Back to Project Portfolio Management

Portfolio Performance Management

5 minutes 5 Questions

This concept involves monitoring and managing the performance of the project portfolio. It includes developing key performance indicators (KPIs) to measure portfolio performance, tracking these KPIs over time, assessing portfolio health, and making adjustments as required. Performance management also helps demonstrate the value of the portfolio, aids in decision making, and provides insights for continuous improvement.

Guide to Portfolio Performance Management

Portfolio Performance Management is a key element in project portfolio management under the CAPM, or Certified Associate in Project Management, conceptual framework

Importance:
Portfolio Performance Management is crucial in determining the success of an array of projects. It aids in decision making by illustrating the returns, risks, and value of the projects.

Definition:
Portfolio Performance Management involves the systematic review, monitoring, and adjustment of an array of projects towards meeting specified objectives. It emphasizes the performance of the portfolio as a whole rather than individual projects.

Working:
This process involves tracking portfolio results, comparing them with planned or desired outcomes, and taking necessary actions to align actual results with targets. Performance metrics may involve return on investment, risk levels, project value, and stakeholder satisfaction.

Exam Tips - Answering Questions on Portfolio Performance Management:
1. Understand concepts: Key to success is understanding fundamental concepts and not just memorizing definitions.
2. Application-based learning: Focus on applying theory in practical scenarios.
3. Clear explanations: Explain terms with clarity, providing examples where appropriate.
4. Time management: Practice solving questions in a timely manner to manage time during the exam effectively.
5. Exam pattern: Understand the exam format and types of questions asked.
6. Practice: Regular practice and revision can facilitate a firm grasp of the subject.

Test mode:
Start practice test
CAPM - Project Portfolio Management Example Questions

Test your knowledge of Amazon Simple Storage Service (S3)

Question 1

Your company has recently started a new project that is part of its strategic portfolio. You, as the project manager, discovered some potential risks which might affect the portfolio's performance. What is the best course of action?

Correct Answer: Inform the Portfolio Management about the risks and ask for guidance and decision.

The best course of action when identifying potential risks in a strategic portfolio project is to 'Inform the Portfolio Management about the risks and ask for guidance and decision.' This ensures transparency and allows for expert guidance on how best to handle these risks. It's essential to maintain constant and open communication with the Portfolio Management, as they can provide strategic direction and make necessary adjustments to mitigate risk. The option to 'Ignore the risks as they are part of every project' is incorrect because while risks are inherent in every project, ignoring them could lead to project failure. The third option, 'Try to solve the issues independently without informing the Portfolio Management,' also lacks transparency and could lead to mismanagement of risks that could have been better addressed with Portfolio Management input. Finally, 'Quit the project since the risks are high,' is also not a viable solution, as high risks can potentially be managed and quitting doesn't align with project management principles.

Question 2

You are in charge of portfolio performance management at an organization. When evaluating the performance of the various projects within the portfolio, where should your greatest focus be?

Correct Answer: On projects that are most closely aligned with the organization's strategic objectives and the highest value.

The best possible answer is 'On projects that are most closely aligned with the organization's strategic objectives and the highest value.' This is because the primary purpose of project portfolio management is to ensure that an organization is investing its resources in the right projects; those that contribute to its strategic objectives and bring high value. Focusing primarily on projects managed by the best project managers does not necessarily mean these projects align with the organizational goals. Similarly, while it is important to address problems within projects, focusing only on the problematic projects, regarless of their significance to the portfolio, may not bring strategic benefits to the organization. Lastly, focusing just on projects with the highest budgets doesn't ensure aligning with strategic objectives. Instead, it might mean allocating too many resources where they aren't strategically needed.

Question 3

Company X is planning to expand its operations and has created multiple new projects to facilitate this goal. As the Portfolio Manager, you've observed that many of these new projects are varying considerably in their risk profiles. These variances are impacting overall portfolio performance. How should you respond to this scenario?

Correct Answer: Consider reassessing the portfolio risk management strategy to ensure that it can adapt to the changing project risk profiles.

The best answer is 'Consider reassessing the portfolio risk management strategy to ensure that it can adapt to the changing project risk profiles.' As a Portfolio Manager, it's crucial to have an adaptable risk management strategy that can accommodate varying project risk profiles. This approach ensures that regardless of the changes in individual project risks, the overall portfolio performance is maintained. On the contrary, the other answers are not viable strategies. 'Focus solely on the projects with the highest risk profiles to prevent future performance issues.' This approach may neglect other projects that could potentially pose risks in the future. 'Scrutinize the performance of each project individually, disregarding the implications on overall portfolio performance.' This approach would not be thorough, as it doesn't take into account the collective impact of all projects on the portfolio's performance. Lastly, 'Terminate the projects with high risk profiles to maintain the portfolio's performance.' terminating projects may not always be the best solution as high-risk projects can also bring high returns. Instead, effective risk management should be implemented.

Go Premium

Certified Associate in Project Management Preparation Package (2024)

  • Earn 15 PDUs needed for your CAPM certification
  • 4454 Superior-grade Certified Associate in Project Management practice questions.
  • Accelerated Mastery: Deep dive into critical topics to fast-track your mastery.
  • Unlock Effortless CAPM preparation: 5 full exams.
  • 100% Satisfaction Guaranteed: Full refund with no questions if unsatisfied.
  • Bonus: If you upgrade now you get upgraded access to all courses
  • Risk-Free Decision: Start with a 7-day free trial - get premium features at no cost!
More Portfolio Performance Management questions
12 questions (total)
Start 12 question test