Strategy is a pattern in a stream of decisions – Henry Mintzberg
Most accounting and finance leaders have a solid grasp on the management of the business investment portfolio. However, when it comes to managing that of the project portfolio, more often than not, there is a need for improvement.
So, why are accounting and finance leaders missing the mark on managing how various projects and programs fit within the company’s overall strategy?
It seems as the role of accounting and finance leaders continues to evolve and include technology, operations, strategy and the like, so does knowing exactly what is needed to evaluate, assess and understand the big picture – and more importantly – the bottom line.
I came across a recent CFO.com article that does a good job of explaining how accounting and finance leaders can enhance their project portfolio management – starting with clearly defining what that really means. Below are some of the strategies discussed in the article to optimize your project portfolio management, along with a few thoughts of my own.
Fully understand the concept of Project Portfolio Management.
According to the article, project portfolio management is “evaluating, selecting, balancing, and resourcing projects and programs that are aligned with strategy.” A full understanding of the term allows you to recognize when there is an opportunity to optimize all of the projects and/or programs that are in the queue. It’s not enough for accounting and finance leaders to simply have a list of ongoing and future programs and projects. You must assess them individually, along with how they fit together, in order to ensure they are aligned with the overall strategy of the company.
Effectively monitor without micromanaging.
It’s important to have clear and standardized metrics in place in order to analyze the success or failure of projects and programs – so that you can know how the return on your investments. Being able to pay attention to the important things that impact strategy, and not waste time and resources by micromanaging, is the essence of effective project portfolio management. You should evaluate the success of the projects and programs based off of those metrics to allow for better decision making. It’s also best to inform other accounting and finance leaders about the status of the projects and programs, or working closely with a Project Management Office if you have one, so you can continue to monitor investments accordingly.
Regularly redefine failure and success.
Besides measuring success and failure, you should also take the time to redefine those concepts by looking at the results in terms of how they fit the overall strategy. If over time a project or program no longer aligns with the strategy, muster up the courage to terminate that project or program. Businesses with a mature, or comprehensive, project portfolio management make it easier for accounting and finance leaders to determine these decisions. Having this type of discipline will help drive success and ultimately boost the bottom line.
What are some other ways to optimize your company’s project portfolio management? Comment below and let us know!