Project Portfolio Management Vs. Programme Management

Revision as of 18:28, 24 November 2014

Both Project Portfolio Management and Programme Management are mentioned as two common extensions of today´s project management practice. It can be confusing to understand the differences. The objective of this article is to wrap up distinctions according to existing literature and best practices, by the determination of fundamental key factors and thereby clarify the differences.

Program Management

Definition

The definition of a Program is 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 (e.g., ongoing operations) outside the scope of the discrete projects in a Program. [4] When a large project is splittet into multiple related projects with explicit management of the benefits, then the effort becomes a Program. [4] Program effectiveness is traditionally measured by time, cost and performance and in some cases complemented with the satisfaction of stakeholders, users and the Program Management team. [6]

Key Factors

Project Portfolio Management

Definition

The term Portfolio is widely used throughout many different organisations and has come to represent different meanings, for example in the financial industry. Therefore the focus of this article lies on "Project Portfolio Management".

The origins of Project Portfolio Management are found in the application of modern portfolio theory to the project selection problem and first mentioned in the work of Markowitz [7] The definition of a Project Portfolio is a collection of projects and/or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives. The Projects or Programs of the portfolio (components) may not necessarily be interdependent or directly related. [1] Project Portfolio Management is defined as a dynamic decision process, which constantly updates and revises active projects. [2] Thus Project Portfolio Management enables the organization to align the Project Portfolio to strategic objectives, thereby approving only the components that directly support business objectives, and considering the portfolio risk as a result of the mix of components in a Project Portfolio at any time. [3]

It is stated that a Project Portfolio most likely is one of the truest measures of an organisation´s intent, direction, and progress. Thereby the organisation can reasonably question components of a Project Portfolio , when they are not alligned to the strategy. [3] Hence, Project Portfolio Management as a dynamic decision making process includes the collection, identification, categorisation, evaluation, selection, balance and review of components according to the organisation´s specific key indicators and the strategic plan. According to the organisations strategy the components typically wil be reviewed and validated in relation to [5] :

• Alignment of the components with corporate strategy
• Viability of the components as part of the Portfolio, based on key indicators
• Value and relationship to other Portfolio components
• Available resources and Portfolio priorities
• Additions and deletions of Portfolio components

Key Factors

Interface

References

[1] Project Management Institute. The Standard for Portfolio Management: The Portfolio Management Framework. Project Management Institute, Inc, 2006.

[2] Cooper et al., 1998a, b; Griffin, 1997; Graves et al., 2000; Ringuest et al., 1999; Roussel et al., 1991

[3] Project Management Institute. The Standard for Program Management: The Relationship between Program Management and Portfolio Management. Project Management Institute, Inc, 2006.

[4] Project Management Institute. The Standard for Program Management: What is a Program. Project Management Institute, Inc, 2006.

[5] Project Management Institute. The Standard for Program Management: Portfolio Management Process Overview. Project Management Institute, Inc, 2006.

[6] Shao et al., 2012

[7] Markowitz, H.M. Portfolio selection 77–91 J. Financ. 7 (1), 1952.