Top Down Approach to Project Portfolio Management - Why Is It Important? Every organization works hard to dedicate sufficient resources to the processes that matter the most. This approach is known as portfolio management and its adoption happens to be tremendously important for increased productivity and cost-effectiveness of the crucial organizational procedures. Top down project portfolio management is becoming an increasingly popular concept among business managers. Several reasons determine its attractiveness and necessitate the adoption of such an approach. Why is top down portfolio management so important and what are the major ways in which it can affect businesses?
WHAT IS TOP DOWN PROJECT PORTFOLIO MANAGEMENT? This approach relies on the selection of project portfolio management (PPM) software for the adoption of a solution-oriented approach towards corporate processes. Thereâ€™s a significant difference between the top down and the bottom up approach. In the case of top down management, individual tasks and processes are examined by managers to stimulate more effective overall execution. According to many, the top down approach results in better project planning and improved overall project execution. The top down approach provides an ongoing view of all essential processes, tasks and micro-tasks. It makes it easier for managers to make informed decisions and to relocate resources on the basis of current necessity. Objectives are defined by the company managers and expectations are communicated clearly with all other members of the team.
The bottom up approach involves a reversed structure – all team members provide their input. The problem with this process is that the significant networking required for execution will take up large amounts of resources and there’s no full or centralized control. The results of bottom up project management also happen to be more difficult to measure.
WHY IS TOP DOWN PROJECT PORTFOLIO MANAGEMENT SO IMPORTANT? A top down approach stimulates the implementation of the solutions that make sense both in financial and organizational terms. Resources get allocated in the most rational way, which decreases the cost of execution and prevents the loss of resources on processes that may not necessarily be effective. When top down solutions are implemented, the focus is on the business objective and the desired outcome. Management becomes easier and team leaders become capable of avoiding unnecessary or excessively costly challenges. Unrealistic execution schemes are seen as a serious problem in the case of bottom up execution. These stem from the lack of centralized monitoring and the chaotic communication that could be typical for bottom up management. This is one of the main reasons why numerous large and successful corporate structures have adopted a top down approach to project portfolio management.
THE MOST IMPORTANT BENEFITS OF THE TOP DOWN APPROACH Top down project portfolio management results in a vast range of advantages, some of which have been discussed already. Taking a deeper look at all the positive characteristics will shed some light on why this approach has been widely adopted in successful organizations.
BETTER PROJECT ALIGNMENT This approach makes it easier to define a systematic approach to task execution. Managers select the most effective solutions, keeping the focus on the main goals and diminishing the prominence of unnecessary executions.
BETTER PLANNING AND EXECUTION Having full view over the numerous corporate processes that take place simultaneously will enable managers understand the big picture. This aspect of top down project portfolio management will ultimately lead to better planning and better planning is the key to more effective execution.
VISIBILITY The top down approach guarantees much better visibility. Managers communicate the company’s needs clearly with the team. They pass vital information down the chain, which means that everybody is on the same page. Workers in the company understand the task at hand and they know
where to get additional information (from their supervisor). The structure has delivered excellent results for many years and it continues guaranteeing a high level of visibility till present day.
A SENSE OF PURPOSE Everybody in the corporate organization is aware of the major goal. Every team member understands tasks and the manner in which individual efforts contribute to accomplishing the major goal. Thus, top down project portfolio management results in a sense of purpose and standardized procedures, as well. The two factors work together to guarantee product or service quality in the long run.
GOOD STRUCTURE The corporate structure is clear and easy to understand. Bottom up project management can easily lead to chaotic communication, a problem that is non-existent when the top down approach is implemented. Thereâ€™s a well-defined hierarchy and a clear structure. This structure is highly functional and everybody is accountable for a certain element of project execution.
INTERESTING PROJECT PORTFOLIO MANAGEMENT DATA Many companies still stick to a bottom up approach, regardless of the fact that it seems to be standing in the way of efficiency. Though bottom up project management may sound logical, it is connected to very difficult verification of benefits and the investment of large amounts in processes that donâ€™t deliver the expected results. According to Kaplan and Norton statistics for 2013, nine out of 10 companies fail to implement an effective project management strategy. IBM estimates suggest that 40 percent of the investment in IT solutions is wasted due to poor project portfolio management. These problems often stem from the chaotic and random nature of the bottom up approach. When a poor strategy is chosen, portfolio management will not deliver the expected results. Strategies will lack focus, which is the most important prerequisite for maximum productivity and cost-efficiency. Bottom up approaches may work for already established procedures but when it comes to transformation and boosting productivity, this portfolio management strategy will be weakened by multiple shortcomings. Effective portfolio management is the most important element for strategy execution. It enables corporate structures to move forward and benefit from a high level of accountability. Many companies are still failing at this critical process but change is possible and necessary.
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