Project Program and Portfolio Compared
Do you use the terms Project Program and Portfolio in day to day language?
I am sure you are using them regularly. Let’s look at the following statements. These statements might resonate with you – you would have either made them yourself or heard them from someone close to you.
Project Program and Portfolio are common day to day English words with simple meanings. We use these words regularly without even realizing that we are using them. But when it comes to Organizational Management, most people are not sure how to use these terms. Different companies use them differently. Different stakeholders within a company use them differently. Usually, there is confusion around the meaning of these term.
Let me try to allay this confusion. In this article, I will define Project Program and Portfolio, provide some examples, and lastly distinguish between the terms.
A temporary endeavor undertaken to create a unique product, service, or result.
PMBOK Guide 5th Edition
Project Management includes, among many other things, balancing the project constraints. These constraints include, but are not limited to, Scope, Time, Cost, Quality, Risk, and Resources.
You can also refer to Max Wideman Glossary to read some other standard definitions of Project.
A group of related projects, subprograms, and program activities managed in a coordinated way to obtain benefits not available from managing them individually.
PMBOK Guide 5th Edition
The projects within a program share a goal. They are related to each other because of the shared program goal. If all the projects within the program are not successful, the final goal of a program is either not met or it is partially met.
Each project in a program creates a unique product, service or a result. Outcome (product, service or result) of one project may be used by the other projects within the same program. These outcomes collectively contribute towards the shared program goal.
Program Management involves coordination among the constituent projects so as to obtain the benefits that might not be obtained if they are managed individually. Program Management may also involve completing some work that is outside the scope of individual projects.
You can also refer to Max Wideman Glossary to read some other standard definitions of Program.
Note: Related projects may or may not be similar. Similarity comes from deploying same/similar technology, using shared resources, working for the same client etc. If the projects are similar but not related, then they should be managed as part of a Portfolio.
Projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives.
PMBOK Guide 5th Edition
Portfolio is a collection of projects programs and operational work. The projects and programs within a portfolio are not related to each other. The constituents of a portfolio are used to fulfill strategic business objectives of an organization. Strategic business objectives could include maximization of profits, building brand & reputation, reducing overall costs, and optimization of resource usage. Portfolios are aligned to the business and industrial domain of an organization.
You can also refer to Max Wideman Glossary to read another definition of Portfolio.
Consumer Durable Company
A consumer durable company is in the business of design, development, marketing, and servicing consumer products like refrigerators, washing machines, air-conditioners (AC) etc.
Portfolio – The Company, itself, is the largest portfolio. Different divisions like Refrigerator Division, Washing Machine Division and AC Division would be sub-portfolios. Each sub-portfolio would be headed by a Division Head like a Vice President. The portfolio and sub-portfolios will have running programs, projects and operations.
Program – Each division within the company would have several running programs e.g. Launch a new line of refrigerators. This program could involve several projects e.g. a design project (refrigerator design), a manufacturing project (setting up refrigerator manufacturing), a marketing project, a servicing project (training post-sales servicing personnel) etc. The projects within the program might be executed at different times by a different set of people but they will be governed by the larger shared goal of “making the new line of refrigerators successful”.
Project – The Company would have several running projects at any given point in time. These project may or may not be part of a program e.g an IT project to implement a Customer Relationship Management (CRM) software may not be part of any program.
Real Estate Company
A real estate company is in the business of constructing buildings and performing related work to fulfill the unmet public demand.
Portfolio – The Company, itself, is the largest portfolio. Different divisions like Commercial Division and Residential Division would be sub-portfolios. Commercial Portfolio could include construction of malls, shopping complexes, and office buildings while Residential Portfolio could include construction of residential buildings, and row houses. Each sub-portfolio would be headed by a Division Head like a Vice President. The portfolio and sub-portfolios will have running programs, projects and operations.
Program – Each division within the company would have several running programs e.g. a Residential Township at location X. This program could involve several projects e.g. construction of row houses, construction of a multi-storied residential building, construction of a club house, landscaping project, marketing project etc. The projects within the program might be executed at different times by a different set of people but they will be governed by the larger shared goal of “making the township successful & livable”.
Project – The Company would have several running projects at any given point in time. These project may or may not be part of a program e.g a procurement optimization project to reduce material procurement costs may not be part of any program.
Differences Between Project Program and Portfolio
|Collection of Project, Programs and Operations
Strategic business objectives
|Major Tasks||Identifying project requirements
Completing project scope
Balancing project constraints
|Coordination among related projects
Controlling inter-dependencies among related projects
|Selection of right programs and projects
Prioritization of work
Optimization of organizational cost, resources etc.
Maximization of organizational profits
|Benefits||Final product, service or result||Meeting the program goal||Organizational benefits like reduction in costs, increase in profits, and good return on investments|
I hope you would start using these terms correctly in your organization. Please leave a comment if you still have any confusion.