Portfolio Program and Project Management: Center of Excellence

Distillate from our Center of Excellence

A project may be described as “a temporary endeavor undertaken to create a unique product, service or result”. In other terms, a project has a specific start and end date with a clearly defined deliverable produced. Project management is the application of knowledge, skill, tools, techniques and processes to effectively manage a team towards this final deliverable.

A program is a group of related projects managed together to obtain specific benefits and controls that would likely not occur if these projects were managed individually. While project management focuses on delivering the specific objectives of the project – program management is focused on achieving the strategic objectives and benefits of the integrated program.

The implementation of an Enterprise Resource Planning (ERP) system is often performed as a program.

A portfolio is a collection of projects or programs grouped together to facilitate effective management of efforts to meet strategic business objectives. These projects or programs are not necessarily interdependent or directly related. Portfolio management is the centralized management of multiple projects, programs and possibly portfolios. This typically includes identifying, prioritizing and authorizing projects and programs to achieve specific strategic business objectives.

The roles of a Project Manager, Program Manager and Portfolio Manager have similarities but are fundamentally different. Many organizations blend these roles together and treat them all as basic project management. While this might seem like a way to reduce some overhead and bureaucracy, in reality it’s a recipe for failure.

An excellent project manager may not necessarily be the best program manager or be capable of running your overall portfolio. Organizations successfully delivering projects and programs that produce strategic business results are those that tend to formalize these three distinct roles. They use the methodologies, processes, tools and resources most appropriate for the function being performed.

Resource allocation

Resource allocation is a critical component of PPM. Once it is determined that one or many projects meet defined objectives, the available resources of an organization must be evaluated for its ability to meet project demand (aka as a demand “pipeline”). Effective resource allocation typically requires an understanding of existing labor or funding resource commitments (in either business operations or other projects) as well as the skills available in the resource pool. Resources may be subject to physical constraints. Thus, a holistic understanding of all project resources and their availability must be conjoined with the decision to make initial investment or else projects may encounter substantial risk during their lifecycle when unplanned resource constraints arise to delay achieving project objectives.

Implementing PPM at the enterprise level faces a challenge in gaining enterprise support because investment decision criteria and weights must be agreed to by the key stakeholders of the organization, each of whom may be incentivised to meet specific goals that may not necessarily align with those of the entire organization. But if enterprise business objectives can be manifested in and aligned with the objectives of its distinct business unit sub-organizations, portfolio criteria agreement can be achieved more easily. (Assadourian 2005).

From a requirements management perspective Project Portfolio Management can be viewed as the upper-most level of business requirements management in the company, seeking to understand the business requirements of the company and what portfolio of projects should be undertaken to achieve them. It is through portfolio management that each individual project should receive its allotted business requirements (Denney 2005).

Pipeline management

In addition to managing the mix of projects in a company, Project Portfolio Management must also determine whether (and how) a set of projects in the portfolio can be executed by a company in a specified time, given finite development resources in the company. This is called pipeline management. Fundamental to pipeline management is the ability to measure the planned allocation of development resources according to some strategic plan. To do this, a company must be able to estimate the effort planned for each project in the portfolio, and then roll the results up by one or more strategic project types e.g., effort planned for research projects. (Cooper et al. 1998); (Denney 2005) discusses project portfolio and pipeline management in the context of use case driven development.

Organizational applicability

The complexity of PPM and other approaches to IT projects (e.g., treating them as a capital investment) may render them not suitable for smaller or younger organizations. An obvious reason for this is that a few IT projects doesn’t make for much of a portfolio selection. Other reasons include the cost of doing PPM—the data collection, the analysis, the documentation, the education, and the change to decision-making processes.