Project Management Tools for Portfolios
Project Management Tools for Portfolios
Do you know the difference between projects, programs and portfolios? Or what Project Portfolio Management is all about? In this article , we’ll discuss the differences between each so that you have a clear understanding of the value that they bring to your organization…
Project Management Tools, Projects, Programs & Portfolios
To understand the true difference between projects, programs and portfolios, we must first clarify what a project is.
A project is a unique endeavor to produce a set of deliverables within clearly specified constraints of time, cost, and quality. Projects are different from business operations due to their:
- Uniqueness. Every project is different from the last, whereas operational activities typically involve repetitive (if not identical) processes.
- Timescale. A project has clearly specified start and end dates within which deliverables are produced to meet the customer’s requirements.
- Budget. A project has a maximum limit to the expenditure within which the deliverables must be produced to meet the customer’s particular requirement.
- Resources. A project is allocated a specified amount of labor, equipment and materials at the start.
- Risk. A project entails uncertainty and therefore carries with it, a certain amount of risk to the business.
- Change. The purpose of a project is typically to improve an organization through the implementation of business change.
The Project Management Institute (PMI) formally define a project as “a temporary endeavor undertaken to create a unique product, service, or result.”
So in summary, projects are one-off business activities that have a limited timeframe, budget and resources in which they must produce a clearly defined set of deliverables to a customer.
Whereas the PMI formally defines a program as “a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. Programs may include elements of related work outside of the scope of the discrete projects in the program.”
So program management brings together a number of projects and often some operational work, to achieve a larger goal for the organization. Programs are typically larger than projects and may not have specified end dates.
While each project is tightly scheduled, the relationship between projects in a program is much looser. Here are some examples of programs:
- A program to launch a new product line. Here, many projects of different types including design, manufacturing setup and marketing are combined to produce a new product line.
- A program to create and provide services to customers. Here, a number of difference projects are undertaken to create a service capability within the business. The program is complete when each service has been operational for a number of months and is proven to be operate efficiently.
- A program to change business operations. These types of programs change the way an organization works internally. For example, creating a Project Management Office (PMO) and standardizing the way your organization performs project management could be considered a program.
Otherwise known as project portfolio management
The PMI formally defines a portfolio as “a collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic objectives. The projects or programs of the portfolio may not necessarily be interdependent or directly related.”
So the key difference between a program and a portfolio is that in a program all the work is in some way related, either by a common goal or by interdependencies. Whereas a portfolio is larger and it can include totally unrelated projects and programs. In fact, it’s fair to say that an organization’s portfolio is the total sum of all of the resources that it invests in projects and programs. Therefore the only real relationship between projects, programs and operational work in a portfolio is that they contribute to the strategic direction of the organization.
Also, the way that a portfolio of work is managed in an organization is the same as how stocks, bonds, and mutual funds are managed in the financial market. Executives look at resources that have been consumed and they continually monitor the overall return on their investment to make sure that their strategic goals have been achieved.
Managing a portfolio involves:
- Allocating, monitoring and controlling the assignment of resources, such as people, time and money.
- Mitigating the organizations risk which may occur due to a project or programs poor performance.
- Reviewing the effect of the portfolio on the strategic objectives.
- Measuring the return on investment of the portfolio.
- Identifying and exploiting underutilized resources.
- Resolving resource constraints that are causing delays.
- Selecting new projects and programs to kick off.
And there you have it. By understanding the difference between projects, programs and portfolios we hope that you can improve that way that your work is undertaken and take another step towards gaining total project management success.
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