Large organizations execute many projects simultaneously, and to use their resources optimally, they manage these projects using different strategies (e.g., project management, program management, and portfolio management).
These strategies are related to each other and work under one another.
In today’s blog post, we will discuss project, program, and portfolio management and the differences between these strategies.
Let’s get started.
What is Project Management?
The PMI states, “A project is a series of structured tasks, activities, and deliverables that are carefully executed to achieve a desired outcome. They are temporary efforts to create value through unique products, services, and processes.”
And project management is “the practice of using knowledge, skills, tools, and techniques to complete a series of tasks to deliver value and achieve a desired outcome.”
Project management is about planning, organizing, and overseeing a project from initiation to completion. Here, the project manager coordinates project management activities to achieve project objectives defined in the project charter.
Effective project management results in project success. According to a PMI report, organizations that excel in project management complete more projects on time, within budget, and meet other project objectives.
Key project management activities are identifying project stakeholders, collecting requirements, developing project management, executing the plan, monitoring & controlling the progress, and delivering the project deliverables to the project sponsor or client.
Data from a survey conducted by Wellingtone shows that 74% of organizations believe that project management is either critical or high in terms of strategic importance. The same survey found that only 22% of organizations fully understand the value of project management.
According to the PMI, project management has five phases:
- Initiation
- Planning
- Executing
- Monitoring & Controlling
- Closing
A project must go through these five phases during the project lifecycle.
You can use many different project management methodologies and frameworks.
These frameworks fall under three categories:
- Waterfall or Traditional Approach
- Agile Methodologies
- Hybrid Framework
If the scope of work is well-defined, you will use the waterfall approach. If requirements are not clear upfront, you will go with agile methodologies. However, if some parts of the project have a defined scope and others do not, you can choose a hybrid approach.
Project management is crucial for achieving successful results. As projects become more complex, the demand for effective project management continues to grow.
What is the Project Manager’s Role?
The project manager is responsible for leading the team to complete and deliver the project deliverable to the client.
The project manager’s role throughout the project lifecycle is as follows:
- After signing the project charter, the project manager will identify stakeholders and collect requirements. The project managers will use these requirements to define the scope with their team members.
- After defining the scope, the project manager will develop the project plans (e.g., baselines) and get them approved. Once the project plans are approved, the project manager will execute them. This is how you will spend most of the project’s budget and duration.
- While executing the project, you will monitor and control the processes and activities to ensure that deliverables meet quality requirements.
- Once the deliverables are ready, the project manager will deliver them to the client, then update the lessons learned documents, project documents, and organizational process assets, then release the team, and finally close the project.
The project manager’s role requires technical and interpersonal skills. Project management skills are important. According to the U.S. Bureau of Labor Statistics (BLS), project-management specialists’ requirements will grow 7% from 2021—2031, on par with the average growth rate for all occupations. On average, there will be an estimate of 70,400 openings for project managers every year over the next decade.
What is Program Management?
According to the PMI, a program is ” a group of related projects managed in a coordinated manner to obtain benefits not available from managing them individually. Program management is the application of knowledge, skills, tools, and techniques to meet program requirements. Organizations with mature program management are far more successful than those without it, according to our research.”
For example, suppose your organization has two projects: construct a school building and an office building. In that case, they will manage both projects under a program to use their resources efficiently as construction projects are similar.
A “CHAOS Report” prepared by the Standish Group highlights the importance of program management. This research shows that only 29% of projects are successful without significant challenges.
Program management uses established policies, processes, procedures, tools, and techniques to manage projects under a program. This ensures that the organization uses its resources to full strength and no resource is either idle or overloaded.
Program management is a strategic approach to overseeing multiple similar projects to achieve organizational goals using resources efficiently.
Programs with effective management have a higher success rate because of strategic coordination. It is the next layer of the project. Program management allows organizations to streamline efforts and resources by providing a holistic view, reducing redundancies, and optimizing efficiency.
The person responsible for managing the program is the program manager. The success criteria for a program are the degree to which it satisfies its objective.
A study by KPMG indicates that 56% of organizations believe program management positively impacts project outcomes. The report emphasizes that mature program management practices contribute to improved project delivery, aligning projects with organizational goals.
Program management is crucial for organizations aiming to achieve strategic objectives through effectively coordinating related and similar projects. It optimizes project resource utilization and reduces friction to increase the organization’s performance.
What is the Program Manager’s Role?
A program manager oversees multiple projects within a broader organizational initiative. Their focus is broader than managing individual projects. This role demands an all-inclusive perspective, which requires the program manager to blend information from all projects and ensure that they collectively help achieve organizational goals.
Program managers are responsible for strategic planning, setting objectives, and defining key performance indicators that guide project teams. They bridge upper management and project teams, facilitating communication and ensuring project outcomes align with the organization’s strategic vision.
Effective program managers excel in resource allocation, ensuring optimal time, budget, and personnel utilization across the program. They promote collaboration among project teams, sharing knowledge and best practices. They regularly assess project milestones and key outcomes to promptly adapt strategies and address emerging issues.
Program Management Benefits
Program management benefits include:
- Less conflict
- Optimal resource utilization
- Minimal resource constraints
- Better communication and coordination
- Improved organizational performance
What is Portfolio Management?
A portfolio refers to a group of related or unrelated projects or programs. It can consist of multiple programs or multiple projects. A portfolio can also have multiple dissimilar projects because portfolio management deals with two or more unrelated projects. Conversely, in program management, only related projects are managed.
Portfolios are managed under portfolio management. It has a bigger scope and objective than program management.
For example, assume you have three projects: the first is to construct a building, the second is to research the impact of motor pollution on the environment, and the third is to set up a call center.
How are you going to manage these projects?
You will manage them by keeping them under a portfolio, as they are neither related nor similar. The success criteria for a portfolio are the combined performance of its components.
Now, let’s discuss portfolio management.
According to the PMI, “Portfolio management ensures that an organization can leverage its project selection, and execution success. It refers to the centralized management of one or more project portfolios to achieve strategic objectives. Our research has shown that portfolio management is a way to bridge the gap between strategy and implementation.”
Portfolio management is sometimes referred to as project portfolio management (PPM). It is the next layer of the program.
Portfolio management is a strategic approach to overseeing and optimizing different projects, programs, or a combination of projects and programs. It involves evaluating, prioritizing, and aligning various projects or programs to ensure they use resources optimally.
Portfolio management involves assessing the risks and returns of individual projects or programs and balancing them to create a diversified and well-rounded portfolio. This approach helps organizations mitigate risks and maximize returns on their investment.
A PMI study indicates that organizations waste 97 million USD for every 1 billion USD invested in projects due to poor performance. Effective portfolio management can play a significant role in improving project success rates and minimizing financial waste.
Portfolio management is crucial for organizations to optimize their project or programs and align them with strategic goals.
What is the Portfolio Manager’s Role?
Portfolio managers set the priorities of projects based on the leadership’s agreed-upon business objectives. They select the program or projects under a particular portfolio and ensure they benefit the organization most.
Please note that although portfolio managers prioritize the projects or programs in a group, they do not oversee any individual project or program.
A portfolio manager has a high-level strategic position; they oversee projects and programs to align them with organizational objectives. They focus on optimizing the portfolio, which includes selecting, prioritizing, and managing projects that collectively contribute to the organization’s goals. The role requires understanding the business strategy, industry trends, and the portfolio’s overall impact on the organization’s success.
Portfolio managers ensure that every project within the portfolio aligns with the organization’s mission and objectives. They evaluate potential projects and consider their benefits, risks, and resource requirements. By maintaining a comprehensive view of the portfolio, they make informed decisions about project selection, continuation, and/or termination.
Portfolio managers convey the portfolio’s strategic importance to stakeholders.
Portfolio Management Benefits
Portfolio management benefits include:
- Optimal resource allocation and utilization
- Constant project and/or program support
- Fewer conflicts and better communication
- Better coordination
Project Management vs. Program Management vs. Portfolio Management: What Are the Key Differences?
“Project management,” “program management,” and “portfolio management” are related to each other but work at different hierarchy levels. Project management is at the bottom, and Portfolio management is at the top. Program management is in the middle.
These are the key difference between project management, program management, and portfolio management:
Project Management
- The project manager manages the project alongside the project team.
- The project manager can report to the program manager, portfolio manager, or PMO.
- Project success is measured against successful project deliverables.
Program Management
- The program manager manages the program with the help of project managers.
- The program manager reports to the portfolio manager or PMO.
- Program success is measured against collective project success.
Portfolio Management
- The portfolio manager manages program and/or project portfolios autonomously.
- The portfolio manager reports to the PMO or upper management.
- Portfolio success is measured against collective project and program success.
Summary
The project manager, program manager, and portfolio manager must collaborate to achieve strategic objectives, long-term goals, and collective success, as well as to help the organization grow.
These are essential topics from a PMP exam point of view, and you will see some questions on these topics on your exam. Make sure you understand these topics well.
