Project Management vs Program Management vs Portfolio Management

As the saying goes, there is always room for improvement, and organizations are constantly looking for ways to improve processes and optimize resource utilization. If an organization is big and juggling many projects at the same time, it is difficult for them to better utilize their resources if all projects are performed in isolation.

So, they manage projects in groups to use the resources efficiently.

Now, if an organization has more than one project, they will deal with them under a program or portfolio.

The distribution of projects under a program or portfolio depends on the nature and the type of project. Programs are managed through program management and portfolios are managed through portfolio management.

To manage a project under any of the above, it is necessary to understand the concepts well. 

Therefore, in this blog post will discuss projects, programs, and portfolios and their management. Collectively, these terms are known as the 3Ps of project management.

Project

A project is the lowest level in the hierarchy of project, program, and portfolio.

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

So, you can say that the nature of a project is temporary; once the project achieves its objective, it no longer exists, and the objective of the project is to create a unique product, or develop a system to provide you with a service or the result.

For example, assume you have been given a project to set up a call center for a company. You complete the project, set up the call center, and hand it over to your client. Now your client can provide a support service to their customers.

Please note that once you hand over the product to the client, your project will be completed and closed. You will disband your team; members will be separated, since the nature of the project is temporary.

It is not necessary for your team members to be located in the same place; sometimes your project team may include members located outside your geographic location. In this case, you will call your team a virtual team.

As a project manager, you will be responsible for managing projects, and the success criteria being timely completion, under budget, and conformance to the requirements.

Project Management

Project management is about managing projects, and it helps projects achieve their objectives. The processes include initiating the project, developing a plan, executing the project, controlling the project activities throughout its lifetime, and finally handing over the output of the project to the client, and closing the project.

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

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, and you manage them at a higher level.

For example, assume you have two projects: the first is to construct a school building and the second project is to construct an office building. Since these two projects are similar, you will keep them under a program.

The person responsible for managing the program is the program manager. The success criteria for a program is the degree to which it satisfies its objective.

Program Management

Programs are managed under program management, which is defined as the centralized, coordinated management of a program to achieve its strategic objectives. You only manage the interrelated or similar projects as a group to accomplish the desired result.

The objective of program management is to optimize the resource utilization among projects and reduce the friction 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 project, while in program management you manage multiple projects.
  • A project can be a part of a program, but a program cannot be a part of a project.
  • Project management addresses the management of the project; while program management helps you set the project management processes and measure the project results.

The Benefits of Program Management

A few benefits of program management include:

  • Less conflict among projects
  • Optimal utilization of resources
  • Resource constraints are minimized
  • Better communication and coordination among projects
  • Improved organizational performance

Portfolio

A portfolio refers to a group of related or unrelated projects or programs. A portfolio can consist of multiple programs or multiple projects. It can have multiple, dissimilar projects because portfolio management deals with two or more unrelated projects. Conversely, in program management, only related projects are managed.

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

How are you going to manage these projects?

You will manage them by keeping them under a portfolio because they are neither related nor similar to each other.

Portfolio manager manages portfolios. The success criteria for portfolio is the combined performance of its components.

Portfolio Management

Portfolios are managed under portfolio management. It has a bigger scope and objective than program management.

There is centralized management in portfolio management, that individual’s job is to identify, prioritize, and authorize the projects or programs. This centralized management manages the projects or programs to achieve the organization’s strategic objectives.

Portfolio managers set the priorities of projects based on the leadership’s agreed-upon business objectives. They select the program or projects under a particular portfolio and make sure that they provide the most benefit to the organization.

Please note, 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

There are a few differences between portfolio management and program management, including:

  • Program management manages similar projects while portfolio management manages dissimilar projects or programs.
  • The scope of program management is broader than the project scope, and a portfolio has an organization-wide scope, which changes with the strategic objectives of the organization.

The Benefits of Portfolio Management

Some benefits of portfolio management include:

  • Optimal allocation and utilization of resources among projects or programs
  • 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, the scope and objectives will become larger and larger. In project management, you perform 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 to economies of scale and fewer risks.

These are essential topics from a PMP exam point of view, and you are going to see some questions on these topics on your exam. Make sure you understand these topics well.

How are you involved with a project, program, or portfolio? Please share your thoughts in the comments section.

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Speak Your Mind

  • I really like your simple and clear explanation to various concepts in PM. Your site is very helpful to me in my teaching. Thank you so much!

  • Fahad and all, Who are members of project board and change control board? Are these two boards the same entity? Is project board same as board of directors? Project board is in charge of project governance, right? Meanwhile, board of directors is in charge of organization governance, right? So, does project board report to board of directors?

    • Hello Jo, it totally depends on organization structure. However generally board of directors are for organization governance and project board report them or any other authority as per the organization policy.

  • The program manager is a senior project manager, right? He reports to the portfolio manager aka project director who in turn reports to the CEO portfolio manager is at the same level with operations manager and technical manager. Therefore, all three are at least heads of departments or divisions while project manager is only head of a section or unit of projects.

    • It depends on organization structure and policy. It is not necessary that program manager reports to portfolio managers. They may work in isolation and separately report management.

  • Who prepared the business case for each project or program? Is it the portfolio manager? Is the portfolio manager equivalent to project director? Does the program manager prepare the benefit management plan? Project sponsor is the same as the project champion, right because s/he is the project originator or proposer?

    • Business case is usually prepared by business analyst along with the sponsor. Project manager, program manager, portfolio manager can be involved.

  • Which one in your opinion is better suited for a professional business title? Portfolio Management can also be confused with the same in the financial industry…

    • It should be defined by the company. It should not be confused with two positions in the company, outside, it does not matter.

  • So much better and clear explanation than the one that I found in 3 books already,

    Something about the words you used clarified all the doubts that I had. Thank you for your help!

  • How does the interaction between project management, project portfolio management and strategic programme management lead to better planning and financial performance?

    • It helps you in better resource utilization – hence better planning and financial performance.

      For example, an equipment is idle at another project, you can plan it to use on your project to better utilize and save some money.

  • Hello Usmani,
    Can one order a hard copy of your 400 PMP exam queantion bank or the A2Z of PMP certification preparation manual? And what is the procedure lease?

    • Both of these eBooks are available in soft format only, though you can take printout if you need.

      I did not understand your question on procedure lease. Can you elaborate it?

  • Wow! This is so insightful and beneficial too. I’ve just registered to enroll on a PMP course and subsequently exams. This prep is just to refresh my memory on management before stepping into the tutorials. I will keep coming back to your blog to learn more so as to gain added advantage. Thanks. Please keep up the good work.

  • This is a nice, simple explanation. Thank you. In practice, the definitions can sometimes overlap a little depending on how you choose to break up the effort. Some large projects, with many moving parts, could be considered either a project or a program. Some large programs contain projects that are less interconnected than others, and therefore might be thought of as a portfolio, rather than a program.

    The term Program Management Office is also used in a variety of different ways. I’ve seen it used variously to refer to offices overseeing several projects, one or more programs, or a portfolio.

  • Dear Fahad
    I’ve just started my MS in PM, I’m very impressed by your simple, precise and clear defining skills.
    I just wanna associate with you not till the completion of my MS but as long as possible.Can i read your other relevant stuff on PM, give me one link brother.
    I do appreciate your effort.

    You can reach m at [email protected]
    Yours Plz

    Syed Shakaib Shah

  • 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

  • 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

  • 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 ?

  • 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

    • 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:

      https://www.pmi.org/learning/library/grow-up-already-opm3-primer-8108

  • 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.

  • 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.

    • 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.

  • 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.

    • 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…

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

    • 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.

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