The Portfolio Life Cycle

The portfolio life cycle is the ongoing processes and functions that occur to a set of portfolios, programs, projects, and operations within a continuous time frame. There are a lot of factors, both internal and external which influence the organization. So, the portfolio life cycle should be resilient.

A life cycle of processes used to collect, identify, categorize, evaluate, select, prioritize, balance, authorize, and review components within the project portfolio to ensure that they are performing compared to the key indicators and the strategic plan.

Strategic planning, organizational performance metrics, and product and service design are critical elements as inputs into the portfolio life cycle. These inputs help understand how the portfolio can add value to the organization. This process is streamlined to an extent where the essential and non-essential programs, projects, and activities are clearly distinguished along with their benefits.

Figure1: Major Activities by Stage in the Portfolio Life Cycle

The phases of the life cycle are:

1. Initiation
   The major standards and principles applicable are defined in this stage, describing how a portfolio and the included components are handled. There are a few key processes: governance framework, communications planning, prioritization criteria, portfolio performance metrics, and portfolio risk management.
2. Planning
   The main goal is to agree upon a plan and develop the plan accordingly. Agreements made in the initiation stage are reviewed to ensure that they are aligned to the organization’s goals, including scope, time, budget, prioritization, product/service specifications, risks identified, resource availability, and inter-dependencies. Any changes proposed are thoroughly reviewed, and the portfolio management plans are adjusted.
3. Execution
   The execution happens within all the included components, and the progress is constantly monitored. Conflicts are resolved promptly to ensure a smooth workflow. Regular status reports are prepared and are compared to the metrics established during the planning phase. Changes in the existing components or creating new components could also be initiated in this stage based on the organization’s situation.
4. Optimization
   The portfolio is optimized to achieve the best possible results considering the limitations and resources. Carrying out Portfolio Optimization is ideal when introducing a new component or when the component is ready to be closed. The portfolio manager plays a vital role in communicating with the stakeholders.

References
1) https://www.pmi.org/pmbok-guide-standards/foundational/standard-for-portfolio-management
2) https://www.pmi.org/learning/library/project-portfolio-management-techniques-7624