How to tell a project from a program from a portfolio?

The whole sphere of project management has evolved and now includes terms like program management and portfolio management. Some people are confused and can’t tell where one form of management ends and the other begins. Let’s try to clear up that confusion here.

The best way to approach this is to explore the purpose of these different forms of management. After all, if we are setting out to do anything, there should be a reason why we’re doing it. So why do project, program or portfolio management in the first place.

The purpose of project management is to produce a specific product. In project management terms, that would be the “deliverable”. The product is unique and is the combined result of all the activities and product components that have been created within the project to lead to the creation of this product. A good example is the construction of a house. The product is, well, the house. All the different components such as the foundation, the walls, the windows, the doors, the roof, they all go towards the delivery of the final product which is the house. The house foundation may be a sub-project or a phase but it is still a component created towards the delivery of the house. There are many other elements delivered within this project such as the blueprints for the house, electric wiring etc. One thing is clear though, what combines the entire set of elements is one thing – the house.

The purpose of program management is the delivery of common benefits. You will have probably heard elsewhere that programs are really just collections of sub-projects. That is INCORRECT. A program could be a collection of projects and sometimes even of some sub-programs, but they must all be related and focused towards the delivery of a set of common benefits. For example we could have a “process improvement program” where the focus is ongoing refinement of business processes within an organization. The improvement of each business process would be a project on its own with the specific deliverable being a document outlining the newly improved process and its implementation. There could be many of these processes within the organization. Another good example is a “productivity improvement program”. This may have projects within it to install new software applications within the company and other projects to send people on training courses to help them improve their time management skills.

A program could very well not end at all and continue forever as long as management feels they want to continue reaping the benefits of the program. It could end if management decides they have achieved the benefits they set out to achieve or if they decided they didn’t want to spend any more money on it. Note though that in strict project management speak, just because a program does not end that does not mean it does not have closing procedures. This I will touch on in another article. For now just note that “closing” does not mean “ending” when it comes to a program.

Some will argue that a program can have a specific “large” product such as a nuclear plant. Yes that could be the case and in fact that is a very good example of employing program management. However even in this case the focus of program management is to produce a benefit, a specific outcome or capability rather than a specific product. The outcome could be “improve the energy supply capacity by 20%”. The focus on this benefit unites all the sub-projects towards the accomplishment of this overarching benefit. When the objective of a program is a benefit, it could trigger a discussion on whether you could achieve it by building a nuclear plant, a coal plant or buying more electric power from a neighbouring country or state. Any of these, once decided on, would become a project with a specific deliverable such as a nuclear plant, a coal plant or an enhanced grid drawing power from another jurisdiction or a combination of some or all of these. Any of those decisions need to contribute to the overarching benefit of achieving the 20% electric supply capacity increase. And since these are large projects they themselves can be broken down into sub-projects. The advantage of using program management is the inter-project management processes that come with it to produce the desired outcome and benefit.

Bottom line, the common element in a program is the common benefits.

The purpose of portfolio management is picking the right programs and projects to spend money and resources on. No organization has an unlimited supply of money, labour, technology or space and therefore they need to be selective about what they want to spend their limited resources on. That means a process for prioritizing and selecting. That is what portfolio management is for. Because it looks at the whole picture, portfolio management oversees all projects and all programs whether they are related or not.  What combines the elements of portfolio management is the money, human resources, technology, space etc. that need to be employed for all the programs and projects that the organization selects to expend those resources on.

So here it is: the way to understand the differences between these forms of management is to understand the common shared item that drives their purpose.

Project management: Common purpose: Shared Product.

Program management: Common purpose: Shared Benefits.

Portfolio management: Common Purpose: Shared Resources.


Hope you found this useful. Let me know what you think. Add a comment.



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