There is certainly frequently a misunderstanding, and hence a mixed and overlapping use of terms, when it comes to program management. Sometimes a program is called a project. At times a project is called a program. Additionally, often project portfolio and program are mistakenly used interchangeably. This post is intended to clarify the principal differences and to distinguish the distinctive aspects of project portfolios, programs, and projects.
A fantastic approach to commence to believe about these would be to think when it comes to a pyramid hierarchy. At the leading of the pyramid is portfolio management, which contains all of the projects and programs that are prioritised by organization objectives. Below that’s program management, which contains quite a few projects that are interrelated, given that they support a particular organization objective. Programs consist of numerous projects, but projects could be independent and simply component of the portfolio. Projects differ from programs in that they’re strictly tactical in nature.
Here can be a a lot more detailed take a look at each and every:
Among the key distinguishing functions about Project Portfolio Management is that it’s a process which is clearly characterised by business leadership alignment. Priorities are set by way of an suitable value optimisation process for the organisation. Risk and reward are deemed and balanced, and programs are selected based on their alignment with organisational strategy. Feedback is provided from program and project implementation so that portfolio adjustment can happen, if essential. Strategic changes may also demand portfolio adjustments.
A key distinguishing feature of Program Management is enterprise sponsorship. Almost by definition, based on decisions made at the Portfolio Management level, programs are sponsored by enterprise needs. The program takes on the ownership of rewards and is measured primarily based upon achievement of those rewards. Programs can also often have “benefits streams,” or sets of interrelated rewards, such as increased R&D capabilities combined with increased market penetration, that cut across functions in the organisation. Because programs, naturally consisting of numerous projects, span functions within an organisation, they have all elements of a enterprise system, and hence are general management oriented.
Project Management is most concerned with delivery of capabilities, typically as defined within a program. Projects need to be strategy-driven, but do not own the strategic initiative as does a program. Rather, the project takes inputs and develops and implements a tactical plan. Monitoring along the way and final measurement of success is typically based far more on the tactical considerations such as budget and schedule than upon achievement of a strategic business objective.
Now, with the basic distinctions among Project Portfolio Management, Program Management, and Project Management defined, each organisation must “personalise” its implementation of these three processes. Some key factors and how they affect choices made about implementing every are as follows:
- Industry: Industry provides insights into the stability and consistency of operations. Some industries, like pharmaceuticals, are be very driven by product lifecycles, albeit fairly long ones that include a major regulatory process. Consumer electronics companies are driven by much shorter project lifecycles and rapidly evolving technology, with little regulation. Construction firms are highly porjectized and deal with very stable technologies and products.
- Organisation Size: Generally, greater size requires a lot more formal organisation. Without structure, the relationships between strategy, portfolio management, programs, and projects can become blurred and disjointed. The two points of focus here are to have well-considered organisational frameworks for each of portfolio, program, and project management, and then to pay special attention to building strong ties among them for communication, collaboration, and information flow.
- Operational Breadth: A more narrowly defined operational capability, such as found in a sales-focused or production focused organisation, will tend to demand less formality, and information will flow more freely among portfolio, program, and project management processes. In organisations which are well-integrated horizontally, containing well-developed core competencies in R&D, marketing, production, distribution, and the like, there will be natural separations that need to be managed. This will make program management especially challenging, because it really is likely to cross those boundaries.
- Strategy: Like the various operational considerations, the strategy will effect organisation of portfolio, program, and project management based on how complex it’s. One key consideration not mentioned above is strategic alliances, which can greatly effect how tightly managed and how structured these processes need to be.
Standards for Project Portfolio Management, Program Management, and Project Management do exist, and clear definitions might be found within. The worldwide Project Management Institute (PMI) has developed and published the following standards (free for members):
- The Standard for Portfolio Management
- The Standard for Program Management
- A Guide to the Project Management Body of Knowledge: (Pmbok Guide) Third Edition