Role of Project Portfolio Control Techniques in Achieving Efficiency in Project Based Firms

University essay from Umeå universitet/Handelshögskolan vid Umeå universitet; Umeå universitet/Handelshögskolan vid Umeå universitet

Abstract:

“While project management and program management have traditionally focused on ‘doing work right’, portfolio management is concerned with ‘doing the right work’” (PMI,2006)

Nowadays organizations are facing problems with too many projects and having limited resources to execute these projects. Therefore the role of portfolio control is gaining more importance to yield the right balance, mix and number of projects, and also to deal with the challenge of maximizing the value of the portfolio. Therefore the organizations rely on effective portfolio management and are developing new methods to deal with these challenges. Hence present study involves study of those organizations that rely on portfolio control techniques to effectively manage their portfolio of projects.

 

The aim of this research is to investigate the role of portfolio control techniques in achieving efficiency in project based firms, examine relationship between control techniques and the portfolio efficiency, and to find the role of contextual factors like project and governance type in impacting the portfolio efficiency. Three portfolio control factors: portfolio selection, portfolio reporting, and decision making style were identified and portfolio efficiency was explained by two measures: achievement of portfolio results and achievement of project and program level purpose.

 

The research was conducted at two multinational organizations, a pharmaceutical company in Europe and engineering and contracting transportation company in Asia. Case study research strategy was used, and data was collected through semi- structured interviews to investigate the impact of using these portfolio control techniques in a project based firms.

 

The results of the research indicate that these control techniques helps to select and analyse the portfolio from strategic, financial and risk perspective. Furthermore it helps to balance the organizational priorities by taking into consideration project type, market sector, resource constraints and product lines. The portfolio control techniques also involve portfolio reporting which is considered as formal way of communication and information sharing and is believed to be significant project-level factor contributing to portfolio efficiency. Lastly, portfolio decision making helps the organizations in making the right decision in the best interest of the organization. All these control variables were found to have a significant impact on achieving results and achieving project and programme level purpose which in our research are the dimensions of portfolio efficiency.

 

In our study we also found that there exists a positive relationship between the portfolio control techniques and portfolio efficiency which is affected by the contextual variables such as project type, governance type, organizational complexity, co-localization of team members, communication and clarity of goals and objectives.

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