Relationship Between Project Management Program Management and Portfolio Management

Project management exists in a broader context that includes program management and portfolio management.

■ Strategies & priorities ' Progressive elaboration

■ Governance

■ Disposition or requested changes ■y * impacts trom changes in oder portfolios, programs or projects

Lower Level Portfolios

■ Project status ' Change requests with impact on other portfolios programs or projects

Higher Level Programs

■ Strategies & priorities ' Progressive elaboration

■ Governance

■ Disposition or requested changes ■y * impacts trom changes in oder portfolios, programs or projects

■ Project status ' Change requests with impact on other portfolios programs or projects

' Strategies S priorities • Progressive elaboration ' Governance

> Disposition on requested changes ' Impacts trom changes in other portfolios, programs or projects

Strategies S priorities Progressive elaboration Governance

Disposition on requested changes Impacts from changes in othef portfolios, programs or projects

Projects

Lower Level Programs

Projects

' Strategies S priorities • Progressive elaboration ' Governance

> Disposition on requested changes ' Impacts trom changes in other portfolios, programs or projects

• Project status ■ Charge requests with Impact on other portfolios, programs or projects

Projects

Strategies S priorities Progressive elaboration Governance

Disposition on requested changes Impacts from changes in othef portfolios, programs or projects

► Project status

»Change requests with .*' impact on other portfolios, ; programs or projects ;

Projects

Figure 1-1. Portfolio, Program, and Project Management Interactions

1.4.1 Portfolio Management

A portfolio refers to a collcetion of projects or programs and other work thai is grouped together to facilitate effective management. The projects or programs of a portfolio may not necessarily be interdependent or directly related. For example, an infrastructure firm that has the strategic objective of "maximizing the return on its investments" may put together a portfolio that includes a mix of projects in oii and gas, power, water, roads, rail, and airports. From this mix, the firm may choose to manage related projects as one program. All of the power projects may be grouped together as a power program. Similarly, all of the water projects may be grouped together as a water program.

Portfolio management refers to the centralized management of one or more portfolios and includes identifying, prioritizing, authorizing, managing, and controlling projects, programs, and other related work. Portfolio management focuses on ensuring that projects and programs arc reviewed to prioritize resource allocation, and that the management of the portfolio is consistent with and aligned to organizational strategics.

1.4.2 Program Management

A program refers to a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. Programs may include elements of related work outside the scope of the discrete projects in the program. Some examples of programs include:

• A new car model program that involves projects for the design and upgrades of each major component (e.g., the transmission, engine, interior, and exterior) while ongoing manufacturing occurs on an assembly line, and

• An electronics firm that has program managers who are responsible for both individual product releases (projects) and the coordination of multiple releases over a period of time (an ongoing operation).

Program management can be viewed as the centralized, coordinated management of a group of projects to achieve the program's objectives and benefits. Programs can involve several repetitive or cyclical undertakings. For example, utility companies may combine a series of projects into an annual "construction program."

1.4.3 Projects and Strategic Planning

Projects are a means of organizing activities that cannot be addressed within the organization's normal operational limits. Projects are often utilized as a means of achieving an organization's strategic plan.

Projects are typically authorized as a result of one or more of the following strategic considerations. Some examples of these include, but are not limited to:

• Market demands (e.g., an oil company authorizes a project to build a new refinery in response to chronic gasoline shortages),

• Organizational needs (e.g., a training company authorizes a project to create a new course to increase its revenues),

• Customer requests (e.g., an electric utility authorizes a project to build a new substation to serve a new industrial park),

• Technological advances (e.g., a software firm authorizes a new project to develop a new generation of video games after the introduction of new game-playing equipment by electronics firms), or

• Legal requirements (e.g., a chemical manufacturer authorizes a project to establish guidelines for the handling of a new toxic material).

Projects, within programs or portfolios, are a means of achieving organizational goals and objectives, often in the context of a strategic plan. Although a group of projects within a program can have discrete benefits, they often also contribute to consolidated benefits as defined by the program.

Organizations manage their portfolios based on their strategic plan, which may dictate a hierarchy in the portfolio, program, or projects. One goal of portfolio management is to maximize the value of the portfolio by the careful examination of the candidate projects. Those projects not expected to meet the portfolio's strategic objectives may be excluded. The organization's strategic plan and available resources guide these investments in projects.

As Figure 1-1 illustrates, organizational strategies and priorities are linked and have relationships between portfolios and programs, and between programs and individual projects. Organizational planning impacts the component projects by means of project prioritization. Organizational planning can direct the funding and support for the component projects on the basis of risk/reward categories, specific lines of business, or general types of projects, such as infrastructure and internal process improvement.

At the same time, projects provide feedback to programs and portfolios by means of status reports and change requests that may impact other projects, programs, and portfolios. The needs of the projects, including the resource needs, are rolled up and communicated back to the portfolio level, which in turn sets the direction for organizational planning.

1.4.4 Project Management Office

A Project Management Office (PMO) is an organizational body or entity that can be responsible for the centralized and coordinated management of the projects, programs, and portfolios under its domain. The projects supported or administered by the PMO may not be related other than by being managed together. The specific form, function, and structure of a PMO is dependent upon the needs of the organization that it supports.

A PMO may be delegated authority to act as an integral stakeholder and a key decisionmaker during the initiation phase of each project, to make recommendations, or to terminate projects to keep business objectives consistent. In addition, the PMO may be involved in the selection, management, and redeployment of shared or dedicated project resources.

Some of the key features of a PMO may include, but are not limited to:

• Managing shared resources across all projects administered by the PMO,

• Identifying and developing project management methodology, best practices, and standards,

• Developing and managing project policies, procedures, templates, and other shared documentation, and

• Coordinating communication across projects.

Project managers and PMOs pursue different objectives and, as such, are driven by different requirements. All of these efforts, however, are aligned with the strategic needs of the organization. Differences between the role of project managers and a PMO may include the following:

• The project manager focuses on the specified project objectives, while the PMO manages major program scope changes and can view them as potential opportunities to better achieve business objectives.

• The project manager controls the assigned project resources to best meet project objectives, while the PMO optimizes the use of shared organizational resources across all projects.

• The project manager manages the scope, schedule, cost, and quality of the products of the work packages, while the PMO manages the overall risk, overall opportunity, and interdependencies among projects at the enterprise level.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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