Value of the Portfolio Approach

The implementation risk has three components, project size, technological experience, and volatility of requirements. There is a greater chance of risk in a situation of implementing a large project. In a large project, the risk can be in terms of budgetary requirements, number of staff, number of departments involved, and the duration of implementation. A company that has invested a lot of money into a project carries more risks than that which has invested little money. A company with a large investment tends to be more affected in case it realizes risk (Applegate, Austin & Soule, 2009). Therefore; more risks come with the implementation of a large project than a small project.

The technological experience of staff members is important during and after the implementation of projects. There is a greater chance of risk when the organization and project team are not familiar with the software, hardware, and other technologies relating to the project. Companies that use new technologies when implementing a new program face greater risks than those companies that use familiar technologies. Hiring IT experts as consultants in companies can help reduce and avoid risks according to portfolio management processes. Companies should also establish training programs for their employees. It will be useful for the employees to familiarize themselves with the new technology (Applegate, Austin & Soule, 2009).

The volatility of requirements is another common risk among companies. The output of a project does not change but requirements are prone to change from the first stage to the last. However, some projects have stable requirements hence very few risks. A company that has identified one risk factor is at a lesser risk than that which has identified the three risks. The figure below describes it (Applegate, Austin & Soule, 2009).

Effect of Adding Risk Factors on project risk

Project portfolio management increases efficiency in a number of ways. These ways include allocating resources optimally; it identifies common factors in various projects and links the resources available and priorities among the needs of the company. When working on projects, resources are usually scarce because of the presence of many ideas. The Portfolio Approach of implementing ideas involves making comparisons, measuring, and making priorities before working on the most valuable goals only. This approach solves the problem of competition for resources through prioritizing (Brentani, 2003).

The approach identifies the common factors in the various projects and consolidates the resources available for the job. It is important to optimize all the resources available bearing in mind that they are scarce. Identification of common factors among projects is necessary as it can help work on all programs and not only the most valuable (Brentani, 2003). Implementing all projects occurs through resource linking among common factors in projects.

Portfolio management also aligns projects to the organization’s goals. The Portfolio Approach ensures that the projects’ alignment to organizational goals remains intact during the implementation and execution stages. The approach achieves these objectives by enhancing communication, coordination, management monitoring, oversight of the projects, redirecting projects to maintain alignment, changing objectives, and regular inspection for any drifts in the project (Brentani, 2003). All the above ways increase the efficiency of portfolio management, hence, successful project implementation.

In conclusion, portfolio management has many advantages to companies that are intending to implement multiple projects at the same time. Efficiency is the most important element in any project. Portfolio management gives efficiency in terms of risk management, resource allocation, and linking of company objectives to the outcomes of projects.


Applegate, L., Austin, R. D. & Soule D. (2009). Corporate Information Strategy and Management. New York: McGraw-Hill Higher Education.

Brentani, C. (2003). Portfolio Management in Practice. Chicago: Butterworth-Heinemann.