Project Management vs Program Management vs Portfolio Management

project-managment-vs-program-management-vs-portfolio-managment

In this blog post I’m going to discuss the projects, project management, programs, program management, portfolios, portfolio management, and then I will explain the difference between them.

These are very important topics from a PMP exam point of view and you are going to see some questions on these topics in your exam; therefore make sure that you understand these topics well.

Okay, let’s get started.

Project

According to the PMBOK Guide 5th edition, “A project is a temporary endeavor undertaken to create a unique product, service or result.”

So you can say that a project is temporary in nature, i.e. once the project achieves its objective its existence comes to an end, and the objective of a project is to create a unique product, or develop a system to provide you any service, or is the result of any task.

For example, let’s say that you have been given a project to set up a call center for a company that they can use to provide service to their customers. You start the project, set up the call center and hand it over to your client. Now your client is ready to provide support service to its clients.

It is not necessary for your team members to be located in one place; sometimes your project team may include members located outside your geographic location.

Please note that once you hand over the end product to the client, your project will be completed and you will close the project. Moreover, since the nature of the project is temporary, your project team members will be separated once the project is completed.

Project Management

Project management is the process that helps projects achieve their objectives. These processes include initiating the project, developing the plan to execute the project, executing the project according to the approved plan, controlling the project activities throughout its lifetime, and finally handing over the output of the project to the client, and closing the project.

Simply put, project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.

Visit ‘Project and Operation’ to read more about the project and operations.

Program

A program is a group of related or similar projects managed in a coordinated way to get the benefits and control not available from managing them individually. This means that in a program you will have multiple projects which are either similar or related to each other.

For example, let’s say that you have two projects: the first project is to construct a school building and the second project is to construct an office building. Since these two projects are similar in nature, you will keep them under a program.

Program Management

Program management is defined as the centralized coordinated management of a program to achieve its strategic objectives. In program management you only manage the interrelated or interdependent projects as a group to achieve the desired result.

The objective of program management is to optimize the utilization of resources among projects and reduce the friction or constraints so as to increase the organization’s performance.

The Difference between Project Management and Program Management

The following are a few differences between project management and program management:

  • In project management you manage one individual project while in program management you manage multiple similar or related projects.
  • A project can be a part of a program but a program cannot be a part of a project.
  • Program management addresses the management of project management. It helps you set the project management processes and measure the project results.

The Benefits of Program Management

The following are a few benefits of program management:

  • Less conflict among projects
  • Optimal utilization of resources
  • Resource constraints are minimized
  • Better communication and coordination among projects
  • Improves organization’s performance

Portfolio

We have discussed the projects and programs, now it is time to discuss the portfolio.

Portfolio refers to a group of related or non-related projects or programs. A portfolio can consist of multiple programs or multiple projects without having a single program. A portfolio can have multiple non-similar projects without having a program, because two or more non-related projects will be managed under portfolio management. Conversely, in program management only related projects are managed.

For example, let’s say that you have three projects: the first project is to construct a building, the second project is to conduct research to find the impact of motor pollution on the environment, and the third project is to set up a call center.

So how you are going to manage these projects?

You will manage these projects by keeping them under a portfolio, because all three projects are neither related nor similar to each other.

Portfolio Management

Portfolio management has a bigger scope and objective than program management.

In portfolio management, there is a centralized management whose job is to identify, prioritize, and authorize the projects or programs. This centralized management controls and manages the projects or programs to achieve the organization’s strategic business objectives.

Please note that, although portfolio management sets the priority of the projects or programs in a group, it does not oversee any individual project or program.

The Difference between Portfolio Management and Program Management

The following are a few differences between portfolio management and program management:

  • In program management you manage similar projects, while in portfolio management you manage non-similar projects or different programs.
  • The scope for program management is larger than the project scope, and the portfolio has organization-wide scope which changes with the strategic objectives of the organization.

The Benefits of Portfolio Management

The following are a few benefits of portfolio management:

  • Optimal allocation and utilization of resources among projects or programs
  • Provide constant support to projects or programs
  • Fewer conflicts and better communication among projects or programs
  • Better coordination among projects or programs

Summary

As you move from project management towards portfolio management, scope and objective will become larger and larger. In project management you do micro management, and in portfolio management high level macro management is required. Program management and portfolio management facilitate better communication and coordination among projects and programs, resulting in enormous benefits in economies of scale and lesser risks.

The person responsible for projects is the project manager, for programs it is the program manager and for portfolios it is the portfolio manager. The success criteria are different for projects, programs and portfolios: for projects it is timely completion, under budget, and the quality of output of the project; for programs it is degree to which it satisfies the objective it was undertaken; and for portfolios it is the combined performance of its components.

Here is where this blog post on project – project management, program – program management, and portfolio – portfolio management ends. If you have something to say, you can do so through the comments section.

Comments

  1. Paul ejike says

    How can one be a project manager. Am a graduate of physics and astronomy from University of Nigeria Nsukka. Pls i need your help.

    • Fahad Usmani says

      Hello Paul,

      I assume that you are asking about how to become a PMP.

      To become a PMP, graduation is enough. Second condition is to have three years of experience in leading and directing the project. If you have this much of experience then you can go for the training and apply for the exam.

      Once you pass this exam, you will be a PMP.

  2. mkhan1122 says

    Thank you Fahad. I am preparing for PMP Exam these days.

    This was really helpful. Keep up the good work.

  3. said says

    I guess you are a teacher M. FAHAD , if not you have to be :)
    you are doing a good job here.
    it’s so helpful.

    • Fahad Usmani says

      Thanks Said,

      I am just a blogger who passed the PMP exam and helping other to do so…

      I am glad that you’re benefiting from my posts…

  4. Michelle says

    In your above post you mention the 4th ed. of the PMBOK Guide. The 5th edition is out and that is what will be reference when I sit for the CAPM exam. Is this information still accurate?

    Thank you for your posts – they are very helpful in breaking down concepts and making analogies.

  5. Etu Friday says

    Hi Fahad,

    Kudos to you for the great work of knowledge shearing via your blog posts. Very informative publications indeed.

    Pls could you send me a one-in-all study material i can use wholly for the pmp exam via my email add?

    Appreciate your support.

    • Fahad Usmani says

      Hello Etu, all reference books are is in hard format that can not be shared through email, and the rest is copyrighted material, that is also can not be shared.

  6. Michael Hosho says

    Hi Fahad,

    Your explanation is simple and well understood and will help to perform audit examation of projects, programs with its relationship aligned to expenditure to achieve audit objective, and provide report/recommendations to management.

    Where and how can I get examples of past PMP exams before sitting for the exams.

  7. Jayanth Krishnamoorthy says

    Hi Fahad,

    I appreciate the pains that you’ve taken to provide the difference here. However, to check whether my knowledge is correct or not, an example would help me, obtain a complete understanding of project, portfolio and an OPM model. Can you please assist?

    With warm regards
    K.N.Jayanth Krishnamoorthy

    • Fahad Usmani says

      Project: Any single project will be managed.

      Program: Let’ say you got two projects, one is to construct school building and other is to construct a office building. You will manage these two projects under program management because both are of similar type.

      Portfolio: Let’ say you got two projects, one is to construct school building and other is to develop a software program for any organization. This will be managed under portfolio management because both projects are entirely different.

      OPM3: Please visit below given links:

      http://www.pmi.org/Business-Solutions/Organizational-Project-Management.aspx

  8. Muhammad Anjum says

    Dear Fahad Sb,
    Assalam o Aleikum,

    I have confusion with this definition of Program which is;
    “A program is group of related projects…”
    What does mean by related projects, same projects? or related to each other?
    For example: Engineering, Procurement & Construction are different projects or sub-projects of EPC project but also related to each other.
    So, is this program or portfolio ?

    • Fahad Usmani says

      Hello Anjum, I am updating this blog post in two or three days. I hope it will answer your query as well.

  9. shazie says

    Fahad,

    I am confused in Program and Portfolio in below example. The company calls it a “Project,” but I believe its wrong. Please clear me

    “A company is starting a mega project of housing community. They will construct a 100 luxury villas, 200 small family houses, and 100 condos, with a small hospital 10 beds, kinder-garden school, recreational parks, and shopping mall in it. They will also open a zoo in the community project.”

    Is this a Program or a Portfolio? They call it Project. My understanding is, its a “Construction Program” and the entrepreneur is using a wrong word, “Mega project” for this type of adventure. Please clarify my confusion. Thanks

  10. mahesh says

    Dear Fahad Usmani
    very crystal clear explanation of Project, Program and Portfolio ,
    Appreciate your intent to help those new PMP entrants.
    God Bless you for ToK(transfer of knowledge)
    You can also throw some light on ITTO!
    thank You
    Mahesh

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