What is Portfolio Planning? Exploring Its Importance and Benefits

portfolio planning

Portfolio planning is largely about strategizing and building the portfolio of investments, projects, or services of a company based on its goals, vision and mission. Earlier, Anand Jayapalan had spoken about how portfolio planning helps companies to put together a good blend of reward and risk. Portfolios tend to provide enterprises with a way to organize and shape their operations and projects while keeping an eye on the bigger picture.

People most commonly hear about portfolio planning in the context of finance. A financial portfolio basically refers to a grouping of assets like stocks, bonds, or a mutual fund. Investors use portfolio planning in order to design a group of assets based on their risk tolerance, investment time horizon and desired return on investment (ROI). The system of portfolio planning is also widely used in project management in order to review the project portfolio of a company, and help determine the projects that the organization should take on. It is also a foundational part of project portfolio management (PPM), and acts as the connective tissue between high level strategic planning that sets the direction of the whole organization and project-level planning.

When it comes to organizational or project management, a portfolio can include just about anything from projects or services to projects, inventories or properties. However, the goal of portfolio planning in project management is somewhat the same as financial portfolio planning. Basically, by organizing things centrally, a company would be benefited from a standardized bird’s eye view of the projects of a company. They shall be in the position to see which projects are helping the company achieve its important strategic goals. Hence, portfolio planning is extremely important for businesses trying to boost their overall efficiency. Portfolio planning goes a long way in determining which products or projects a company should be working on, which order in which they should tackle them, how much resource and time to devote to it, and so on.

Earlier, Anand Jayapalan had spoken about how portfolio planning has a number of benefits, an improved project selection process being among the most important ones. Selecting the projects that shall be a good fit for an organization is a vital aspect of portfolio planning. Hence, this process involves taking a look at the key business risks, goals, and resources available, to determine the projects that are going to be right for the organization. Portfolio planning also helps in developing a big picture of organizational activity. With time companies expand and their teams get bigger, and as a result, many businesses may lose sight of their long-term roadmap. For instance, a company takes on a huge project that takes up the majority of the time and resources of their company. If the employees end up spending too much time or resources on this one project, they may not have enough time to focus on ancillary projects, and end up making mistakes. Proper portfolio planning is needed to prevent such a situation and make sure that the company employees can juggle multiple projects seamlessly.

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