In our previous post, we understood the importance of Project Management and how effective use of Project management tools, techniques and processes provides a strong foundation for organizations to achieve their objectives. All the projects are about teamwork; but how the teams work depends heavily on the type of organization and their governance structure.
A project may be managed in three separate scenarios:
- A stand-alone project,
- A Program – A group of related projects which are managed in a coordinated manner to obtain benefits. The respective inter-dependencies make the separate management of these projects challenging.
- A Portfolio – Projects, programs, and operational work managed as a group to achieve strategic objectives.
Let’s understand more about what Program and Portfolio management are and how they differ from Project management!
Program management approach focuses on managing the interdependent projects in a coordinated manner to effectively manage risks, avoids conflicts for shared resources, achieve economies of scale in order to achieve management objectives which ultimately support organization strategy. Projects are combined into programs to provide coordinated control and support.
Project portfolios are used to effectively manage multiple programs, individual projects and operational work to achieve specific strategic objectives. Combining Programs, projects and operations together into a portfolio helps managing the resources better, enhance productivity, optimize the benefits and manage risks. The programs and projects that are included in a portfolio may not related but do support a common organizational objective.
A project or program is included in a portfolio based on the potential returns, scope for benefit realization, alignment with the organizational strategy and other factors important to business. Program management and portfolio management differs from project management in their lifecycle, objectives, focus and benefits.
The picture below indicates the interdependencies between Projects, Program, Operations and Portfolios.
Project governance refers to the framework within which the projects will be executed across the organization. It includes setting and application of processes, policies and procedures regarding portfolio, program and project work, which help to ensure that these initiatives operate within strategic plan of the organization and that they contribute towards delivery of the strategic organizational objectives. Project governance sets out guidelines to manage key areas such as risk, resources, communication and change.
Projects, Programs and Portfolios are driven by Project governance or Organization strategies. Although they differ in their level of contributions but still carry forward a common goal to meet strategic objectives.
- Portfolio management aligns portfolios with organization strategies by selecting the right programs and/or projects, prioritizing the work, and providing the needed resources.
- Program management harmonizes its program components and controls interdependencies in order to realize specific benefits.
- Project management enables the achievement of organization goals and objectives.
The below picture illustrates the level of alignment of projects, programs and portfolios with the strategic objectives.
Project Governance can be established and effected by a Project Management Office (PMO). We will discuss more about PMOs in the next blog of our study resource series.
To conclude, Program and Project management focus on managing the programs and projects the “right” way while the Portfolio management focuses on doing the “right” programs and projects to meet organization’s strategic objectives.