Project Portfolio Management vs Project Management
Project portfolio management (PPM) is the management of many projects, which is called a portfolio. This includes the processes, methods and technologies used by the project managers and or project management offices leading these individual projects. PPM analyzes the portfolio to have the portfolio be as productive as possible, while remaining on schedule and within budget.
Many different perspectives are at play with project portfolio management. Such as the mentioned various schedules, scope and costs of the portfolio must be maintained. But there are also the constraints imposed by customers, the strategic objectives of the larger organization and the impact of external real-world factors that require attention as well.
Managing an organization’s portfolio of projects requires prioritizing projects, allocating resources, tracking performances and much more. Also, data from individual projects is collected, reviewed and analyzed to make sure it’s aligned with the overall strategy of the organization.
In the hierarchy of business management, project portfolio management is the link between project management and enterprise management. Project management being project teams working on assessment, proposals and project deliverables; portfolio management overseeing the resource allocation, project prioritization and tracking performance of those projects; and enterprise management dealing with the overriding vision, mission and strategy of the organization.
To further understand where project portfolio management and project management differ, it’s important to define each and expose the areas where they diverge.
Project management is defined by its name: it’s the management of a project. A project is a temporary endeavor that results in a product or service. It has a beginning and an end, which is planned and monitored through a series of processes, which is project management.
Project management can include the following:
- Defining project goals
- Managing project requirements
- Breaking down tasks into a schedule
- Managing cost and budget
- Assigning resources
- Monitoring, tracking and reporting on project progress
- Communicating to teams and stakeholders
Project portfolio management is a formal approach to orchestrating, prioritizing and analyzing the potential value of many projects, called a portfolio, or many portfolios. The goal is to manage and leverage the life cycle of investments, initiatives, programs, projects and outcomes to best reach the overall goals and objectives of an organization.
What project portfolio management is concerned with is a high-level view and how the many projects under its wing can rise to meet the larger strategic objectives of the organization. Unlike project management, which is dealing with aligning one project to business strategy, project portfolio management is looking to make portfolios act as one in their ability to achieve the goals of the organization.
Therefore, project management is a subset of portfolio management. It leads to the overriding objective, which is meeting the strategic goals of the organization. Often there is a step between project management and portfolio management, known as program management, which is a related group of projects. Project portfolio management doesn’t have to be comprised of similar projects.
The person in an organization who is responsible for the management of the project portfolio is called a project portfolio manager. They can be in charge of one or more portfolios. They work with different financial algorithms and models to help guide their decisions in keeping the portfolio within the organization’s strategic objectives. They supervise and manage a small team of project management staff and project managers, who report back to the project portfolio manager on project reporting, methodology, application and financials.
The project portfolio manager reports to the program delivery manager or a similar high-level C-suite executive. In big organizations—especially those that are structured, vertical operations—portfolios managers might work for a project management office (PMO) within the larger organization. In some cases, the PMO is managing the portfolio, not a specific portfolio manager.
Again, the portfolio manager is in charge of a portfolio or group of portfolios. The structure of a portfolio is that it’s made up of a number of projects. These projects can be related, as in a program, or not.
Each project is broken down into phases, which are managed by a series of processes. These phases, also called the life cycle of a project, are the initiation, planning, execution and closure. Each of these phases is made up of a number of tasks with the objective of moving the project forward and creating deliverables. The final deliverable being the project product or service.
Project portfolio management doesn’t dig deep into the mechanics of each project, but must manage the overall goals and objectives of each of the projects in the portfolio in order to ensure that they’re all aligned with the overall goals and objectives of the organization.
Project portfolio management requires a balance of time, skills, budgets, risk mitigation and finding ways to run the projects in the portfolio cheaply and quickly without losing quality. They do this through the use of five key capabilities.
- Change Control Management: Identifies and prioritizes change requests. These can be feature requests, operational constraints, regulatory, etc., based on demand, financial and operational constraints.
- Risk Management: Identifies risks in projects that make up the portfolio, and develops contingency and risk response plans in order to rein in the uncertainties of managing the portfolio.
- Financial Management: Manages financial resources related to the projects in the portfolio and demonstrates financial value of the portfolio as it pertains to the organizational strategy, goals and objectives.
- Pipeline Management: Gets enough project proposals in the pipeline and determines if they’re worth executing and will assist in the goals and objectives of the organization.
- Resource Management: Efficient and effective use of organization’s resources, from materials and equipment to people and technical skills.
Project portfolio management started as a broad brush in which to paint the selecting major strategic initiatives. It was mostly based around cost, risk and return. These were the decision mechanisms that drove portfolio managers.
Capacity planning then was crowned king of project portfolio management, but it was also too narrow to act as an overall process to control portfolio management. The need for a wider lens on which to view project portfolio management was clear as more senior-level management and executives wanted greater detail and focus on improving process.
While simple software has been in play for years, it wasn’t until the advent of the internet and the personal computer revolution of the mid-to-late 90s that software solutions were able to offer the breadth of features that gave portfolio managers the tools they needed to manage every part of the project portfolio management process.
With software moving from the desktop to the cloud, project portfolio management grew more efficient and effective. Some of the features that serve portfolio managers are the following:
- Online Gantt Charts
- Real-Time Dashboards
- Shared Calendars
- Time Tracking and Timesheets
- Dynamic Reporting
- Collaborate with Remote Teams
There are project portfolio management tools which can be used to make tracking easier. The features that are needed to manage a portfolio are broad and powerful, and can be found within a selection of tools located in projectmanagementcompanion.com, online tools such as Gantt Charts. Planning a portfolio of projects is exponentially more complicated than scheduling one project, which is no small task itself. The online Gantt chart, makes it easy to prioritize and link tasks across all the projects within a portfolio and track their progress.
Any industry that is working on multiple projects at the same time, which collects those works in a portfolio that requires management, benefits from the discipline of project portfolio management. Obviously, that’s a lot of industries and organizations.
Some of the industries and organizations that are reaping the rewards from using project portfolio management include IT, computer software, hospitals and healthcare, construction, automotive, non-profit, financial services and banking, service and staffing recruiting, insurance, telecommunications, government administration and more.
Anyone can benefit by looking at their projects from a higher perspective, which is what using project portfolio management offers as its perspective. PPM leads to better decision-making, helps with risk management and creates a faster turnaround time for projects by streamlining processes and getting more on investments.
But it’s not only that projects move faster and cheaper. Project portfolio management also increases product delivery success. PPM streamlines data and that makes for a more efficient collaboration.
All these factors and more make it clear that project portfolio management is a methodology that can serve any organization with a portfolio of projects.
Projectmanagementcompanion.com, provides a selection of the best PPM tool in the market, so take full advantage of all these business benefits.
The following is a mini-glossary of project portfolio terms that have been used in this guide.
- Portfolio Management: Controlling a portfolio of projects to make sure they align with the overall strategic goals and objectives of an organization.
- Program Management: Managing a portfolio of projects with the same aim as portfolio management, only the projects in the portfolio are all similar or related.
- Project Management: Planning, executing, monitoring and reporting on one project, from start to finish, including controlling scope, costs and schedule.
- Project Management Office (PMO): Group within organization that’s tasked with maintaining standards for project management within that organization, often oversells portfolio and program management.
- Portfolio Manager: Individual who manages a project portfolio or portfolio of portfolios.
- Program Manager: Individual responsible for managing a program.
- Project Manager: Individual tasked with managing a single project and project team through all project phases: planning, execution, monitoring and closure.
- Change Control Management: Process to identify and successfully respond to change in a project or portfolio.
- Portfolio Reporting: Creating charts, graphs and other reporting documentation to communicate progress and other portfolio metrics.
- Risk Management: Identifying and resolving risk before it happens and after.
- Resource Management: The process of allocating resources throughout the life cycle of the portfolio.
- Pipeline Management: Making decisions for estimating and selecting which projects to fund that align with an organization’s strategy.
- Financial Management: Understanding each project’s unique risk and using this knowledge to make decisions across the entire portfolio.