Why Organizations Should Focus on 1 or 2 Metrics as Drivers in Decision-Making for Project Portfolio Management

Project Portfolio management in many organizations often involves maintaining a list of projects with their statuses, ownership, and progress updates. While having an updated list of projects is important, it is even more critical to determine which key performance indicators (KPIs) will act as primary decision-making drivers. Without a clear focus on a few core metrics, organizations risk tracking too many indicators without actionable insights, leading to decision paralysis.

In this article, we will dive into the importance of selecting the right metrics for portfolio management and why organizations should focus on just one or two critical metrics to drive performance and ensure project success.

Metrics serve as leading indicators that help organizations understand whether projects are progressing as expected. However, tracking too many metrics can dilute focus and make it harder to act on the insights they provide. Instead, organizations should prioritize a few critical metrics that align with strategic goals and help trigger action when thresholds are breached. Selecting the right metrics ensures that alarm bells ring at the right time, prompting swift corrective actions.?

Time to Value (TTV)

In today’s fast-paced business environment, Time to Value (TTV) should be a core metric for any organization managing a project portfolio. TTV measures how quickly a project delivers meaningful value after it has been initiated. In an age where innovation and time-to-market are critical success factors, organizations need to ensure they are delivering products, services, or improvements as fast as possible without compromising on quality.

Speed in decision-making and project execution is key to staying competitive. However, speed must be balanced with quality. This requires organizations to agree on minimum quality standards or an acceptable range of error for deliverables. These standards must be established at a management level to ensure consistency and alignment.

Earned Value (EV)

Another powerful metric to track is Earned Value (EV). EV provides a monetary representation of the value of work completed in a project. EV helps organizations understand whether they are getting their money’s worth from ongoing initiatives. It is a critical metric for fast-paced organizations that need to make real-time decisions about project continuation or termination.

Without tracking EV, organizations risk continuing to fund projects that are not delivering sufficient returns. This can lead to wasted resources and missed opportunities to invest in higher-value initiatives.

The Case for Composite Metrics

While individual metrics like TTV and EV provide valuable insights, a composite metric can offer a more holistic view of portfolio performance. Composite metrics combine multiple factors such as schedule performance, risk exposure, cost efficiency, and resource utilization into a single score that provides a comprehensive assessment of the portfolio.

Benefits of Composite Metrics

• Simplifies reporting: A single score can be easier to communicate to stakeholders.
• Balances multiple factors: Composite metrics ensure that performance is not assessed in isolation.
• Triggers more informed decisions: By integrating various metrics, organizations can get a realistic view of project health.

This single score can help portfolio managers quickly gauge the overall status of projects and identify areas that need attention.

Tracking Project Statuses and Resource Allocation

In addition to key metrics, organizations should pay attention to project statuses (e.g., on hold, closed, or in progress) as they can provide valuable insights into resource allocation and demand.

For example:

• High volumes of on-hold projects may indicate resource constraints or bottlenecks.
• An increasing number of closed projects suggests efficient delivery and resource availability.
• Work-in-progress (WIP) limits can help prevent over-allocation and ensure teams remain focused on completing ongoing work.

These status insights, when combined with metrics like TTV and EV, can provide a complete picture of portfolio performance.

Focusing on one or two key metrics can significantly improve decision-making in project portfolio management. Metrics like Time to Value (TTV) and Earned Value (EV) are essential for ensuring that organizations deliver value quickly and efficiently while avoiding wasted investments.

Incorporating composite metrics can further enhance portfolio management by providing a holistic view of project health. Ultimately, portfolio management without performance metrics is ineffective. Organizations must focus on clear, actionable, and strategically aligned metrics to drive successful project outcomes and make informed decisions.