It refers to the centralized management of one or more project portfolios to achieve strategic objectives. Our research has shown that portfolio management is a way to bridge the gap between strategy and implementation. By PMI. What is Program Management? A program is a group of related projects and program activities managed to contribute to the same business objective or benefit.
The program as a whole has a clear, defined goal, and each project within the program assists in meeting those goals. Program management is the process of analyzing and managing the projects to define the right strategy, ensuring that projects are aligned with the business strategy, as the strategy changes.
Program management allows organizations to have the ability to align multiple projects for optimized or integrated costs, schedule, effort, and benefits. And helps the manager to determine the optimal approach for managing project interdependencies. What is Project management? Project has multiple definitions, adapted to the market or industry. By now you would have understood the meaning and finer differences between the main terms.
Just notice the major tasks written in the table above. The role of respective managers is to complete these tasks. A consumer durable company is in the business of design, development, marketing, and servicing consumer products like refrigerators, washing machines, air-conditioners AC etc.
Portfolio Management — The Company, itself, is the largest portfolio. Each sub-portfolio would be headed by a Division Head like a Vice President. The portfolio and sub-portfolios will have running programs, projects and operations. Program Management — Each division within the company would have several running programs e.
Launch a new line of refrigerators. This program could involve several projects e. Project Management — The Company would have several running projects at any given point in time. These project may or may not be part of a program e. A real estate company is in the business of constructing buildings and performing related work to fulfill the unmet public demand. Different divisions like Commercial Division and Residential Division would be sub-portfolios.
Commercial Portfolio could include construction of malls, shopping complexes, and office buildings while Residential Portfolio could include construction of residential buildings, and row houses. There is a difference between Project, Program and Portfolio but many people use these terms interchangeably in day to day conversations.
Different companies use these terms differently. Many people within the same company use them differently. Usually, there is confusion around the meaning of these term. What is your take on these terms? How do you use them in your organization?
Each project still has a project manager completing the work described above. The role of the program manager is to ensure that the benefits intended are met by validating that the correct projects are included in the program. Any project not providing value to the benefits is then realigned or removed from the program.
The program manager is responsible for overseeing the dependencies between projects and creating program-level plans to accomplish this.
For example, a master schedule is created to manage the dependencies between projects; a program risk management plan is created to manage program-level risks; and a program communication plan establishes how information will flow in the program.
The program manager is then not managing the projects, but rather providing the oversight needed to ensure that the pieces of each project are completed effectively and efficiently in order to meet the needs of the other projects. The program manager is focused on benefits realization—rather, knowing the benefits that can be accomplished from this collection of projects and focusing on achieving them.
The program manager is also working to manage organizational change and ensure that the benefits are not only transitioned to operations, but that processes are in place to sustain these benefits. Since the role of program management is to ensure that projects are aligned to the business strategy, as the strategy changes, the program manager also needs to communicate with the project teams so that they are aware of the changes and what needs to be done about them.
A portfolio is a collection of projects and programs that are managed as a group to achieve strategic objectives. An organization may have one portfolio, which would then consist of all projects, programs, and operational work within the company.
It may also establish several portfolios for project selection and ongoing investment decisions. Organizations need to decide which projects are the right ones to focus on. Some risk needs to be taken, but the portfolio should not be so risky that everything could be lost within a period of time. Beyond prioritizing and selecting projects and programs, portfolio management is balancing the portfolio so that the right projects and programs are selected and implemented.
Monitoring and controlling is key to the process, since portfolio composition is not a one-time decision. For example, it may have an inappropriate risk profile, subjecting the organization to either too much or too little risk. Use balance displays to check the balance of a tentative portfolio across important dimensions. Exhibit 8 shows a bubble chart that displays risk versus reward in a small portfolio, where each bubble represents a project.
Some popular balance displays are:. To keep the amount of data manageable, a portfolio is initially constructed at high level of abstraction. The resulting portfolio ignores some important constraints and details about its projects.
However, this masks bottlenecks caused by limited availability of certain skill sets Exhibit 9. Thus, a portfolio may not be feasible to execute even though it is maximized and balanced. Before starting execution, validate that a tentative portfolio appears to be feasible. Team up with the people who will run the projects and thus know them bestgenerally line and project managers, perhaps coordinated by the project management office PMO.
After validating the portfolio, put it into execution. Initiate the new projects and programs, inserting them into the project management system. He or she monitors the execution of the portfolio and its component projects, ensuring that it continues to meet its original design objectives. This paper focuses on the process and tools for PPfM. However, knowing the process and tools is not enough. PPfM must have a governance framework. Governance specifies who has responsibilities in each process step and how these individuals will work together to make good decisions about projects.
PPfM is about sharing power and decision making at very senior management levels, so clear governance is vital. Based on my experience managing portfolios and helping clients, the following are attributes of a good portfolio management system:. Organizations that combine effective project portfolio management with good project management achieve these results:. For example, the IBM Institute for Business Values scored the performance of over 20 electronics and high-technology manufacturers from to Are your projects unfocused and misaligned?
Carroll, L. New York: The Macmillan Company. Cooper, R. Portfolio management for new products 2nd ed. Cambridge, MA: Perseus Publishing. Cooper, J. Reshaping the funnel: Making innovation more profitable for high-tech manufacturers. Kaplan, S. The balanced scorecard. Boston: Harvard Business School Press. Oltmann, J.
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