Project portfolio management is the art of applying management skills, techniques, and tools to a group of projects with the purpose of meeting the financial goals of organizations. It usually employs a structured approach. Project portfolio management is often regarded as the next generation of project management. It is an integrated system that views business as a set of projects.

Project portfolio management has numerous benefits. It is possible to review and alter programs accordingly as situations change. The central part of project portfolio management is selection of the right project. There are mainly five levels in the project portfolio management process. The first level is to organize projects into discrete units and analyze cost and other necessary resources. The next level is to take decisions that would help achieve the goals. At the third level, metrics, tools, and models are developed and the cost of the project is estimated. The fourth level does the optimization of the project. The final level is attained when the company has made project portfolio management a core competency.

Project portfolio management allows executives to review portfolios, spot redundancies, spread resources in an appropriate manner, and adjust projects to get return as high as possible. There are three main reasons to adopt project portfolio management - its realistic nature, rationality, and visibility. Project portfolio management is based on reality and it encourages a company to build a project inventory baseline. Resources available and targets to be achieved are realistically balanced. Project portfolio management is fact-based as it allocates resources such as time, equipment, and personnel based on information available. Project portfolio management is observable too. It employs several tools to view progress made at various levels and the amount of resources used.