Portfolio management helps organizations make decisions about project identification, prioritization, and resource allocation to achieve strategic objectives and ensure the selection of "the right project". The key purposes of portfolio management are to maximize value, ensure strategic alignment between projects and organizational strategy, and maintain a balanced portfolio in terms of risk, products/services, and focus on growth versus sustainability. Portfolio management is important for determining the optimal number and mix of projects through redefining strategic fit and priorities.

1. The Purpose of Portfolio Management
(By Djoni Wibisono, PMP, PgMP, CSM)
What will we do with a bunch list of projects?
This raises concerned the necessary of the projects and its worth to organization.
Moreover, this relates to question on choosing ‘the right project’.
Portfolio management can help us on the decision-making process for the
identification and prioritization, as well as resource allocation to support the
achievement of strategic objectives that lead to having ‘the right project’.
Few purposes of portfolio management:
1. Maximize the value. The results of all initiatives (projects and operations)
should obtain optimal value to the organization. Several techniques can be done
such as ranking or scoring method for each initiative. Scoring can be based on the
value of the financial, risk, and strategic value by using a baseline that has been set
as a reference. ’However beautiful the strategy, you should occasionally look at the
result – Winston Churchill’
2. Strategic Alignment. There should have linkage conformity between initiative
and the strategic objective of the organization. This encourages organization to
focus on achieving higher result for the organization’s benefits. Henry Mintzberg on
his theory of Five Ps for strategy, that strategy is a concept that exists only on the
minds of interested parties, or someone’s imagination, the key important thing is
that the perspective is shared, as a collective mind.
3. Balance. The initiatives to fulfill organization
requirements should be in the right uniform
distribution on appropriate consideration.
Balanced could be in terms of risk, for instance,
that not all projects have a high risk / low; in
terms of product or service, investment should
not be entirely for innovation purpose that just
yet to consider the existing services to keep it
properly maintained. This also leads to question
what organization focus whether in growth or
sustainability. The common approach for this
approach is using a bubble diagram. ‘Don’t put all
eggs in one basket’
Yes, it is a matter of resource allocation to determine the right number of projects
through redefining strategic fit, strategic contribution and strategic priorities.
Furthermore, the organization can leverage and continue to improve ‘the project
right’ execution wise, as well as having ‘the right project’ to achieve organizational
strategy. "Strategy Becomes real when you start spending / do action".