Distinguishing Portfolio Management, Programme Management and Project Management

There is often a misunderstanding, and hence a mixed and overlapping use of terms, when it comes to programme management. Sometimes a programme is called a project. Sometimes a project is called a programme. In addition, sometimes project portfolio and programme are mistakenly used interchangeably. This article is intended to clarify the main differences and to distinguish the unique aspects of project portfolios, programmes, and projects.

A great way to start to think about these is to think in terms of a pyramid hierarchy. At the top of the pyramid is portfolio management, which contains all of the projects and programmes that are prioritised by business objectives. Below that is programme management, which contains numerous projects that are interrelated, since they support a particular business objective. Programmes consist of multiple projects, but projects can be independent and simply part of the portfolio. Projects differ from programmes in that they are strictly tactical in nature.

Here is a more detailed look at each:

Portfolio Management

One of the key distinguishing features about Project Portfolio Management is that it is a process that is clearly characterised by business leadership alignment. Priorities are set through an appropriate value optimisation process for the organisation. Risk and reward are considered and balanced, and programmes are selected based on their alignment with organisational strategy. Feedback is provided from programme and project implementation so that portfolio adjustment can occur, if necessary. Strategic changes can also require portfolio adjustments.

Programme Management

A key distinguishing feature of Programme Management is business sponsorship. Almost by definition, based on decisions made at the Portfolio Management level, programmes are sponsored by business needs. The programme takes on the ownership of benefits and is measured primarily based upon achievement of those benefits. Programmes can also sometimes have "benefits streams," or sets of interrelated benefits, such as increased R&D capabilities combined with increased market penetration, that cut across functions in the organisation. Because programmes, naturally consisting of multiple projects, span functions within an organisation, they have all elements of a business system, and hence are general management oriented.

Project Management

Project Management is most concerned with delivery of capabilities, typically as defined within a programme. Projects need to be strategy-driven, but do not own the strategic initiative as does a programme. Rather, the project takes inputs and develops and implements a tactical plan. Monitoring along the way and final measurement of success is typically based more on the tactical considerations such as budget and schedule than upon achievement of a strategic business objective.

Now, with the basic distinctions among Project Portfolio Management, Programme Management, and Project Management defined, each organisation must "personalise" its implementation of these three processes. Some key factors and how they affect choices made about implementing each are as follows:

Standards for Project Portfolio Management, Programme Management, and Project Management do exist, and clear definitions can be found within. The worldwide Project Management Institute (PMI) has developed and published the following standards (free for members):

John Reiling, PMP, has experienced portfolio, programme and project management in organisations of all sizes. John's web site Project Management Training Online, www.pmtrainingonline.com, provides numerous courses on these topics for PDUs, PMP Prep, and PgMP Prep. See John's related article on Programme Management at www.pmcrunch.com