Lee Merkhofer Consulting Priority Systems
Tools for Project Portfolio Management

Project Portfolio Management Tools:

Which Approach is Best?

Part 1: Tool Options

To survive and prosper in today's competitive, cost-conscious, and risky business environment, organizations must derive the greatest possible value from the projects that they conduct. Success requires doing the right projects, not just doing projects right.

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As organizations recognize the need to improve project-selection decisions and to better manage their project "portfolios," consulting companies and software vendors have rushed to offer tools for the job. Most of the relevant products are marketed as tools for project portfolio management (PPM), but they may be alternatively described as tools for project prioritization, capital efficiency, enterprise project management, portfolio analysis, multi-project management, asset management, capital allocation, or some other collection of similar terms. The many tools being pushed in the marketplace use different approaches for evaluating projects and recommending project portfolios. Which approach is best?

Project Portfolio Management Tools

Many Tools:  Which Approach is Best?

This multi-part paper identifies and evaluates currently available PPM tools. All of the tools allow you to establish a database of project information that can be sliced and diced in various ways and presented with colorful graphics, and many offer a slew of additional features useful for project management, such as progress tracking, resource allocation, team communication, audit trails, and even time cards. However, few do a good job supporting what might be regarded as the number one, most important responsibility of the project portfolio manager—identifying the projects that generate the greatest value for the organization.

So, "caveat emptor"—let the buyer beware. If your organization identifies more candidate projects than can be conducted with available resources, do your homework and learn if the tool you are considering employs a defensible logic for accurately evaluating, prioritizing, and recommending projects. Whether the tool you acquire truly has the ability to optimize your project portfolio will make a big difference in the benefit that you derive from PPM.

Project Portfolio Management

I define PPM as a tool-supported process for selecting projects and managing project portfolios for the purpose of generating the greatest possible value. What do I mean by "value"? I define the value of a project (or portfolio) to be the worth to the organization of the project's (or portfolio's) consequences (the maximum amount the organization's executives would be willing to pay to obtain those consequences). Thus, for example, if Project A would produce consequences that executives believe are worth $100,000, the value of that project is $100,000. The cost of the project does not affect project value. However, if the cost of Project A is more than $100,000, the net value of the project would be negative, so the organization should reject it.

Although some might criticize my definition because it is difficult to determine what executives should pay for a project's (often uncertain) consequences, focusing on value has one overwhelming advantage; namely, project value maps exactly to executive preferences—If two projects A and B cost the same and consume the same resources, executives will prefer Project A to Project B if and only if Project A consequences are worth more to those executives than Project B consequences. Also, as described later in this paper and elsewhere on this website, practical and effective methods are available for estimating the worth of a project to the organization without the need to query executives.

Under PPM, new projects are formally evaluated, prioritized and selected; existing projects may be accelerated, slowed, or terminated; and resources are allocated and reallocated based on the goal of maximizing the value created. Properly conducted, PPM does not involve making project-by-project choices based on fixed acceptance criteria (such as net present value (NPV)). Instead, decisions to add or subtract projects from the portfolio are based on the impact on the total value of the portfolio.

The fundamental idea underlying PPM is to apply to project decisions investing methods similar to those that have proven successful in the world of financial investing. This includes principles set forth by modern portfolio theory.

Modern Portfolio Theory

The revolution in financial investing known as modern portfolio theory was initiated in the 1950's by Nobel Prize winner Harry Markowitz. Markowitz showed that investors can obtain significantly greater return at lower risk if, instead of choosing stocks and other financial assets based on their individual potentials, they make choices based on calculating the impact on the risk and return generated by the portfolio as a whole. Certain combinations of investments (portfolios) are efficient (they lie on an "efficient frontier") in that they create the greatest possible value for the least risk. Inefficient portfolios should be avoided. Which of the efficient portfolios is best depends on the investor's willingness to accept risk in exchange for higher expected returns.

Harry Markowitz

What enabled Markowitz to make this breakthrough was a clear understanding of the investor's true goal; namely, to obtain the portfolio of investments that returns the greatest possible value, considering willingness to accept risk. This perspective led Markowitz to a different and much better strategy for selecting investments. Although Markowitz may not have anticipated it at the time, the same reasoning applies to organizations investing in projects. The organization's goal is to choose the project portfolio that creates the greatest possible risk-adjusted value for the organization. Likewise, this revised perspective leads to a much improved project-selection strategy.

Challenges for Optimizing the Project Portfolio

Despite the analogy between financial and project investing, there are some critical differences. Organizations conduct projects because they believe those projects will produce consequences that are good for the business. Thus, as argued above, the value of a project portfolio is determined by the worth, to the organization, of the consequences of conducting those projects. The business consequences of projects may include improved cash flows (e.g., cost savings, increases in revenue), but there are other common project benefits that cannot so readily be expressed in dollar terms. For example, projects may be conducted for the purpose of improving worker safety, customer satisfaction, relationships with business partners, and organizational capability.

Another key difference relates to uncertainty. The returns from financial investments and projects are both uncertain. However, unlike financial assets, data on past performance is generally not available to help quantify uncertainties over the value returned from candidate projects. Difficulties for measuring project value and quantifying uncertainty posed serious challenges for applying portfolio theory to projects.

The Remaining Breakthroughs

Los Alamos National Laboratory

Early PPM users

Since Markowitz's time, additional advancements and breakthroughs important for the optimization of project portfolios have been achieved. These advances include methods for estimating and forecasting project consequences (e.g., data mining, judgment debiasing, consequence models), methods for quantifying preferences and value (e.g., utility assessment, multiattribute utility analysis, value models), methods for accounting for uncertainty and risk (e.g., probability encoding, risk tolerance, certain equivalents), and mathematical solution methods (e.g., decision trees, integer programming, and real options).

The relevant methodologies still had to wait for improvements in computer technology and software engineering to become fully operational. Government laboratories, the military, research institutes, and others with early access to computing power and understanding of the mathematics involved have been selectively applying the techniques for years. However, only recently have suppliers attempted to create commercial products with the necessary capabilities for project portfolio optimization.

Project Portfolio Management Tools

The number of tools advertised for PPM is truly staggering; a list on Wikepedia identifies more than 100 [3]!. My review identifies about 60 that provide capabilities to support project selection, prioritization, or portfolio management. (I don't include tools in my list unless I can identify some analytic support for project selection.)


Software for Project Portfolio Management
(Click links to obtain information from suppliers)
Provider Product Focus
1000Minds 1000Minds Health, non-profits, mid-size orgs. / grp. dec. making / scoring / NZ / web
3esi-Enersight esi.Portfolio Oil & gas / risk anal. / fin. anal., constrained. opt. / Canada, int'l / onsite
4c Systems 4c Portfolio Manager Software, engineering, prof. services / scoring / suite / UK / onsite
AgileAssets Portfolio Analyst™ Gov., transportation / asset mgmt, GIS / optimization / suite / USA, UK / web
Alto University RPM Gov., gen. / proj. synergies, incomplete info. / port. dec. anal. / Java / Fin. / desktop
Antura Antura Projects Gen. / proj., port. & res. mgmt., user friendly / scoring / UK, Sweden / web
Artemis Artemis 7 Large portfolios / cost & res. mgmt / scoring / suite / int'l / onsite, web
Bubble Group Innovator™ Med. tech., retail, utility / multi-proj. mgmt. / scorecards / UK / web
CA Proj. & Port. Mgmt.™ Gen., new prods. / road map, proj. & resource mgmt, / suite / int'l / onsite, SaaS
Canea Canea Project IT, gen. / proj. & res. planning / scoring / suite / Sweden / on-site, web
Catalyze Equity3 General / projs. by area / MCDA, rank by b-c ratio / UK, New Zealand / desktop
Cherwell Software Cherwell Software Gen., IT / proj. mgmt / scoring / USA / SaaS, web
Clarizen Clarizen IT, prof. servs. / collabrtn., proj. & res. mgmt. / strat. align. / scoring / int'l / SaaS
Cogentus Smart Decisions Gen. / decision support, sensitivity analysis / MCDA / UK, USA / desktop
Conteno Innovation Games Online Gen., budgeting / stakeholder part., bidding / USA / SaaS
CopperLeaf C55 Asset-intensive industries / planning, budgeting / mua / Canada / web
Cora Cora PPM life sci., health, eng. / proj. & res. mgmt, / strat. align. / suite / Ire, UK, USA / SaaS
Coras Coras Gov., IT, legal / proj. tracking & reporting / scoring / USA / SaaS
Cranes Software InventX™ New prods. / dispersed teams, custom. / strat. align. / suite / India / onsite, web
Changepoint Daptiv PPM General / proj. & resource mgmt., collaboration / scoring / USA, Canada / SaaS
Demand Metric Project Prioritization Tool Marketing / bubble diag. / scoring / suite/ Canada / Excel app.
Decision Lens Decision Lens Gov. / strategic planning, customization / AHP / USA / onsite, web
Digite Swift Enterprise IT, high tech / planning, what-if analysis / AI / USA, India / SaaS
D-Sight D-Sight Gen. / group dec-mkg., strat. align. / MCDA / Belgium / web
EcoSys EcoSys Portfolios General / real-time proj. data/ strategic align. / USA / web
Enrich EAP R&D / port. visualization, mult. metrics / decision trees, Monte Carlo / USA / web
Expert Choice® Comparion™ Gen. / dec. makg. support, collabrtn., / suite / scoring, AHP / USA / onsite, SaaS
FlightMap FlightMap High tech, elec., auto, life sci. / road maps, res. mgmt. / scoring / NL / web
Genius Project Genius Project Gen. IT, new prods. / plan. & execution / suite / strat. align. / int'l / onsite, web
GenSight Gensight® PPM Gen. / custom, stage-gate, scalable / scoring, strat. align. / UK, USA / web
iPlanWare iPlanWare Gen. / scenario anal., res. alloc. / scoring, strat. align. / UK / onsite, SaaS
KeyedInSolutions KeyedInProjects Gen. / cost control, risk mgmt, constrnts. / scoring, strat. align. / USA / SaaS
Logical Decisions® Logical Decisions Portfolio General / custom MCDA models, port. opt. / USA / desktop
Meisterplan Meisterplan Gen. / multiproj. res. mgmt., proj. schedlng / scoring / Ger. USA / onsite, SaaS
MaestroTec Maestro-PPM Prof servs. / proj., res. & engmnt. mgmt. / suite / strat. align. / USA / onsite, SaaS
Make It Rational TransparentChoice Gen. / collaborative ranking and decision making / AHP / Europe / Desktop, web
Micro Focus® HP PPM Gen. / proj. & res. mgmt, appl. lifecycle mgmt. / scoring / suite / UK, USA / SaaS
Microsoft Project Server 365 Gen. / proj. & res. mgmt., schedlng. / scoring, AHP / suite / int'l / onsite, web
Octane HiPriority Gen. / res. allocation, proj, synergies / MCDA, rank by b-c ratio / UK / desktop
Onepoint Projects Project Enterprise Gen. / proj, & res. mgmt. / suite / scoring / Ger., Aus., USA / desktop, onsite, SaaS
Oracle Instantis Instantis Enterprise Track IT / proj. & res. mgmt. / scoring / int'l / web
Oracle Primavera P6 EPPM Eng. & construct. / accounting, plan, res. mgmt. / srategic align. / int'l / SaaS
ORbee Consulting Portfolio Optimizer/Simulator R&D / port. opt., risk simulation / decision trees / US / onsite
Palisade Decision Tools Suite 7 R&D, gen. / dec. & risk models, cust. / dec. trees, Monte Carlo / suite / int'l / Excel
Parm myPARM Gen. / resource & risk mgmt / scorecards / suite / Switzerland / onsite, SaaS
Planisware Planisware/Orchestra New prod., R&D, eng., IT / proj. & res. mgmt. / strat. algn. / int'l / onsite, SaaS
Planview Planview PPM Pro IT / governance, financial & time mgmt. / scoring, strat. align. / USA /SaaS
Planta Planta Portfolio Gen., mid-size orgs./ process, risk / scoring / Europe / onsite, SaaS
Project Insight Project Insight Gen. / proj. & res. mgmt., scheduling / scorecard / USA / onsite, web, SaaS
Project.net Project.net IT, new prods., prof. serv. / no lic. fees, constg. / strat. align. / USA / onsite, SaaS
Project Objects Project Objects IT, new prods. / proj. & res. mgmt / suite / strat. algn. / Ire., Asia, S. Amer. / SaaS
Projectric Projectric IT, mis-size orgs. / resource mgmt / scoring / USA / SaaS
Psoda Limited Psoda IT, testing, new prods. / proj. mgmt., / scoring / modular / New Zealand / SaaS
SAP® Port. & Proj. Management Gen. / lifecycle proj., port., & res mgmt. / strat. align. / suite / int'l / onsite, SaaS
Saviom Software EPPM Gen. / custm., prog., res., proj. & time mgmt / scoring / suite / Austr., India / onsite
Sciforma ISciforma Gen. / proj. mgmt, scheduling, collaboration / scoring / USA / SaaS, onsite
Semanticspace PPM Studio IT / proj. & res. mgmt. /scoring / suite / int'l / onsite, SaaS
Sentient PPM Gen., mining / configble., change mgmt. / scoring / suite / NZ, Au. / onsite, SaaS
ServiceNow ServiceNow PPM IT / proj. visibility, cost & res. mgmt, cust. apps. / USA, Brazil / web hosted
Smart Org Portfolio Navigator™ R&D, new prods. / simultn., cust. / fin. value, dec. trees, risk anal. / USA, UK / web
Sopheon Accolade™ Express PPM New prods. / roadmap., simultn., integrated data / strat. align. / int'l / web, SaaS
Spectral Solutions Element PPM General / real time proj. & port. mgmt. / fin. metrics / NZ / desktop
Syncopation Software DPL Portfolio Gen. R&D/ Excel conseq.. & val. models / dec. trees, mua / USA / desktop, onsite
SumOpti® SumOpti R&D, gen. / scheduling, throughput solns., custom. / opt. / USA / onsite or SaaS
Targetprocess Targetprocess Gen. / agile, app. lifecyle mgmt. / scoring / suite / Belarus / SaaS
TeamDynamix PPM 501(c) orgs. / proj. & res. mgmt., / scoring / USA / web
Transparent Choice TransparentChoice Gen. / collab. dec. making / strat. align., AHP / UK, North Amer. / SaaS
UMS Group SOS Utilities / asset mgmt., proj. deferal risks / scoring, opt. / suite / int'l / web
Upland Eclipse PPM Gov., IT, healthcare / configurable dashboards, risk scoring / scoring / USA / web
Upland Software Upland PowerSteering IT, new prods., gen. / collab., ben. realization / fin. anal., strat. align. / USA / SaaS
Vanguard Software Business Analytics Suite™ Gen., new prods. / dec. models / suite / Monte Carlo / USA / onsite, web, SaaS

The information in the table is intended only to provide starting points for further inquiry. In the "Focus" column, I've attempted to indicate main target industries and project types highlighted by the supplier (e.g., general, construction & engineering, IT), features that the supplier emphasizes (e.g., resource management, collaboration), structural characteristics (e.g., suite), prioritization or optimization method (e.g., scoring, the analytic hierarchy process (AHP)), provider locations, and delivery modes (desktop, onsite, web hosted, SaaS).

Tools for PPM are evolving rapidly, and it is impossible to maintain a complete and up-to-date list of suppliers and capabilities. Use the links in my table to obtain up-to-date information about how providers distinguish their tools. Product updates are announced almost weekly, and software capabilities can change significantly as new versions are introduced. Competition is fierce, and suppliers drop products or go out of business. Others are being acquired by larger companies. Please let me know if you find links that no longer work, or if you are aware of any PPM tools with project prioritization capabilities that are not on my list.

At best, the information in my table is useful for initial screening only. The tools differ in so many dimensions that it is impossible to fairly summarize distinguishing characteristics in just a few words. For example (as explained in Part 2), a tool may address a select few or nearly every task encountered in a large, project-based organization. A given tool might recommend projects using sophisticated portfolio optimization routines and models designed for a specific industry or particular types of projects. Or, it may merely rank projects based on a simplistic scoring model chosen by the vendor as a lowest-common denominator applicable to the widest possible customer set.

Tool Lifecycle

For the purpose of evaluating tools, it is helpful to understand the typical lifecycle of a successful tool, as available tools will range from "bleeding edge" to nearly obsolete. Francois Retief [4] provides a helpful characterization, from which the following is derived:

Cardin quote

To compete successfully within the established PPM market, a new tool needs to provide some significant new idea or capability. When first released, the tool will have basic capability and a few defects. If the tool is initially successful, the supplier will gradually add capabilities requested by users. But, not all users will want or need the additional features. The new features will complicate the product and make it harder to use. Also, adding features will likely produce additional defects. As the design becomes more feature-laden, it will become more complex, contain more defects, and become increasingly difficult to modify in any significant way. Eventually, the feature-rich product will stop selling because it is too complicated and can't be made to incorporate the next new idea.

Try to ascertain where a tool that captures your interest is within its lifecycle, and be wary of mature, feature-rich tools laden with capabilities that are not very important to you.

Obtaining Information

Cardin quote

Tool providers are eager to pitch their products and most offer free demos. Be prepared to be impressed. Modern PPM tools are graphically rich, with bubble diagrams, portfolio mappings, tornado diagrams, ranking curves, organ pipe charts, and other colorful plots. But, don't be persuaded solely by pretty colors and sexy displays. You will need to do your homework to decide whether there is sufficient content behind the attractive cover.

Be skeptical. Many companies describe themselves as the "leading provider" of PPM software. As one vendor told me, "We would never tell a prospective customer that someone else has a better tool for their application."

Importantly, it is often difficult to determine from websites and marketing materials (and even proposals submitted in response to RFP's) what capabilities the tool has to support project selection. Despite what is claimed in marketing materials, many packages advertised as supporting portfolio management actually have little or no functionality for identifying value-maximizing project portfolios.

Before purchasing a PPM software product, learn more about how to compare and evaluate PPM tools. In addition to reading the remaining parts of this paper, you might want to take a look at my paper containing detailed criteria for evaluating PPM tools and its accompanying free spreadsheet for doing tool comparisons. My free eBook, Choosing the Wrong Portfolio of Projects, contains detailed information on project selection and prioritization.

The Bottom Line

Wikipedia quote

For those of you who can't afford the time to read through the remaining parts of this paper, here is the bottom line. Tools advertised for PPM usually attempt to satisfy only one of two distinct functions:

  • Most are multi-project management tools, They are primarily designed to help with project execution, not project selection. They are typically live systems which project managers use on a daily or weekly basis. Such tools are capable of collecting and reporting information conveying the status of projects in the project portfolio, and, quite often, they also provide features to support project planning, tracking and assignment of resources, time and expenditure reporting, and communication and collaboration. Multi-project planning tools that contain features for supporting project selection (many don't, but those tools don't get on my list) rarely offer credible capability for valuing projects or optimizing project decisions. The methods used, scoring, scorecards, strategic alignment, and multicriteria decision analysis (MCDA), are similar, simplistic, and unlikely to produce accurate project priorities.
  • Some are project prioritization or portfolio optimization tools. They are designed to support project selection and are mainly applied annually or quarterly in support of the capital budgeting process. The best typically need customization before delivery and are often aimed at specific industries or types of projects (e.g., utilities, oil & gas, construction, R&D). They require as inputs estimates or forecasts of how conducting the project will impact organizational objectives, estimates that may be supported by a project consequence model. . They then translate these mostly judgmental inputs into estimates of project value using a value model; that is, a logic for quantifying the value of the project's anticipated impacts. Some consider only financial value computed based on financial metrics, typically the present value of the project's estimated contributions to future earnings. The several tools capable of properly accounting for non-financial project benefits do so via a defensible multicriteria technique, usually AHP or multiattribute utility analysis Such tools normally compute a value-maximizing portfolio by ranking projects by the ratio of value to cost, the metric termed project productivity. A very few include constrained optimization engines capable of constructing value-maximizing portfolios subject to specified constraints on resources other than, or addition to, capital constraints.

Bait and Switch

For many vendors, selling PPM software involves a bit of bait and switch. The bait is the ability to make project choices that maximize the value of the project portfolio. The switch is to a tool that facilitates multi-project management, not portfolio optimization. Why do they do this? Because, deriving optimal project choices is more difficult—you can't do it with a simple scoring model.

Ariely quote

The reality about PPM that most software vendors don't want you to hear is that the necessary model for valuing projects needs to be different for different customers because what customers need from their projects to be successful differs, even for similar organizations within the same industry. It is often not profitable nor technically feasible for big PPM vendors to deliver large, multi-project management tools with the customer-specific models that would enable organizations to optimize their project portfolios based on value.

The reality about PPM that many PPM customers don't want to hear is that, to obtain a tool that reasonably prioritizes projects, the customer needs to think hard about what the business needs and the specific ways that proposed projects address those needs. Effective but practical project performance measures need to be defined, difficult and largely judgmental, project-specific inputs must be generated, and the metrics and scales that work for one organization often won't work for another. Also, the value of a project cannot be estimated without understanding the willingness of the organization to make tradeoffs, additional inputs that ought to be provided by senior executives. The customer must then devote necessary effort to working with the software supplier to define an effective process for obtaining inputs, applying the model, and using results to support the project portfolio selection process.

So Which Tool is Best?

There is no easy answer. There is no one PPM tool that is best for every organization. Available tools differ greatly in what they do and how well they do it. No single tool does everything really well. Also, and most importantly, the right tool depends on you — how much you are willing to spend, the nature of your business, your needs, the kinds of projects you conduct, the maturity of your existing processes and associated tools, your culture and politics, and the degree of rigor that you want and can realistically bring to your decision-making processes. I can't tell you which single tool will work best (or even work at all) for your situation. However, the path to finding that tool is here.

Cardin quote

The Good News

Fortunately, for both PPM vendors and PPM users, it is not essential that a tool include accurate algorithms for valuing projects and optimizing the project portfolio in order for that tool to be useful. Experience shows that collecting and making project information accessible in near real time can provide considerable benefit to any organization that needs to take better control of the work it is performing. Likewise, a project prioritization tool does not need to provide real-time project reporting and support a broad spectrum of project-related activities to be useful. A focused tool that improves project selection decisions can be of considerable value to an organization that finds it difficult to determine which of too many projects ought to be rejected, terminated, or delayed. You can benefit from acquiring a quality tool that supports multi-project management or from a quality tool that identifies value-maximizing project decisions.

In truth, you don't need an expensive, feature-laden piece of software to implement a model that uses best-practice methods for valuing and prioritizing projects (you can do it with Excel). What you do need is a tool that can evaluate project proposals based on estimating the value to the business of the outcomes that would be produced by the decision to conduct those projects. I teach courses on how to do this. You can read about the applicable methods, starting here.

Among the important questions that you must answer in order to choose the best PPM tool for your organization is whether your organization needs most urgently to improve its ability to select the right projects or its ability to collect, manage, and communicate basic information about the projects it conducts and the resources that are utilized. If you need to do both, you can look for a tool that does both, or acquire both types of tools. Just don't make the mistake of choosing projects based on the recommendations of a PPM tool that lacks the analytics for quantifying project value.

The remaining parts of this paper provide more understanding for choosing a PPM tool, beginning with Part 2, which describes the key differences among currently available PPM tools.

Notes


  1. An early version of this paper was published under the title "Tools for Prioritizing Projects and Selecting Project Portfolios" in the Proceedings of the First Annual Power Delivery Asset Management Workshop, New York, June 3-5, 2003.
  2. Rachel Burger,"5 of the Best Project Portfolio Management Software According to Reviews," Project Management, October 19, 2015.
  3. Wikipedia, "Comparison of Project Management Software," accessed August 17, 2018.
  4. Francois Retief, "Modern Project Portfolio Management Software," Management Planning Systems, 2005. Retief, in turn, cites Morendil, "Incipient(Thoughts)", Laurent Bossavit's web log, posted by Morendil at July 24, 2003.
  5. Lewis Cardin, "SaaS-Based Tools Lower Barriers to PPM Success," Forrester, April 2008.
  6. Anirban Dutta, "A Guide to Successful PPM Implementation," IBM, January 2006.
  7. Wikipedia, "Project Portfolio Management," accessed March 2008.
  8. Dan Ariely, "Column: What Was the Question?" Harvard Business Review, September 2011.
  9. Johnathan Feldman, "PPM Gets Your Projects In Line," Information Week, March 6, 2010.