Multi-Project Management (MPM) vs Project Portfolio Management (PPM): Differences & Commonalities
| Translated by Julian Hammer
Both multi-project management and project portfolio management are project methods for managing multiple projects simultaneously. Both methods aim to implement projects efficiently and achieve business objectives.
What is the difference between multi-project management and portfolio management? Multi-project management controls several projects simultaneously at an operational level. Portfolio management, on the other hand, strategically prioritizes projects in order to achieve overarching corporate objectives.
The objective of both multi-project management (MPM) and project portfolio management (PPM) is to control projects efficiently and make optimum use of resources. Both methods improve transparency and control across multiple projects.
The advantage of multi-project management is that simultaneously running projects can be coordinated which provides a better overview and allows you to identify conflicts between project objectives at an early stage and find solutions. One disadvantage is that resources can quickly become overloaded.
The advantage of portfolio management is that the projects are prioritized according to their strategic importance. This makes it possible to focus on the projects that are most valuable to the company and supports long-term corporate success. The disadvantage is the high planning effort, as portfolio management encompasses all projects of a company.
In our article, we describe multi-project management and project portfolio management in detail and show you how a suitable software optimizes both multi-project and project portfolio management.
What Is Multi-Project Management (MPM)?
Multi-project management refers to the simultaneous planning, controlling and coordination of multiple projects within an organization. Compared to individual project management, which focuses on the management of a single project, MPM requires overarching resource planning and the prioritization of different projects.
Challenges arise, a.o., when exclusive resources must be distributed across several projects. Dependencies between projects, different priorities and the necessity to ensure that projects meet their deadlines increase complexity. Furthermore, teams must react to changes in a flexible manner when priorities shift.
In large companies or international organizations, MPM can become particularly complex. An example could be a global car manufacturer that develops new models, optimizes existing lines and pursues research projects for alternative drives at the same time. Projects must also be strategically prioritized in order to make optimal use of scarce resources such as employees, machines and finances while still achieving the long-term business objectives.
For prioritization and selection of projects in MPM, criteria are used that contribute to the realization of the most important projects of a company. This includes, e.g.:
- risk evaluation
- return on investment (ROI)
- resource availablilty
- legal requirements
- technical necessities
What role does communication play in multi-project management?
In a multi-project environment, communication is of pivotal importance. It is the key for information flow between different project teams but also between the management levels involved, departments and other stakeholders. Clear and regular communication prevents misunderstandings, promotes transparency and allows you to identify risks or dependencies between projects at an early stage. It also ensures that everyone involved is constantly informed about priorities, resources, risks and deadlines.
What tools and methods are useful in multi-project management?
When managing several projects simultaneously, it is crucial to keep an overview of the tasks. Compared to traditional project management, agile project management methods are more flexible, iterative and promote communication between project teams and employees.
Agile project management methods offer the following advantages:
- Flexibility: You can react quickly to changing requirements or market developments.
- Iterativity: Tasks are carried out in short, repetitive cycles with constant feedback.
- Team orientation: Thanks to short communication channels, teams collaborate closely.
- Customer friendliness: Strong involvement of customers and other stakeholders is possible throughout the entire process.
- Fast results: Agile project methods enable the delivery of partial products instead of a large final product at the end of a project.
The agile Kanban and Scrum methods are particularly common. Kanban uses visual boards to control the workflow and identify bottlenecks. Scrum splits project tasks into short sprints in which the teams receive regular feedback in meetings and control the project progress.
Project management software is used for visual support, processing large volumes of data and automating standard processes.
These software solutions offer functions such as project tracking, resource planning, risk management and real-time collaboration which are especially tailored to the requirements of multi-project environments. They allow you to prioritize tasks, allocate resources, identify risks, visualize the project progress and identify bottlenecks at an early stage. This significantly increases efficiency in project management.
What Is Project Portfolio Management (PPM)?
Project portfolio management refers to the strategic selection, prioritization and planning of all projects within a company. The objective is to make sure that all projects in the portfolio are in line with the long-term business objectives.
Portfolio management contributes to corporate planning by selecting projects with the highest benefit, the lowest risks and according to strategic relevance.
The following criteria are used to prioritize projects:
- strategic importance
- expected turnover
- possible risks
- resource availability
- interests of stakeholders and investors
How is success measured in project portfolio management?
With key performance indicators (KPIs), the success in portfolio management can be measured in the project context.
The ROI measures the financial return of a project in relation to the costs. The capital value (Net Present Value, NPV) on the other hand calculates today’s value of future cashflow in order to evaluate the long-term profitability of a project. By comparing the planned costs with the actual expenses, it is possible to determine how exactly the project budget is adhered to.
Risk management evaluates the risk of each project and how well these risks are dealt with. Minor deviations from planned results indicate good risk management.
As far as the resources are concerned, it is important to measure how efficiently they are deployed to avoid overload or underload. Effective use of resources produces the highest output with the lowest input.
The actual project results are strategically compared to the long-term business objectives.
What role does communication play in project portfolio management?
Risk management plays a central role in portfolio management because it helps to identify and evaluate potential risks in the entire project portfolio before they jeopardize the success. With the help of different risk management methods and strategies, risks are identified through systematic analyses such as risk matrices or SWOT analyses. They are prioritized according to their probability of occurrence and potential damage.
The management of risks includes measures to minimize or avoid risks. This proactive risk evaluation and control supports decision-making by concentrating resources on valuable low-risk projects and adjusting or discarding risky projects.
What Do Multi-Project Management and Project Portfolio Management Have in Common?
Multi-project management and project portfolio management have several overlaps in terms of structure, objectives and methods. Both approaches require coordinated resource planning to ensure that projects are implemented effectively and without conflicts.
The objectives are similar: They maximize the success of the project in the context of the company’s objectives. Multi-project management focuses on the operational management of simultaneously running projects, while project portfolio management takes over the strategic alignment and prioritization of projects. In both cases, prioritization processes, risk management and progress monitoring are used.
What are the differences between multi-project management and project portfolio management?
When comparing multi-project management vs. portfolio management, differences in project management become clear. Multi-project management is focused on the operational management of several simultaneously running projects with the objective being the efficient distribution of resources and the timely conclusion of projects.
Portfolio management, on the other hand, is focused on strategic management and aims to select the right projects that help to achieve the long-term business objectives. While multi-project management uses methods for resource distribution and scheduling, portfolio management relies on the evaluation and prioritization of projects according to strategic importance, risks and returns. In portfolio management, for example, resources only the outline planning of resources is carried out.
The table below provides a clear overview of the differences between multi-project management and project portfolio management:
| Aspect | Multi-project management | Project portfolio management |
|---|---|---|
| Objective | Coordination and implementation of several operative projects | Strategic selection and management of an organization’s entire project portfolio |
| Focus | Operative control of simultaneously running projects | Overarching objectives and priorities of the portfolio |
| Time horizon | Short to medium-term | Long-term and strategic |
| Risk management | Risk estimate on project level | Risk and opportunity assessment at portfolio level |
| Resource management | Coordination and assignment of the resources between projects | Outline planning of resources at portfolio level |
| Success criteria | Results of the individual projects including adherence to deadlines and budgets | Overall performance of the portfolio such as ROI and strategic goals |
What are the advantages of multi-project management and project portfolio management?
Both multi-project management and portfolio management offer operational and strategic advantages for the company.
The essential advantages of multi-project management can be described as follows:
- Operational efficiency through optimum resource utilization
- Flexibility allowing you to react quickly to conflicts or changes in requirements
- Transparency thanks to the progress overview and the dependencies of all running projects
Achievement of business objectives through the timely implementation of projects
For example, an IT company can use multi-project management as a method to manage several software development projects simultaneously and efficiently distribute specialists such as programmers to the projects.
The advantages of project portfolio management are rather focused on the company’s strategic objectives:
- Strategic orientation through the prioritization of projects in line with the business objectives
- Yield maximization thanks to the use of resources for projects with the greatest benefits
- Risk minimization through targeted strategic project evaluation
What are the disadvantages of multi-project management and project portfolio management?
The disadvantages of multi-project management are the following:
- Conflicts by projects competing for exclusive resources
- Resource overload in the case of scarce resources
- Complexity in project management
While the disadvantages of MPM result from the complexity of managing multiple projects, the disadvantages of project portfolio management result from the long-term strategic planning:
- High planning effort through the strategic evaluation of all projects that require a lot of time and resources
- Limitation of the short-term operational flexibility by placing a focus on the long term
- Overlooking smaller projects, which may be important from an operational point of view
When does multi-project management make sense and when does project portfolio management make sense?
Companies should use multi-project management if they have to simultaneously manage and coordinate multiple operational projects that use the same resources. In such a case, it is crucial to keep an eye on all projects, set priorities, maximize synergies and make optimum use of exclusive resources.
Project portfolio management, on the other hand, makes sense when strategic decisions must be made on which projects offer the greatest value for the company. This is less about the operational management of individual projects but rather about the selection and prioritization of the right projects to achieve long-term business objectives.
PLANTA has expertise in the area of multi-project and project portfolio management, for the company looks back on decades of experience in the development of software solutions for ambitious project management. PLANTA Project is is not only designed to systematically manage complex projects, but is also based on a deeper understanding of best practices.
How can I combine both approaches?
In an integrated strategy between multi-project management and project portfolio management, operational and strategic management are efficiently combined. First of all, PPM prioritizes the strategically relevant projects and approves them for implementation. MPM then carries out the operational planning and management of these projects and ensures that resources and schedules are coordinated efficiently.
The PLANTA software offers a maximum of flexibility and scalability for different project management requirements. Companies can choose between traditional, agile, and hybrid project management and adapt the functions individually to their projects. With PLANTA, agile methods such as Kanban can be seamlessly combined with traditional planning approaches so that projects can be perfectly monitored in terms of deadlines, resources and costs.
Intuitive task management and time recording allow teams to get right started and become productive. As a company, you also have the choice of either storing your data on your own premises (on-premises) or manage them flexibly as an SaaS solution.
PLANTA Project comprises efficient multi-project management, strategic project portfolio management and optimized communication in the team. Furthermore it offers the following PM methods:
- Agile for flexible and iterative project management
- Traditional for structured project management
- Hybrid for flexible and precise project management
Multi-Project Management vs Portfolio Management: Conclusion
Both multi-project management and project portfolio management include the evaluation and controlling of multiple projects in a company. While multi-project management is focused on the implementation of operational projects , project portfolio management aligns all projects of an organization with the strategic business objectives in prioritization.
The objective of both methods is to make efficient use of scarce resources and realize projects successfully and in line with the business objectives within the specified time frame and budget. software solutions like PLANTA Project are suitable for the management of these complex tasks.
FAQ
Can you use both multi-project management and project portfolio management in agile environments?
Agile methods allow for flexible adjustment and quick reactions to changes in projects. Therefore, agile environments are a good choice both for multi-project management and portfolio management.
How does poor resource planning in multi-project management affect project results?
Poor resource planning in multi-project management leads to double assignments of exclusive resources like machines and personnel, causing conflicts and delays. Employee overload due to overwork reduces performance and increases the risk of mistakes, while inefficient machine assignments cause project delays and increases in costs.
What mistakes are frequently made when introducing multi-project management?
Common mistakes when introducing multi-project management are unclear priorities, missing resource planning, lack of transparency of project progress and missing coordination between projects and project staff. If software tools are inadequate and teams are not sufficiently trained, this leads to inefficient project management and increased concflicts between simultaneously running projects.
