Portfolio Management Processes

Portfolio Management Processes

Portfolio management sounds like a good idea. Anyone who has set up a company or has served on a board of directors has had to manage the work the organization does, decide what new projects to embark on and juggle resources between all initiatives. This overall management of the enterprise is often frighteningly haphazard. The attraction of introducing portfolio management to an organization is to put discipline on this level of organization.

According to the Project Management Institute, you need to make sure the conditions are right before introducing portfolio management. So you need the board to buy in to the idea and formally commit to supporting the appointment of a Portfolio Manager and, ideally, a Portfolio Management Office. Then there needs to be a mechanism put in place to identify potential work that the organization could tackle. These ideas can come from the board, but there should also be means for employees to offer their suggestions for consideration as well. Salespeople, for instance, are well worth listening to, as they are out there tuned into the marketplace. Line workers can also make process improvement suggestions that both make their lives easier and improve productivity.

We need people to manage the portfolio. The overall Portfolio Manager is likely to be a board member, but s/he will need assistance in acquiring, reviewing and selecting work that aligns with the corporate strategy. Similarly, the portfolio management responsibilities of governance and resource allocation require dedicated personnel to ensure compliance with standards and alignment with strategy, as well as ensuring optimal resource usage.

Processes need to be put in place and roles and responsibilities defined. Functional department heads need to realize that they need to supply resource availability data to the Portfolio Manager and also provide specialist expertise to critique suggestions that could affect their areas. Clear and effective communications channels need to be established too between all interested parties.

Any Project Management Professionals (PMPs)® or even Program Management Professionals (PgMPs)® reading this will be wondering if portfolio management offers a set of processes neatly arranged across knowledge areas and process groups to guide the Portfolio Manager. Unsurprisingly, there is. If you are still recovering from mastering the 47 processes that form the basis for the PMP® exam, do not panic – portfolio management involves a total of 16 processes, 3 process groups and 5 knowledge areas. The following table has been adapted from page 31 of the Standard for Portfolio Management (third edition):

Knowledge Areas Process Groups
Defining Aligning Authorizing & Controlling

Strategic Management

  • Develop Portfolio Strategic Plan
  • Develop Portfolio Charter
  • Develop Portfolio Roadmap
  • Manage Strategic Change

Governance Management

  • Develop Portfolio Management Plan
  • Define Portfolio
  • Optimize Portfolio
  • Authorize Portfolio
  • Provide Portfolio Oversight

Performance Management

  • Develop Portfolio Performance Management Plan
  • Manage Supply & Demand
  • Manage Portfolio Value

Communication Management

  • Develop Portfolio Communications Management Plan
  • Manage Portfolio Information


Risk Management
  • Develop Portfolio Risk Management Plan
  • Manage Portfolio Risks


Any PMP® will be comfortable with this breakdown. Effectively, the “defining” process group is all about planning. We plan what we are going to do about keeping everything aligned with the strategy, how we will measure and assess performance, how we will communicate with stakeholders and what we will do about risks – including what types of risks are managed at what level and what the escalation procedure should be. A Portfolio Charter will be a familiar concept and PgMP® exam students will be aware of roadmaps.

“Aligning” is what is done when the portfolio is up and running. Any time the strategy changes, we need to assess the portfolio and ensure that all components remain relevant to the revised strategy. This could mean re-scoping some work and, unfortunately, terminating other components.

“Authorizing and Controlling” is an odd sort of process group, as it combines two processes that do not seem to relate. The “Authorize Portfolio” process seems like something that happens at the end of planning but, looking more closely, you see that this also involves authorizing portfolio components. So, when there is a change of strategy, the governance function has to approve any new components or the termination of existing ones. “Providing Portfolio Oversight” makes sure that best practices are used and that the status data from the components are providing appropriate guidance to the Portfolio Manager. It also is where process improvement suggestions emerge.

As with the process groups specified in the Guide to the Project Management Body of Knowledge (PMBOK® Guide) these process groups do not represent phases and will be revisited regularly during the lifetime of the portfolio.

At present, Velopi does not provide a dedicated portfolio management course, but many of the concepts relating to strategy alignment and governance are covered in our Program Management Professional (PgMP)® courses. If you do not see yourself working at this level for a while, you might consider Velopi’s PMP® exam preparation courses. For more details, please visit our training page, or contact us directly.