Do Program and Project Portfolio Management Add Value over Project Management?

Do Program and Project Portfolio Management Add Value over Project Management?
By Bruno Collet

Organizations are increasingly implementing Program Management (PgM) and Project Portfolio Management (PPM) on top of their existing Project Management (PM) practices. I had the opportunity to contribute establishing or improving such methods and noticed that there is a lot of confusion regarding the roles PgM and PPM can and should play. I have yet to see two organizations that define PgM or PPM the same way.

I thought it would be a good idea to summarize what differentiates PM, PgM, and PPM.

Whereas the role of Project Management is fairly well understood, there is no consensus regarding the roles of Program Management and Project Portfolio Management. Following are the most common demarcations.

Project Management (PM): The most notable difference between PM and PgM/PPM is that PM involves managing people, usually in the form of one or more delivery teams. Otherwise, techniques and skills used in these three disciplines are remarkably similar.

Program Management (PgM): Program Management represents methods to manage a group of projects in order to achieve a business objective. Programs are often used to deliver organizational changes.

In most organizations there is no distinction between projects and programs. Often what they (incorrectly) call programs are simply large, complex, or business-critical projects. In other organizations, programs are actually portfolios of projects with a common business or technological objective. Even in organizations that correctly make use of programs, not every project is part of a program; there are stand-alone projects, which adds to the confusion between PM and PgM.

There are two situations where PgM adds value compared to only PM:

• In organizations structured in functional silos or (weak) matrix, each project focuses on a single business unit (ex: IT, marketing) and programs coordinate projects to achieve business objectives.

• When business objectives are too broad to be achieved by single projects.

Project Portfolio Management (PPM) represents project investment decision-making methods used to determine and manage the optimal mix of initiatives in order to achieve strategic objectives within given constraints. A portfolio may contain both programs and projects; PPM establishes a decision-making level above both PgM and PM. PPM is born from the need to solve the problems arising from starting and managing projects as independent initiatives (also called “one-off” or “ad hoc” approaches). Whereas the added value of PgM over PM is arguable, PPM offers undisputable benefits since projects should never be started and managed as one-off, ad hoc initiatives.

In large organizations, global budget is often divided into smaller discretionary budgets (sometimes called envelopes) allocated to business units and/or strategic objectives. Each envelope is managed as a program or as a portfolio, with relatively independent decision-making regarding which initiatives are part of or may use the envelope’s budget.

	Project Management	Program Management	Portfolio Management
Paradigm	Do projects right	Coordinate projects	Do the right projects
Success driver	“Output”, solution at right time for right cost	“Outcome”, business benefits	Aggregate success of projects
Decision level	Business unit or higher	Business unit or higher	Enterprise
Timeframe	Finite	Finite or ongoing	Ongoing
Key success factors	– Manage team – Plan and monitor – Remove obstacles	– Manage dependencies between projects – Calculate business benefits objectively	– Select initiatives based on objective criteria (incl. risks) – Optimal use of resources – Refresh portfolio to reflect changes in environment
Standards	PMI’s PMBOK, Prince2	PMI’s Standard for PgM	PMI’s Standard for PPM

Bruno Collet combines business acumen with technology know-how. His successful track record comprises Daimler-Chrysler, Siemens, and Loto-Quebec, with roles such as management consultant, project manager, SAP consultant, and software architect. Bruno Collet’s skills are firmly grounded in academic excellence by achieving an MBA at John Molson School of Business and a Master of Computer Science. He maintains a professional website: brunocollet.com.