When managing construction projects, you simultaneously handle various sizes, scopes, and complexities. No two projects are the same, so each one might affect your overall profitability and productivity differently. Having a “bird’s-eye” view of all the projects is crucial to making sound business decisions based on the company’s overall status rather than looking at each project separately. Managing your construction project portfolio helps you find, study, and deal with risks in a portfolio to meet their goals and plan for the future.
What is A Construction Project Portfolio?
A construction project portfolio is a collection of projects a company is doing or has completed. Construction project portfolio management allows businesses to look at their projects and get the most in performance and return on investment. It helps leaders and project managers see the big picture to make decisions based on that instead of looking at each project separately. To keep an eye on all of these actions at once, project portfolios are made to store and organize important information.
The main goal of efficiently and effectively managing your project portfolio management is to look for potential problems across multiple projects as soon as possible and fix them. It can also help you allocate the right amount of money, time, and resources across all projects. Cost or schedule overruns in one project might not seem like a big deal, but overruns in several projects could be a red flag that should be looked at immediately. There can also be a scenario where one project can stay under budget and could cover one that goes over budget.
What is Construction Project Portfolio Management?
Over the years, the building industry has continuously grown and expanded. Each project can range from a few thousand dollars to billion-dollar projects. The rewards are high, but so are the risks. Even though there are a lot of big plans for the industry, things could continuously be improved, like incorporating construction technology to streamline and optimize processes.
Choosing which projects to work on, setting priorities, allocating resources, and overseeing them are all parts of portfolio management. If a project fits the company’s long-term goals and is doing well, it will likely get all the money and attention. On the other hand, if it is too risky and not in line with the company’s overall plan, you might not take it. This centralized management and oversight helps the company paint a bigger picture of what is happening within the organization and if you can take on another project.
Since owners, contractors, and suppliers work on multiple projects simultaneously, building projects can quickly get more complicated. Not to mention the challenges facing the construction industry today, such as labor shortages, procurement delays, and supply chain management. This is where comprehensive project portfolio management can make a big difference. Setting up your processes, focusing on your current processes, and looking into the future can help you understand what is happening behind the scenes and how to improve it.
Some of the benefits of project portfolio management are:
- Taking care of the company’s resources, risks, and changes
- Keep costs, schedule, and plan delays to a minimum
- Foster constant communication and close collaboration
- Analyze data points from a lot of different projects
The Importance of Managing Your Overall Project Portfolio
Like most project management techniques, an efficient and effective portfolio management system can add value to you and your organization in many ways. In this section, let us look at some of the benefits you can realize.
Aligned Strategies and Goals
As mentioned earlier, project portfolio management can help general contractors or project managers get a clear overview of the project and its operations and see if everything is still on track with their KPIs and high-level goals.
Higher Efficiency
Having a bird’s eye view of the project makes it easier to determine which activities must be done first and what can wait when all the jobs are laid out in one place. This way, you can create a thorough plan on how you want to handle the projects.
Managing Risks
Clarity in a project portfolio helps you manage risks better by putting together the most important parts of projects in one place for assessment. You can also get valuable insights and learnings from past projects, which can help you prevent the same things from happening.
Effective Strategies For Managing Your Portfolio
Depending on your current company’s capacity, there are many different ways to manage your portfolio efficiently and effectively. This section lists some tried-and-true methodologies that can help you change how you handle your projects.
Create A Project Inventory
Looking at your projects simultaneously gives you insight essential for managing your business well. Create a project inventory list showing what you are doing or have already completed. Please include all relevant information, such as the project title, due date, expected cost, business goals, and return on investment.
Choose The Right Projects
Focusing on projects most aligned with the company’s overall goals is essential. A good portfolio manager will ultimately find projects that overlap early on and stop projects with weak business cases. After judging each project based on how well it fits with the overall plan, you must set priorities based on the resources and money you have available.
Look Out For Dangers
Before you start, you should know the risks that could affect your assets. This means reviewing each project in the portfolio and judging its difficulty, the changing market, and the availability of resources.
Be Aware of Risks
Once you know them, you will need to examine the risks in the tasks and portfolio. This means knowing how likely each risk is and how it will affect the business. You could use different approaches here, like models or in-depth interviews.
Review Your Company’s Capacities
An excellent process for evaluating and prioritizing projects will only help if you handle your portfolio after making the approved list. You should also ensure that you have the proper resources to finish each project you will undertake.
Foster Communication and Collaboration
When project heads look at their whole portfolio, they work together instead of against each other or in separate groups. This mindset also spreads to sub-teams, which do great work when they communicate a lot.
Good Crew Management
Project portfolio management gives project managers valuable tools to see their crew’s schedules, actions, time logs, and other information. More open communication is good for the project managers and their teams. Construction management software can help you allocate tasks efficiently and keep everyone on the same page.
Bid and Document Management
Standard templates and processes are built into document management systems to make writing and approving bids and contracts easier. A cloud-based management system can help you organize documents more efficiently and easily pull up what you need with just a few simple clicks.
Create Dashboards and Reports
It can be challenging for senior leaders to tell if the work on the ground aligns with their overall plan. Construction management software, like Pro Crew Schedule, offers simple yet intuitive reports that allow you to check what is happening with the project in real time.
Common Challenges When It Comes to Project Portfolio Management
Project portfolio management may seem easier said than done. It requires setting up suitable systems and committing to it for it to work. In this section, let’s look at the common challenges you may encounter.
Stakeholder Management
Stakeholders and the portfolio management team each have goals and needs to be met. Managing the relationship between the two can be challenging since financial choices are closely examined. Everyone should be aligned from the get-go. A partnership is a two-way street, so you must ensure everyone is doing their part of the contract. From the bottom up, everyone needs to be dedicated and open so that tasks stay on track and relationships remain strong.
Resource Allocation and Forecasting
It is hard to tell how much time, ability, and resources like budget are available for each project. General contractors or project managers must be able to allocate and forecast the resources necessary for each project to ensure everything will go according to schedule.
Interpreting Data
To handle your portfolio well, you need to be able to import project data and change how you or other stakeholders see it. You must be able to create simple yet concise reports that clearly explain all the relevant information and flag all issues that need to be raised.
Complicated Processes
With construction projects getting more extensive and complicated, you must streamline and optimize your processes to ensure a smooth and seamless project delivery. You can do this by incorporating construction technologies like software, AI, or BIM to automate the nitty-gritty tasks and allow you to focus more on how to grow and expand your business.
Big-Picture Economic Risks
The construction industry is highly volatile, and things out of a company’s control can hurt it. For example, when the economy goes down, a company may have to deal with increasing material costs or lower profits. With efficient project portfolio management, a company can make better financial choices before, during, and after a crisis or slow period.
