PORTFOLIO, PROGRAM & PROJECT MANAGEMENT
By Anton van den Berg
What is the difference between portfolio, program and project management? From a distance it seems that people use these terms interchangeably. They do however represent different endeavours.
Definitions of project, program and portfolio management.
Wikipedia provides the following definitions:
"The discipline of planning, organizing, motivating, and controlling resources to meet specific goals. A project is a temporary endeavour with a defined beginning and end (usually time-constrained, and often constrained by funding or deliverables.")
For more information about project management see Anton's article on the Basics of Project management.
"The process of managing several related projects."
"The centralized management of processes, methods, and technologies used by project managers and project management offices (PMOs) to analyse and collectively manage a group of current or proposed projects... The objectives of PPM are to determine the optimal resource mix for delivery."
What is the difference between portfolio, program and project management?
Just looking at these definitions does not distinguish large projects, from small programs, portfolios from very large programs and so on. So let’s look at what is different and then we should be able to tell them apart.
This will give us some basis of comparison.
- Portfolios do not have an end date.
- Portfolios are entirely strategic.
- Portfolios contain projects, programs and operations that does not require a specific relationship to each other.
- Portfolios don’t intend to reach a specific strategic objective, but rather address a strategic value or intent.
- Programs have a specific strategic goal that it must satisfy.
- All components in a program are included to deliver or contribute to reaching a measurable strategic goal (Could be more than 1).
- Programs may temporarily include the management of operations.
- Programs have a start and end date within which they have to deliver on the agreed objectives.
- Projects deliver a specific outcome (product, result).
Portfolios contain projects, programs and operations that do not require a specific relationship to each other.
A specific aircraft manufacturer has a project portfolio in which they intend to enhance the organisation’s image, improve service delivery and secure the medium and long term financial future. Within this project portfolio a program exists to design, develop and implement the manufacturing of a new aircraft. The program contains many projects, one of which is concerned with the building of the manufacturing facility in which the aircraft will be built.
Roles played by project, program and portfolio managers.
A portfolio manager would typically be a head of a department, division or business unit. Within his/her environment there may be several projects and programs occurring all aimed at some specific objective.
In the example of the aircraft manufacturer, the aircraft maintenance manager may have existing operations, a service delivery improvement project, as well as involvement with the new aircraft design program where his organisational unit have to provide input into aircraft maintenance requirements and considerations.
So in essence the portfolio manager would be a very senior person (manager or executive), tasked with ensuring the overall health and well-being of a discipline or concept within an organisation part of which would contain the components of the portfolio.
The program manager may or may not be employed by the company that will receive the eventual products and services produced by the program. This person is fully focused and committed to ensure delivery of the eventual products and services produced by the program. This does not mean that a program manager may not have line or other managerial function within an organisation, it simply means that a overwhelmingly large proportion of overall available effort would be consumed by the management of the program.
In my view a program manager is still a very senior person but this person is accountable to produce the goods… (products and services produced by the program). Because of the strategic nature of programs, it would be advisable that this person either have a very senior position OR have unwavering executive support. The program manager may also perform the role of project sponsor to the constituent projects within the program.
Project managers as we know can vary greatly in seniority, authority and capability. Obviously it would help if the project manager is more senior than the project members, but that is not essential (I have successfully executed quite a few projects where a number of the project members outranked me significantly in the corporate structure without much problems.
It is all about scale.
While this gives you some idea as to who these persons would be inside an organisation, however, exact levels are difficult as they depend on the scale of what is being undertaken. e.g. what NASA view as a small project could overshadow the largest program ever undertaken by company x and could exceed the size of the finance portfolio of a small country.
Anton van den Berg is a professional program and project management practitioner with several years of management experience on various levels and in different capacities in a range of industries and disciplines.
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