and other characteristics for identification
  • All the expenses involved in the project
  • The business value provided by the project
  • Organizational data for individual projects
  • How it aligns with the business goals of the company
  • All the resources utilized in the project
  • The current status of the project

The Analysis Phase

The analysis phase is involved understanding all the parts of the projects in the portfolio that are a part of the inventory. This includes understanding what processes and programs are doing well in a project and which ones are not performing well enough. It also includes analyzing any future risks that projects might face and possible strategies to mitigate them. Another aspect included in the analysis phase is how well the projects are aligned with the company’s current business goals and how all the resources are performing with their projects.

The Alignment Phase

The alignment phase acts as a prioritization phase for the portfolio. Once all the projects have been categorized and analyzed, they need to be prioritized in order of importance. This is usually done by considering which ones have the highest impact on the organization. Based on this prioritization, resources can be further allocated to ensure they meet all their requirements and function in an optimized manner. This helps in preventing future pitfalls and avoiding risks.

The Management Phase

The previous steps were preparatory steps that would help with the actual portfolio management plan, which takes place in the final stage. This is when the actual management of the portfolio takes place. This step has multiple aspects, which include the following:

  • Alignment of projects with the business and strategic goals of the company
  • Reprioritization, addition, and elimination of certain projects and processes
  • Redistribution of resources
  • Building a steady architecture for all the projects within the organization

Tips to Achieve Portfolio Management Success

There are many ways in which organizations can ensure that their portfolio management strategy is a success. Some of the tips that portfolio managers and organizations can use to achieve portfolio management success are listed below:

  • Project portfolio managers need to have strategic knowledge of all the technological investments of their existing projects.
  • Organizations should be able to use their processes and resources in a way that the results have the best possible impact on their projects.
  • The portfolio management strategy for all the projects needs to be aligned with the business strategy and goals of the company.
  • There should be a strategy in place to enable mobile and remote workers to be able to work whenever they need to.
  • All organization members and relevant teams need to have access to their tasks and progress on their projects. All stakeholders need to be able to view the progress of each project easily as well.
  • Risk management needs to be a priority to make sure all projects are delivered on time.
  • Stakeholders need to have real-time visibility when it comes to the progress of each project in the company.
  • All data needs to be accurate and of high quality.
  • Time management and task management aspects of portfolio project management need to be simplified enough for all team members to be able to use them.
  • Organizations can make better-informed decisions for their projects and strategies if they can accelerate and simplify the task entry system and the time entry system. Kanban tools are greatly recommended for this aspect, and they are generally available with a lot of portfolio management tools for use in the company.
  • Regularly check for compliance with all rules and regulations in the company to avoid unnecessary delay and loss of resources.

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Difference Between Portfolios, Programs, and Projects

Given below are some differences between a portfolio, program, and project for a better understanding of the three terms:

Factors Projects Programs Portfolios
Monitoring and Control Project management is in charge of taking care of the project and its deliverables. Using program governance, the program manager monitors and controls the program. The portfolio manager measures the aggregated performance.
Scope It has a defined scope that alters and is improved upon as the project moves forward. It has a wider scope and is focused on the benefits. The scope is driven by the strategic business objective, which the portfolio was meant to address.
Success criteria Success is measured by the product quality, time of delivery, budget compliance, and degree of customer satisfaction. The level to which it satisfies the needs and benefits for which it was started decides the level of success of programs. Success is measured regarding the collective performance of its components, and on the benefits, it inflicts on the stakeholders and investors.
Schedule The project schedule is the time taken to create the results expected out of the project Program schedule is essentially the aggregation of the schedule of the program components The portfolio does not have a schedule. Individual program or projects associated with it will have their schedules.


Portfolio management is gaining importance across the globe as a sound way to manage projects and company assets. Organizations can use portfolio management services to improve their operations and project processes. It is critical for enterprises and individuals to invest in widely-recognized Project Management Certification courses for them to gain a better understanding of project management best practices and how program and portfolio management work in an organization.

Know more about project management best practices through Invensis Learning’s Project Management certification training on PMP Online Training, Best CAPM Course, Prince2 Training, Project Management Fundamentals, P3O, and MSP. We are a trusted training partner for Fortune 500 companies and Government institutions globally.

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Lucy Brown has many years of experience in the project management domain and has helped many organizations across the Asia Pacific region. Her excellent coordinating capabilities, both inside and outside the organization, ensures that all projects are completed on time, adhering to clients' requirements. She possesses extensive expertise in developing project scope, objectives, and coordinating efforts with other teams in completing a project. As a project management practitioner, she also possesses domain proficiency in Project Management best practices in PMP and Change Management. Lucy is involved in creating a robust project plan and keep tabs on the project throughout its lifecycle. She provides unmatched value and customized services to clients and has helped them to achieve tremendous ROI.


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