The role of Portfolio Management in Driving Business Benefits

Kent Lefner, Chief Transformation Officer, Sandcastle Change

Lisa Hunter

· Transformation,Portfolio Management


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All companies do at least two things: Sell and deliver a product or service and evolve what they sell and how they do it to sell and deliver better. Research shows us that more successful companies are good at both. However, business has been rumination about the importance of change for a long time. Research has shown us that change and transforming a business is hard and most companies fail to realize the value possibilities or see a positive return. The world has been collectively working to improve how we effectively navigate change to create the value companies seek. A key area of focus has been the use of Portfolio Management to manage multiple initiatives at once.


A project portfolio is the organization of multiple projects into a single view. Portfolio Management is the active and centralized management of one or more portfolios. According to the Project Management Institute (PMI), "Portfolio management can also be viewed as a dynamic activity through which an organization invests its resources to achieve its strategic objectives by identifying, categorizing, monitoring, evaluating, integration, selecting, prioritizing, optimizing, balancing, authorizing, transitioning, controlling, and terminating portfolio components1".

In other words, Portfolio Management is a way for a business to identify and actively manage value created from changes to the business. It should only choose projects that meet a specified list of criteria and make sure projects are aligned with the strategic direction.

Projects do not need to be related to reside in the same portfolio. They do, however, compete for the same finite resources within the business. So, we use a portfolio approach to assess and compare our collection of initiatives to judge which should be approved and executed and which should not. Also, continuously monitor value creation. We do this by linking the intended business benefits for each project with forecasted and actual costs so we can make a combination of quantified and qualified judgement.

When helping clients effectively prepare for transformative initiatives, and before we discuss the specifics of a Portfolio Management approach, we have found that there are often gaps in processes that are key inputs to Portfolio Management. So, we start with a “back to basics” view of the organization to identify operating gaps that often undermine value created from transformation activities. There are usually three elements that are either not applied or applied ineffectively that can weaken your ability to manage a portfolio of change initiatives. The following are common insights we share with companies preparing to begin a transformational change.


Transformational Readiness

Transformation Readiness is a critical competency for most businesses and companies that can successfully navigate change do it more effectively than those who do not. Transformation Mature companies:

  • Waste less money than the global average 12.6% of every project dollar lost3
  • Spend 14x less money than immature companies3
  • Successfully complete 89% of their projects, while low performers complete only 36%.4

The mature, transformation ready organization has established defined metrics linked to business objectives that are directly referenced in a business case for each project.

Businesses should consider the following when applying a Project Portfolio Management (PPM) approach to managing business value creation through change.

Define target value 

The achievement of business objectives can be validated by measuring the degree of business performance change created based on a predefined target and value. Creating and capturing business objectives will help build a foundation to identify the amount of value created or lost. Project Objectives are usually intended to articulate a form of value improvement. This sets the stage to be able to measure various forms of ROI measures essential for continuous improvement and proactive risk management. Regular evaluation of prescribed value will help identify issues, make needed changes, and determine if a project needs to be rescoped, redirected, or rescued. When aligned with business objectives, project objectives provide confidence that they are organized to directly support business needs.

Objectives and associated value metrics should be included in the project business case so a business can review stated planned metrics against actual performance metrics to help keep a project in support of business direction.

Wildly successful businesses that are flush with cash may be able to afford wasting precious time and resources and can afford to leave their change-related work activity to chance. But most companies do not have that luxury and should actively try to find ways to “do the right projects at the right time in the right way”1.

Apply a Business Case Approach

Develop a Project Business Case (often input to a Project Charter) to describe how each project is aligned with business objectives in terms of measurable performance and judge if the juice from a project will be worth the squeeze.

The value of the enterprise program / project portfolio should be measured (factors can vary across companies but should minimally include the forecast to actual time, finance, scope, user acceptance, and all tangible benefits identified in the project business case. Leadership should periodically ensure that project team behaviors indicate alignment and address gaps.

A Business Case serves as a key input to a Project Charter used to guide team performance and thinking.

PMI defines a Project Charter as "...a document issued by the project sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities5". According to PMI, if there is no project charter, there is no project. The charter takes as input information about business strategy and operating conditions described in the Business Case.

Leaders should review the Project Charter with the team with emphasis on project goals and objectives. Periodically assess consistency in people's descriptions and address gaps. People who are unable to articulate them correctly require additional support to understand the nature of the business and project.

Leaders should also assess that resources are committed and have capacity to satisfy project needs and address gaps.

Adopt a Balanced Scorecard approach to business performance and change management

Balanced Scorecards provide a view of the business from four perspectives; Financials, Customer Perspective, Innovation and Learning, and Internal Business Perspective; Showing Goals and Measurements for each category in a single management report2. A balanced scorecard is a tool for the organization to understand key measures of performance, both lagging and leading. The typical balanced scorecard contains four key dimensions of business performance2:

  1. Financial measures (a lagging indicator) – helps understand how shareholders view the business
  2. Customer measures (e.g., customer satisfaction) – helps understand how customers view the business
  3. Internal processes (e.g., rate of productivity) – helps understand the process where quality execution is critical
  4. Innovation / improvement measures – helps understand how change-related activities drive future performance and value

Include the metrics the business requires, both expected and actual, on the scorecard so everyone can direct their attention aspects of the business that may create roadblocks to achieving business objectives and begin to focus on those areas.

A chart displaying the 4 dimensions will help stakeholders understand and visualize the direct link between Balanced Scorecard metrics and transformation initiative performance metrics. Only projects that show clear linkage to positively influence Balanced Scorecard metrics should be advanced because they can have material business impact.

A Balanced Scorecard should be used as a communication tool for everyone impacted by a project or portfolio. It requires participation from all business participants, management, and employees alike. It must be able to show impact and outcome for all levels of an organization. Teams and management should be able to embrace that a Balanced Score helps focus on items identified as high priority, and areas the need extra attention to be successful. A Balanced Scorecard can be adapted to all levels of a company to ensure the highest priorities are spotlighted and advanced.

A Balanced Scorecard concept when applied to project metrics provides a Portfolio Manager with a view of the same kind of barriers. Optimal maturity is achieved when a portfolio scorecard is aligned with the enterprise portfolio.


  1. PMI, Standard for Portfolio management, Fourth Edition.
  2. Harvard Business Review (
  3. PMI Pulse Report, 2020.
  4. McKinsey, Why do most transformations fail?  A conversation with Harry Robinson, 2019 (
  5. PMI PMBOK, fourth edition.