THE SUM OF
Break down the big picture of
portfolio management to illuminate
each component’s value.
BY TERESA (TERRI) KNUDSON, PMP, PgMP
During the course of studying for the Portfolio Management Professional (PfMP)® certification, I’ve come to see portfolio management as a puzzle with many pieces that need to be put together to create a complete picture. Each piece is important, but it takes all of them together to provide value to rganizations. So what pieces do I see?
The first piece is standards. This is what provides a solid framework for portfolio management.
The Standard for Portfolio Management supplies
guidance in the areas of strategic alignment, governance, portfolio performance, portfolio risk
management and communications management.
While this is an important piece of this puzzle, it’s
definitely not the only one.
The next piece is the project portfolio itself.
Obviously, you can’t manage a portfolio unless you
have one. This piece ultimately represents how
much management the portfolio needs in terms of
the scope, content and leadership structure that
executes programs and projects.
Two other big pieces of portfolio management
are the money and the people. These components
are absolutely necessary to accomplish anything
within the portfolio. But they also tend to be the
pieces that limit the level to which project portfolio investments can be made.
The money puzzle piece represents the financial
management component of portfolio management.
It’s important to consider what funds are available
to invest in the portfolio, and the type of funds:
capital or operating expenses. It’s also important to
consider the ongoing costs of the project and the
long-term funding implications.
Teresa (Terri) Knudson, PMP, PgMP, is the
director of the enterprise portfolio management office at the Mayo Clinic, Rochester,
Minnesota, USA. She can be reached at
The people piece is required to get projects
done. Resource management is a major factor in
portfolio management. As a portfolio manager,
you need to assess the number of people needed,
the required roles and skills, and manage the
schedule and availability of these resources. But
employees within most organizations are limited
in number, have variable skill sets and levels of
expertise, and typically have concurrent assignments that require their time and attention.
The final piece to the portfolio management
puzzle is the one that I’ve found to be the most
difficult to put in place: portfolio decision making. This piece involves weighing strategic value,
benefits realization, organizational readiness,
external market environment and other factors to
determine the portfolio’s priorities. In addition, if
your portfolio is big and complex, decision making will require expertise in forecasting, modeling
It’s important to understand that each of these
pieces must be in place for portfolio management
to be possible and effective. With any of them
missing, you have an incomplete picture and will
have gaps in the processes and information necessary to optimally manage a portfolio.
At any organization, it takes time and effort to
put the full puzzle together. Doing so can be quite
challenging, because many of the pieces might be
new to your organization. Nevertheless, it’s also
intriguing and fun, because when the puzzle is
complete, you can take a step back and see the
full picture. PM
The Portfolio Track
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