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Mastering Portfolio Management:
Approaches for Project Portfolio Optimizations

An overview with Norberto Almeida

Welcome to the newest installment of PPM Hub, where we explore how technology is reshaping portfolio management for the better.
In this edition, our guest Norberto Almeida CEO of Portfolio Expert with 27 years of experience in the field of Portfolio Management shares insights on how integrating today’s advancements in project management software, AI, and real-time data analytics is changing the landscape.

Hi, Norberto, and a warm welcome to our PPM Hub. Let’s kick it off with an important introductory question: What is your understanding of portfolio management and its significance in optimizing project portfolios within organizations?

Norberto Almeida
Hello, and it is a pleasure to be able to share my input on portfolio management. Starting with a general definition – Portfolio management is the grouping of projects and programs aimed at making management more efficient and effective to meet an organization’s strategic objectives. Portfolio management is a strategic approach that ensures an organization’s suite of projects and programs are aligned with corporate objectives.
Some of the main functions of portfolio management include:
  • Validating corporate strategy
  • Supporting decision-making
  • Facilitating communications
  • Balancing projects and programs
  • Linking project outcomes to strategies
Optimizing the portfolio is crucial, as choosing the wrong projects can mean losing competitiveness and even jeopardizing the sustainability of the organization. In recent years, we have seen companies from various sectors, such as telecommunications, automakers, and technology companies struggling to stay in the market. We should always seek the mix of projects that bring the best results for the organization, its clients, and key stakeholders.

In the context of optimizing project portfolios, what do you see as the most critical responsibilities of a Portfolio Manager? How does the effectiveness of this role contribute to achieving organizational objectives?

Norberto Almeida
The portfolio manager is ultimately responsible for the results of the portfolio, ensuring effectiveness throughout the process, from initiation, planning, execution, to monitoring and controlling the projects and programs within the portfolio.
Some important points to ensure effectiveness include:
  • Ensuring strategic alignment with organizational objectives
  • Planning the components of the portfolio according to organizational constraints, whether they are financial, human, material, equipment, or infrastructure
  • Planning and ensuring good communication throughout the process
  • Managing portfolio risks, distinguishing them from the risks of individual projects
  • Monitoring the performance of portfolio components and making adjustment decisions, always considering what is best for the portfolio and not for an individual project
  • Keeping up with rapid changes in the scenario, ensuring that the portfolio always reflects what is best for the organization, stopping projects that no longer make sense and including new ones that generate better results.

Can you explain the difference between project management and portfolio management? How do they complement each other in achieving organizational goals?

Norberto Almeida
While project management seeks to apply techniques, knowledge, and skills to the activities of a single project, aiming to generate better results for the product, service, or outcome produced by the project, portfolio management aims at achieving the strategic objectives of organizations through the execution of initiatives implemented to achieve results, which could be a project, a program, or operational activities. Portfolio management aims to balance the use of organizational resources across all projects being executed, using prioritization and decision-making to generate the best results for the organization. In summary, project management focuses on the outcomes of a single project, while portfolio management focuses on achieving strategic objectives, based on the enhancement and combination of the results generated by the projects.

In your opinion, what are the biggest challenges organizations face when managing project portfolios, and how can these challenges be mitigated?

Norberto Almeida
The main challenge, undoubtedly, as Philip Kotler would say, is “The most important thing is to predict where customers are going and get there first.” To select the best projects, we need a very up-to-date team that is looking for market trends to define strategic objectives and from there, carry out effective portfolio management.
Within the portfolio management processes specifically, the second challenge is balancing the use of resources within different projects competing for the same resources, ensuring that we do not have more projects in the pipeline than we can execute within organizational constraints; otherwise, we are likely to have a very low project completion rate with and a very low success rate.
A third challenge is to ensure a continuous flow of value, reducing waste and bottlenecks, and increasing the value generated for both external and internal customers and the organization.

Could you describe a scenario where you optimized a project portfolio? What strategies did you use to balance conflicting priorities and resource constraints?

Norberto Almeida
Two years ago, we conducted a portfolio prioritization process for a company in the financial sector that needed to prioritize its initiatives and verify if it had the financial resources, but mainly the available personnel to execute all the projects. All areas of the organization were involved. They had 35 initiatives to prioritize with a projected budget of USD 5 million.
We used the Weighted Shortest Job First (WSJF) technique, defining the value each initiative generated for the organization and the effort required to implement it, using the Fibonacci sequence. Projects with higher value and shorter duration were prioritized. We held three 2-hour online sessions with the teams for this prioritization. A process that usually took between 3 to 4 weeks lasted only 6 hours.
In addition to prioritization, we projected the necessary effort for the allocation of key roles from various areas to the projects, providing a comprehensive plan for the organization’s critical resources, showing when resources would be lacking. This allowed the organization to remove some projects from the pipeline and plan for hiring more resources to meet the portfolio needs.
This increased confidence in the portfolio execution, resulting in a 30% increase in the success rate of completed projects by the end of the year and a 12% reduction in project costs, ensuring a 7% increase in return on investment.

With the increasing prevalence of technology and the use of tools for project management, how do you adapt portfolio management practices to accommodate these approaches? Can you share your opinion and the benefits of the use of technology?

Norberto Almeida
With advancements in project management software, AI, and real-time data analytics, portfolio management has become more dynamic and precise. For example, predictive analytics can forecast project outcomes based on current trends, allowing for proactive adjustments. Integrating these technologies enables more informed decision-making, better risk assessment, and enhanced scenario planning. The benefits of such integration include more agile decision-making processes, enhanced visibility into portfolio performance, and improved strategic alignment.
The use of technology, especially artificial intelligence, can provide an excellent gain in precision for choosing which projects to undertake, determining the best path to follow, and offering continuous support in portfolio execution through automatic analyses, alerts for potential issues, cost reduction, increased productivity, and other benefits.
Norberto Almeida
Norberto is an accomplished expert in Business Administration with a PhD from Florida Christian University. He’s the CEO of Portfolio Expert, the founder of the PEXIA platform, and the creator of the Business Agility Management framework. Norberto is also a prolific author of books on portfolio management and project management, and he serves as a guest professor at several prestigious universities in Brazil.