Project portfolio management (PPM) is software with which a large company decides which projects to fund and staff, and then tracks those projects against its strategy. A portfolio here means all the projects a company runs or is asked to run. PPM is part of project management software, one level higher: project management plans how to do one project, and PPM decides which projects to do at all.
It works in a yearly cycle, with quarterly checks. First, teams submit proposals. Each proposal states its cost, its expected benefit, its risk and the people it needs. Second, the company scores each proposal against its goals for the year. Third, it picks the best set of projects that fits within the budget. Fourth, it checks whether it has enough people with the right skills. Then, every quarter, it compares each project's spending and progress with the plan, and it stops or changes projects that are going badly.
Imagine the IT department of a general insurance company in Mumbai, planning next year's work. It receives 60 proposals, which ask for ₹180 crore in total. Its budget, set in the company's financial planning and analysis (FP&A) software, is ₹100 crore. Each proposal is scored against three goals: settling claims faster, selling more policies online, and meeting the rules of IRDAI, the insurance regulator. Four projects are needed to meet IRDAI's rules. They cost ₹25 crore, and they are funded first, whatever their score. PPM then ranks the other 56 by score for each rupee. The 19 highest fit into the next ₹74 crore. The remaining 37 proposals wait for next year.
Next comes the staffing check. The 23 chosen projects need 40 data engineers, but the department has only 28. So one project moves to the third quarter, when another project ends and its engineers become free. Some companies find people for such gaps through an internal talent marketplace, which matches staff whose project has ended to new projects.
In the second quarter, one project has spent 40% more than planned, and it is far behind. PPM shows this on the leadership's dashboard. The leadership reviews the project and cuts its scope. Without PPM, each team would push its own projects, and the company would not see the whole set together. Each funded project then runs as a detailed plan in project management software.