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Friday, May 6, 2011

Chapter 13: Relationship between Project, Program, and Portfolio

So far, we have been talking in terms of projects only. There are two other terms that are closed linked with projects and project management. They are: Program and Portfolio. In this chapter, we are going to look at how these 3 entities are related.

So, lets get started!!!

Relationship between Project, Program and Portfolio:

As a project manager, you should know the basic concepts of program and portfolio and how they are related to each other and to projects. A program may be a part of a higher-level program; it certainly contains some interrelated projects, and it may contain some non-project work as well. Program management focuses on optimally managing the interdependencies among the various projects in the program. The person who manages a program is called the Program Manager.
The program manager’s responsibilities are:

• Prioritize to resolve resource conflict and constraints that affect multiple projects within his program.
• Keep your priorities aligned with the strategic goals and objectives of the organization.
• Resolve issues and manage change within the governance structure of the organization.

Just like a project is managed by a project manager, a program is managed by a program manager, who oversees the projects and provides high-level guidance to the project managers. In other words, a program manager oversees projects and coordinates efforts between projects but does not manage the projects.

Why is that?

That is because; we the project managers are managing our projects!!!

A portfolio contains both programs and projects and is managed by a portfolio manager. The portfolio is drawn directly from the strategic business plan of the organization.
The strategy of an organization is an action plan to achieve its business goals and objectives. It’s also called a strategic plan or a strategic business plan. The strategy determines the portfolio of projects and programs that the organization will execute. A portfolio is a set of projects, programs, or both that is managed in a coordinated fashion to obtain control and benefits not available from managing them individually.

What is Portfolio Management?

Portfolio management is the centralized management of one or more portfolios, and it includes identifying, prioritizing, authorizing, managing, and controlling projects, programs, and other related work in order to obtain specific strategic business objectives of the organization. Just as a program is managed by a program manager, a portfolio is managed by a portfolio manager.
To understand the relationship between these 3 entities, projects, programs and portfolios we need to understand that:

• If an organization does not have any programs but has only individual projects, all these projects can be grouped into one or more portfolios.
• If an organization has programs and no individual project external to all programs, all these programs can be grouped into one or more portfolios.
• If an organization has some programs and some individual projects, all these programs and projects can be grouped into one or more portfolios.

Portfolio management focuses on making sure that programs and projects are prioritized for resources to serve the organization’s strategy. In simpler terms, a portfolio manager worries about the success of the whole strategy put forth by the organization rather than the success of a single project (like what we do)

Therefore, investment decisions are usually made at the portfolio level. Program management focuses on achieving the benefits that would be aligned with the portfolio and hence with the strategic objectives of the organization. So, a portfolio is part of the interface between the programs and strategic business objectives of the organization for which the programs are run.

The relationship between these 3 entities is better explained by the picture below:


As you can see in the picture above, a portfolio is composed of projects, programs or both. And a program consists only of projects.

When compared to projects and programs, a portfolio is closer to an organization’s business objectives, and therefore this is where most of the investment decisions are made.
It’s also important to note that an operation is not part of a project. However, a program can include a non-project work. Similarly, a portfolio can also include work that is not included in any of its constituent projects and programs.

Let us wrap up this chapter with a comparison between projects, programs and portfolios.

Comparison between a Project, a Program, and Portfolio

Characteristic Project Program Portfolio
Definition A limited set of efforts (work) to create a unique product, service, or results. A group of related projects and possibly some related work that does not belong to any project. A collection of projects, programs, and other related work.
Change Project manager expects change and implements processes to manage and control it. Program manager must expect changes from both inside and outside the program and thrive on them if they help maximize the strategic benefits and objectives of the program. Portfolio manager continually monitors changes in the broader context of the strategic plan of the organization.
Management Project manager manages or coordinates the project team to lead the project to its success. Program manager manages the program staff and the project managers and provide overall leadership, including vision. Portfolio manager may coordinate or manage the portfolio management staff.
Monitoring Project manager monitors and controls the project activities (tasks) undertaken to produce the planned products, results, or services of the project. Program manager monitors the progress of program components, including projects and program-related non-project work, to lead the program to success, which means overall goals and benefits will be achieved within the planned budget and schedule. Portfolio manager manages the aggregated portfolio performance and value indicators.
Planning Project manager develops, monitors, and controls project plans from high-level information throughout the project lifecycle by using progressive elaboration. Program manager develops the program plan and performs high-level planning to provide guidance at component-level planning, such as project planning. Portfolio manager performs planning at the portfolio level, which includes developing and executing necessary processes, including communication.
Scope At a given time, a project has a scope limited to meeting its objectives, including delivering the planned product. The scope is developed and monitored and controlled throughout the lifecycle of the program by using progressive elaboration. A program has a wider scope dedicated to meeting the benefits in context of the strategic goals of the organization. A portfolio has a business scope that changes with the change in the strategic plan and goals of the organization.
Success Success relates to the project and is measured generally by the criteria of completing the project within the planned budget, cost, and scope. The degree of customer satisfaction is another parameter to measure success. Success relates to the overall program and is measured in terms of benefit delivery expected from the program. Success relates to the overall portfolio performance, which is an aggregated performance of all of its components: programs and projects.

Previous: Environmental Factors & Process Assets

Next: Other Terms Related to Project Management

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