A5 Comparing Projects, Programs and Portfolios
Many people hear the terms projects, programs and portfolio, but are not sure what they all mean and how they fit together. All three are structures that allow you to organize certain types of work. These three concepts need to be understood by managers so that work is managed in the right way. If you try to manage work as a program, for instance, and the work is really a portfolio, you will struggle to be successful. Each of these models has unique processes and techniques for managing work.
Projects, by their definition, have a defined start and end date. There is a point in time when the work did not exist (before the project), when it does exist (the project), and when it does not exist again (after the project). This is the key determinant of whether a piece of work is a project. Projects also include a defined scope, finite budget and assigned resources. Another characteristic of a project is that they always build something. If you find that all you are doing is meeting, then you probably are not on a project. Projects always create one or more deliverables. Projects should be managed proactively using solid project management processes and techniques.
Some initiatives are so large that it makes sense to break them up into a set of smaller projects. These smaller projects are easier to plan, manage and finish successfully. However, the problem with breaking up work into smaller projects is that each project may start to make independent decisions that will be good for that project, but detrimental to the initiative as a whole.
The purpose of a program is to provide central management and control over a set of underlying projects that are all trying to deliver a common solution. The program allows the projects to achieve a common benefit that would be difficult for each project to achieve independently.
Portfolios are organizational entities that typically cover a set of related work. Unlike a program, portfolios are managing related projects to build a common benefit. In a portfolio, the work is related somehow, but the work is not aligned to deliver a common benefit.
A portfolio will typically contain projects, but they can also include support, operations and other types of work as well. Organizations use the term "portfolio" because they have decided to manage their work with many of the same techniques and processes that we use to manage our financial portfolios. This includes aligning work to goals and strategies, balancing the work and continually validating the project benefit against the costs. It is this new mindset toward the planning and management of the work that makes a "portfolio".
Just remember the key points. Projects are temporary endeavors to build one or more deliverables. Programs are large work efforts that are broken up into a set of smaller projects and centrally coordinated. Portfolios are like departments, and are a way to plan and manage work using concepts similar to how you run your financial portfolio.program management, project management, portfolio management, project office, PMO, program management training, project lifecycle management, program consulting, methodology development, project management training