Project Portfolio Management Certification (PfMP) Practice Exam 2026 - Free PfMP Practice Questions and Study Guide

The purpose of categorization in project portfolio management is fundamentally about organizing projects in a way that aligns them with the strategic goals of the organization and varies based on their resource requirements. When projects are categorized effectively, it enables portfolio managers to clearly identify which initiatives contribute most to the organization’s objectives, ensuring that resources are allocated efficiently and effectively.

By categorizing projects based on strategic alignment, managers can prioritize those that are more likely to yield return on investment aligned with the company’s mission. This organized perspective fosters better decision-making regarding which projects to pursue, continue, or terminate based on how well they align with strategic objectives and the resources they require.

Furthermore, this categorization supports various other processes within portfolio management, such as performance evaluation, risk assessment, and resource allocation, all of which are critical for optimizing the overall project mix and achieving desired outcomes. In sum, the primary role of categorization is to bring clarity and focus to the decision-making process, enhancing the ability to manage a diverse portfolio of projects effectively.