Project Management 101: Portfolios, Yet Another P

Another one?! One more P remains to round out the important P’s of project management, projects, programs, and portfolios.

As defined by the Project Management Institute (PMI), a portfolio is a collection of programs, projects and/or operations managed as a group. Key characteristics from the definition of a program: programs, projects and/or operations and group management.

A program is a group of related projects managed centrally, a project is a temporary activity that produces unique results, and an operation is ongoing non-project work. A portfolio manages all of these different pieces as a group to achieve strategic objectives. Managing these different items collectively allows prioritization and allocation of resources to best meet the objectives of an organization. While a program focuses on related projects and managing resources to best meet the program objective, portfolios are even broader focusing on meeting the needs of the company above the needs of specific programs, projects or operations. Resources would be reallocated based on priority i.e. if the organization’s objective was to increase customer service, then resources may be focused on improving or expanding operations instead on projects or programs.

Think of a smartphone as a portfolio. Keeping in contact would be part of the key operations, calling, texting, messaging. An application downloaded could be thought of as a project i.e. a game that you wanted to play through and beat or a health tracker that you were using to reach a specific fitness level. Similar applications or functionality would be a program. The smartphone manages this whole collection as a group and there are limits to the resources (space, minutes, messages, data, etc.) leading to prioritization choices.

Portfolios can be applied to departments within an organization as well. Let’s take a financial management department as an example. The overall department would be the overarching portfolio with a variety of groups within the department performing operations i.e. accounting, budgeting, forecasting, etc. In addition there are probably several ongoing projects i.e. software implementations, process improvement initiatives, and expansion planning. Many of these projects can be grouped into programs i.e. all procurement related projects (implementation of an eProcurement solution, redesign of the vendor management process, creation of a procedures manual) could be categorized within the Procurement program. As the needs of the department shift, some items may become higher priority over others and result in portfolio management reallocation of resources to support this initiative i.e. eProcurement solution must be implemented by end of month while other projects or operations are not pushing deadlines leading Financial Management to shift resources from other projects, programs, operations to support the eProcurement solution project.

Effective project, program, and portfolio management is key to an organizations success. Regardless of whether a person is officially titled as a P_____ Manager or not, every member of the workforce is part of some project, program, or portfolio. Knowing the ongoing projects, programs and portfolios can connect the dots in understanding an organization’s objectives, and make you a more effective contributor to these objectives (which has the happy byproduct of increased possibility of being identified by your management as a star performer leading to positive career trajectory)!

Disclaimer: The views and opinions expressed are those of the blogger and are not necessarily those of the Federal Reserve Bank of Dallas or the Federal Reserve System.