In this Part 3 we will cover:
Projects, Programs, Portfolios, "Other Work"
Much of the work of many organizations is accomplished through projects. In some cases, a large project is called a program and then the program is split up into smaller projects or "sub-projects". However, a portfolio has a broader meaning than a program. The four terms are compared and contrasted below when viewed from the perspective of project portfolio management.
A Project is a novel undertaking and systematic process to create a new product or service the delivery of which signals completion. Projects involve risk and are typically constrained by limited resources. Note that while we don't speak here of a "beginning and end" or even "temporary endeavor", these are both attributes of projects. The important point here is that once you, as a project manager, have created and handed over the deliverable, the project is finished and you are done. However, until the deliverable does exist and is handed over successfully, you, as a portfolio manager, are not done! Another of the distinguishing features of projects compared to on-going "business-as-usual" work is that projects start and end on dates that may or may not coincide with the annual business accounting cycle.
In the context of portfolio management, projects are the source of "deliverables" that are the enablers of "benefits". So projects should be launched, not because they are someone's brainchild, or pet idea, but because potential benefits have been identified that are consistent with the organization's corporate strategy. Then the projects should be deliberately designed by Project Management to create and deliver the enablers that in turn will be used by Operations to return the benefits.
A program is a group of related projects managed in a coordinated way to facilitate a level of management and control that is not available from managing the projects individually. Programs may include elements of related work outside of the scope of the discrete projects in the program. So, a program is like an umbrella for a group of related projects. A program often implies that one or more projects are running in parallel with others, and a Program Manager manages the whole collection.
The basic responsibility of a program manager is to provide overall management and guidance to the projects running within the program. In particular, the correct sequencing of the various projects and allocation of resources for purposes of coordinating the arrival of deliverables is key to successful program management. Thus, all of the projects in the program are related and all are set up to deliver portions of a very large deliverable or set of deliverables. Programs typically do not contain operations or "other work". If they do, it is only for a finite period of time when some deliverables need to be supported and run, while other projects are still working on other aspects of the final solution.
A Portfolio, for our purposes, is a collection of programs and/or projects and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives. Unlike a program itself, the projects or programs of the portfolio may not necessarily be interdependent or directly related.
Thus, a portfolio will typically be the umbrella structure over a group of related and unrelated projects and other work. A program could be contained within a portfolio, although the reverse would not likely be true. A portfolio may also be defined to contain support, operations, non-labor expenses, although those types of work do not have to be included if there are good reasons not to do so.
The portfolio allows you to optimize investment decisions by prioritizing and balancing all work within the portfolio. For maximum effectiveness, a portfolio should encompass all of the work that draws on common resources such as that contained within an entire Business Unit or department. However, again, work is not done at the portfolio level. Instead, the work is done through the projects, support teams and operational teams that are working within the portfolio
In the information technology arena, at least, it often happens that the responsibilities of a particular resource unit include support work. Support work is work of an on-going service nature such as recovering from a service failure, fixing errors, answering questions from your internal users, researching questions and so on. Unlike a project, the work does not result in an obvious or manageable deliverable. Rather, it is a matter of some urgency requiring immediate attention, yet delivers value to the organization.
Alternatively, the work may produce a stream of deliverables of such a minor nature that individually each does not warrant treatment as a project. The need to include this kind of work under the umbrella of a portfolio may be because the availability of the necessary technical skills is limited and must be drawn from resources otherwise available for the projects in the portfolio. Only in this way can the total capacity of the resources for the portfolio be estimated and managed.