Portfolio planning involves the selection, prioritization and control of the programmes and projects of an organization, in line with its strategic objectives and capacity to deliver. Earlier, Anand Jayapalan had discussed how portfolio planning is known to be a foundational part of project portfolio management (PPM). In many ways, it is the connective tissue between high level strategic planning and project-level planning.  An effective portfolio plan allows companies to effectively assess risk across several ongoing projects, while also making sure that each project contributes to their strategic objectives.

Here are some of the most important components of portfolio planning: 

• Strategic synthesis: This is a strategic element of portfolio planning, and goes hand in hand with project selection at a company. Having a strategic roadmap or plan in place is a prerequisite for determining what projects would be needed to effectively fulfil the company’s goals and objectives. In certain cases, a strategic plan can be created that involves concrete goals or targets that can be fulfilled by key projects. There also are instances where the strategic plan of a business is more general, and largely provides term guidance on the type of work required by a company in order to grow and succeed. In both of these situations, a certain degree of analysis would be needed in order to identify gaps in the strategic plan and make sure that the right projects are initiated at the right time, in line with the strategic roadmap.

• Project prioritization: Prioritization in the context of portfolio planning is used to make sure that higher priority projects are initiated at the right time. Lower priority projects can be pushed out later down the line, so that they do not interfere with the delivery of high priority work. Projects higher on the priority list get adequately staffed as well as is scheduled earlier than lower priority projects. This approach presumes that new requests are evaluated and scored early in the portfolio process for the purpose of determining relative importance in the portfolio.

• Managing project interdependencies: Certain projects tend to have important relationship with other projects in the portfolio. For instance, one project may not start until another project is completed, or there might be a lower cost to running projects concurrently. Having a good understanding of these dependencies is important for portfolio managers to competently sequence projects to lower risks, minimize conflicts, deliver on time and on budget and so on. Portfolio managers must develop a dependency management process to have a clear line of sight of all relationships between projects in the portfolio. In the future, there is a good chance that Artificial Intelligence (AI) and Machine Learning will be widely used for identifying project dependencies.

• Evaluating resource capacity: A clear understanding of resource capacity and utilization is essential for effectively sequencing projects. This awareness helps prevent conflicts over critical, limited resources and supports successful project completion.

• Managing organizational impacts: Organizations have a limited ability to handle change, making it crucial for portfolio managers to carefully monitor project launch timings and assess their effects on both internal and external stakeholders. By properly sequencing projects, organizations can reduce disruptions and ensure smoother transitions during project implementation.

Earlier, Anand Jayapalan had spoken about how successful portfolio planning synthesizes what the company aims to achieve at the strategic level and helps select projects at the tactical level that shall help fulfil those strategic goals.