Large organizations execute many projects simultaneously, and to use their resources optimally, they manage these projects using different strategies (e.g., project management, program management, and portfolio management).
These strategies are related to each other and work under one another.
In today’s blog post, we will discuss project, program, and portfolio management and the differences between these strategies.
Let’s get started.
What is Project Management?
The PMI states, “A project is a series of structured tasks, activities, and deliverables that are carefully executed to achieve a desired outcome. They are temporary efforts to create value through unique products, services, and processes.”
And project management is “the practice of using knowledge, skills, tools, and techniques to complete a series of tasks to deliver value and achieve a desired outcome.”
Project management is about planning, organizing, and overseeing a project from initiation to completion. Here, the project manager coordinates project management activities to achieve project objectives defined in the project charter.
Effective project management results in project success. According to a PMI report, organizations that excel in project management complete more projects on time, within budget, and meet other project objectives.
Key project management activities are identifying project stakeholders, collecting requirements, developing project management, executing the plan, monitoring & controlling the progress, and delivering the project deliverables to the project sponsor or client.
Data from a survey conducted by Wellingtone shows that 74% of organizations believe that project management is either critical or high in terms of strategic importance. The same survey found that only 22% of organizations fully understand the value of project management.
According to the PMI, project management has five phases:
- Initiation
- Planning
- Executing
- Monitoring & Controlling
- Closing
A project must go through these five phases during the project lifecycle.
You can use many different project management methodologies and frameworks.
These frameworks fall under three categories:
- Waterfall or Traditional Approach
- Agile Methodologies
- Hybrid Framework
If the scope of work is well-defined, you will use the waterfall approach. If requirements are not clear upfront, you will go with agile methodologies. However, if some parts of the project have a defined scope and others do not, you can choose a hybrid approach.
Project management is crucial for achieving successful results. As projects become more complex, the demand for effective project management continues to grow.
What is the Project Manager’s Role?
The project manager is responsible for leading the team to complete and deliver the project deliverable to the client.
The project manager’s role throughout the project lifecycle is as follows:
- After signing the project charter, the project manager will identify stakeholders and collect requirements. The project managers will use these requirements to define the scope with their team members.
- After defining the scope, the project manager will develop the project plans (e.g., baselines) and get them approved. Once the project plans are approved, the project manager will execute them. This is how you will spend most of the project’s budget and duration.
- While executing the project, you will monitor and control the processes and activities to ensure that deliverables meet quality requirements.
- Once the deliverables are ready, the project manager will deliver them to the client, then update the lessons learned documents, project documents, and organizational process assets, then release the team, and finally close the project.
The project manager’s role requires technical and interpersonal skills. Project management skills are important. According to the U.S. Bureau of Labor Statistics (BLS), project-management specialists’ requirements will grow 7% from 2021—2031, on par with the average growth rate for all occupations. On average, there will be an estimate of 70,400 openings for project managers every year over the next decade.
What is Program Management?
According to the PMI, a program is ” a group of related projects managed in a coordinated manner to obtain benefits not available from managing them individually. Program management is the application of knowledge, skills, tools, and techniques to meet program requirements. Organizations with mature program management are far more successful than those without it, according to our research.”
For example, suppose your organization has two projects: construct a school building and an office building. In that case, they will manage both projects under a program to use their resources efficiently as construction projects are similar.
A “CHAOS Report” prepared by the Standish Group highlights the importance of program management. This research shows that only 29% of projects are successful without significant challenges.
Program management uses established policies, processes, procedures, tools, and techniques to manage projects under a program. This ensures that the organization uses its resources to full strength and no resource is either idle or overloaded.
Program management is a strategic approach to overseeing multiple similar projects to achieve organizational goals using resources efficiently.
Programs with effective management have a higher success rate because of strategic coordination. It is the next layer of the project. Program management allows organizations to streamline efforts and resources by providing a holistic view, reducing redundancies, and optimizing efficiency.
The person responsible for managing the program is the program manager. The success criteria for a program are the degree to which it satisfies its objective.
A study by KPMG indicates that 56% of organizations believe program management positively impacts project outcomes. The report emphasizes that mature program management practices contribute to improved project delivery, aligning projects with organizational goals.
Program management is crucial for organizations aiming to achieve strategic objectives through effectively coordinating related and similar projects. It optimizes project resource utilization and reduces friction to increase the organization’s performance.
What is the Program Manager’s Role?
A program manager oversees multiple projects within a broader organizational initiative. Their focus is broader than managing individual projects. This role demands an all-inclusive perspective, which requires the program manager to blend information from all projects and ensure that they collectively help achieve organizational goals.
Program managers are responsible for strategic planning, setting objectives, and defining key performance indicators that guide project teams. They bridge upper management and project teams, facilitating communication and ensuring project outcomes align with the organization’s strategic vision.
Effective program managers excel in resource allocation, ensuring optimal time, budget, and personnel utilization across the program. They promote collaboration among project teams, sharing knowledge and best practices. They regularly assess project milestones and key outcomes to promptly adapt strategies and address emerging issues.
Program Management Benefits
Program management benefits include:
- Less conflict
- Optimal resource utilization
- Minimal resource constraints
- Better communication and coordination
- Improved organizational performance
What is Portfolio Management?
A portfolio refers to a group of related or unrelated projects or programs. It can consist of multiple programs or multiple projects. A portfolio can also have multiple dissimilar projects because portfolio management deals with two or more unrelated projects. Conversely, in program management, only related projects are managed.
Portfolios are managed under portfolio management. It has a bigger scope and objective than program management.
For example, assume you have three projects: the first is to construct a building, the second is to research the impact of motor pollution on the environment, and the third 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, as they are neither related nor similar. The success criteria for a portfolio are the combined performance of its components.
Now, let’s discuss portfolio management.
According to the PMI, “Portfolio management ensures that an organization can leverage its project selection, and execution success. It refers to the centralized management of one or more project portfolios to achieve strategic objectives. Our research has shown that portfolio management is a way to bridge the gap between strategy and implementation.”
Portfolio management is sometimes referred to as project portfolio management (PPM). It is the next layer of the program.
Portfolio management is a strategic approach to overseeing and optimizing different projects, programs, or a combination of projects and programs. It involves evaluating, prioritizing, and aligning various projects or programs to ensure they use resources optimally.
Portfolio management involves assessing the risks and returns of individual projects or programs and balancing them to create a diversified and well-rounded portfolio. This approach helps organizations mitigate risks and maximize returns on their investment.
A PMI study indicates that organizations waste 97 million USD for every 1 billion USD invested in projects due to poor performance. Effective portfolio management can play a significant role in improving project success rates and minimizing financial waste.
Portfolio management is crucial for organizations to optimize their project or programs and align them with strategic goals.
What is the Portfolio Manager’s Role?
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 ensure they benefit the organization most.
Please note that although portfolio managers prioritize the projects or programs in a group, they do not oversee any individual project or program.
A portfolio manager has a high-level strategic position; they oversee projects and programs to align them with organizational objectives. They focus on optimizing the portfolio, which includes selecting, prioritizing, and managing projects that collectively contribute to the organization’s goals. The role requires understanding the business strategy, industry trends, and the portfolio’s overall impact on the organization’s success.
Portfolio managers ensure that every project within the portfolio aligns with the organization’s mission and objectives. They evaluate potential projects and consider their benefits, risks, and resource requirements. By maintaining a comprehensive view of the portfolio, they make informed decisions about project selection, continuation, and/or termination.
Portfolio managers convey the portfolio’s strategic importance to stakeholders.
Portfolio Management Benefits
Portfolio management benefits include:
- Optimal resource allocation and utilization
- Constant project and/or program support
- Fewer conflicts and better communication
- Better coordination
Project Management vs. Program Management vs. Portfolio Management: What Are the Key Differences?
“Project management,” “program management,” and “portfolio management” are related to each other but work at different hierarchy levels. Project management is at the bottom, and Portfolio management is at the top. Program management is in the middle.
These are the key difference between project management, program management, and portfolio management:
Project Management
- The project manager manages the project alongside the project team.
- The project manager can report to the program manager, portfolio manager, or PMO.
- Project success is measured against successful project deliverables.
Program Management
- The program manager manages the program with the help of project managers.
- The program manager reports to the portfolio manager or PMO.
- Program success is measured against collective project success.
Portfolio Management
- The portfolio manager manages program and/or project portfolios autonomously.
- The portfolio manager reports to the PMO or upper management.
- Portfolio success is measured against collective project and program success.
Summary
The project manager, program manager, and portfolio manager must collaborate to achieve strategic objectives, long-term goals, and collective success, as well as to help the organization grow.
These are essential topics from a PMP exam point of view, and you will see some questions on these topics on your exam. Make sure you understand these topics well.
I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.
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Thank you! Clear explanation that helped me clarify these in my mind. Great visual.
You are welcome, Susan.
Can you summarize in definitive terms project, program and portfolio and their management to the understanding of a layman?
I tried my best to describe these concepts in easy terms. Let me know where you are facing issues?
Does it mean that portfolio management is broader than program management, which is broader than project management?
Yes.
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.
How do i get this document through pay pal. I need soft copy like tomorrow
Which document are you talking about?
Hi Fahad Usmani
Can you please mention few more benefits of PPM.
For example, better resource utilization within the organization.
Hi It’s quite helpful. I am preparing for
Pmp
Thanks Atta for your visit and leaving comment.
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.
Are Project Portfolio Management (PPM) and Portfolio Management (PfM) the same things and hence used interchangeably?
I think both are the same.
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!
Thanks HFR for your visit and leaving comment.
Very very clear and concise!. Kind of explanations one would like to find more often in the internet!.
Thanks a Lot!
You are welcome Roberto.
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.
Thanks fahad. You have good knowledge of PMP. i understood now. Thanks a lot.
You are welcome Faran.
Hello Usmani, how can I get a hard copy your 400 PMP exam sample questions pls?
You can buy it from here:
https://pmstudycircle.com/pmp-question-bank/
Hard copy is not available.
Fahad
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.
Thanks Lizzy for your comment.
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.
Well said Heather.
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
Hello Syed,
You can read all of my blog posts here:
https://pmstudycircle.com/study-notes/
I wanna say big thanks ,really it’s useful and now I understood it.
You are welcome Amna.
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
Thanks Mahesh for your comment. I have written a blog post on ITTO. You can read it here:
https://pmstudycircle.com/2012/03/input-tool-technique-and-output-itto-for-pmp-certification-exam-memorize-remember-or-understand/
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
I believe they should manage it under either program or portfolio.
Thanks Fahad!
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 ?
Hello Anjum, I am updating this blog post in two or three days. I hope it will answer your query as well.
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.
You can not get real PMP exam questions from anywhere. If you get it, it is illegal and please report to the PMI.
However, if you want to practice PMP exam sample questions, the below link will help you such sources:
https://pmstudycircle.com/pmp-questions/
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.
Yes, it is still valid.
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.
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…
Wonderful explanation,thanks
You’re welcome Adhar.
Thank you Fahad. I am preparing for PMP Exam these days.
This was really helpful. Keep up the good work.
Hello Khan,
Let me know if you need any help from me.
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.