Project Portfolio Management in Australia

Abstract

Innovation projects are increasingly important to organisational survival. Large sums are invested in projects to develop new products and services, however a significant proportion of these are not successful. Project management methods have become a standard part of innovation processes and a variety of tools are available for the management of innovation projects. However, the awareness and application of project portfolio management practices is less established. "Project Portfolio management" is a term used for the methods employed by organisations with new product innovation programs to ensure that resources are most effectively alIocated among projects. By ensuring that the best projects are selected for development, project portfolio management methods aim to improve the success rates of innovation projects. This paper presents the results of a survey from a joint research project conducted by the University of Technology, Sydney, Macquarie Graduate 'School of Management, North Ryde, and McMaster University, Ontario. Canada. The project investigated the project portfolio management practices in Australia and draws upon earlier research in North America alIowing direct comparison of project portfolio management practices in the two regions. The research project also extends the scope of the previous research to include project portfolio management practices for both service product projects and manufactured product projects. In addition, data on the resulting new product success rates has been collected to provide indications about which new product project portfolio management practices are linked with new product success. Sixty Australian organisations participated in the research survey and provided details of the project portfolio management methods they use, their attitudes and satisfaction levels, and their resulting portfolio performance and new product success levels. The results were analysed to determine which project portfolio management methods were most commonly used, which had influence on outcomes, and whether there was a difference between the methods used by organisations with primarily service development projects and those that focus on projects for the development of manufactured products. The survey has reinforced results from previous research confirming that one of the biggest challenges for project portfolio management is to help organisations select the appropriate number of projects for their resources. Financial and strategic methods and criteria dominate portfolio decision-making; however strategic methods and or portfolio maps have the strongest positive influence on portfolio performance measures. The paper identifies areas for future research and improvement of professional practice.