What's the Difference Between a Project, Program, and Portfolio?

Project, program, and portfolio management are different but closely related concepts essential for organizations to effectively achieve their goals and objectives and implement their strategy successfully. Understanding the differences between these three concepts is crucial for anyone managing projects, programs, and portfolios. Let’s define project, program, and portfolio management, discuss their key characteristics, and explain the steps and processes involved in managing each.

Define Project Management

Project management is the process of planning, executing, and closing the work of a team to achieve specific goals and objectives. The key characteristics of project management include a defined start and end date, a specific budget, and a clear set of deliverables. The project management goals are to complete the project on time, within budget, and to the project sponsor’s satisfaction.

An example project might be building a desalination plant with a defined budget, timeline, and performance specifications of millions of gallons of water to be processed.

The steps involved in managing a project include:

1. Define the project: This initial step identifies the project's goals and objectives and the deliverables that need to be produced.
2. Plan the project: A project plan is created to outline the steps that need to be taken, the resources required, and the timelines for completion.
3. Execute the project: During execution, the project manager coordinates the team’s work, manages risks, and facilitates necessary adjustments to the work.
4. Monitor and control the project: Issues are identified and resolved, and changes are made to the project plan as necessary.
5. Close the project: This includes finalizing the deliverables, obtaining sign-off from stakeholders, and conducting a post-project review to identify lessons learned.

Define Program Management

Program management is coordinating and aligning multiple projects to achieve a common goal or set of goals. The critical characteristics of program management include multiple projects that are closely related and have a common goal, a defined start and end date, and a specific budget. The program management goals are to align the projects, manage their interdependencies, and achieve the overall program objectives.

The differences between program management and project management include:

1. Program management focuses on the overall program goals, while project management focuses on the specific project goals.
2. Program management involves coordinating and aligning multiple projects, while project management involves managing a single project.
3. Program management requires more coordination and communication than project management.

To build on the project example, there may be a program that consists of projects to build the desalination plant, expand pipelines for water delivery, and expand reservoir capacity to hold additional fresh water.

The steps involved in managing a program include:

1. Define the program: The program goals and objectives are developed, along with a roadmap to achieve them. A program business case, program charter, and program plan are developed.
2. Deliver the program: The program management plan is followed, and the individual projects are managed from initiation through closing. Their benefits are delivered, transitioned, and sustained.
3. Close the program: This includes finalizing the program deliverables, obtaining sign-off from stakeholders, and conducting a post-program review to identify lessons learned.

Define Portfolio management

Portfolio management is managing projects, programs, and other work to achieve strategic goals and objectives. The critical characteristics of portfolio management include a defined set of strategic goals and objectives, a defined set of projects and programs, and a specific budget. Portfolio management goals are to align the work with the organization's strategic goals, optimize resources, and achieve the overall portfolio objectives.

The differences between portfolio management and program management include:

1. Portfolio management focuses on aligning the work with the organization's strategic goals, while program management focuses on aligning multiple projects to achieve a common goal.
2. Portfolio management involves managing projects, programs, and other work, while program management involves coordinating and aligning multiple projects.
3. Portfolio management requires more strategic thinking and decision-making than program management.
4. Unlike project and program management, portfolio management is ongoing.

To build on the water program, there may be a portfolio of all water projects and programs, including those already mentioned, plus all other projects within a given water district. The portfolio would include projects to meet the water district’s strategic goals.

The steps involved in managing a portfolio include:

1. Define the portfolio: Initiation starts with the release of a strategic plan. It defines how disparate projects and programs will be managed. Portfolio initiation includes validating the strategy and identifying the projects, programs, and other work to be completed.
2. Plan the portfolio: This includes creating a portfolio plan that outlines the steps that need to be taken, the resources required, and the timelines for completion. The individual projects, programs, and other work are reviewed in more detail.
3. Execute the portfolio: The projects, programs, and other work are started and completed. The portfolio’s health is measured periodically, and environmental changes may indicate a need for adjusting the portfolio components.
4. Optimize the portfolio: This step includes ensuring that resources are available when needed and how they are best applied to the portfolio components. Optimization may be performed regularly or as components start, deliver, and end.
5. Monitor and control the portfolio: The purpose of this step is to continue checking for portfolio changes and making them as necessary and ensures that the components adhere to the portfolio plan and other organizational standards.

In conclusion, project, program, and portfolio management are three different but closely related concepts essential for organizations to achieve their goals and objectives effectively.  Understanding the differences between these three concepts is crucial for anyone managing projects, programs, and portfolios. Project management focuses on completing a specific project on time, within budget, and to the project sponsor’s satisfaction. Program management coordinates and aligns multiple projects to achieve a common goal. Portfolio management focuses on aligning the work with the organization's strategic goals, optimizing resources, and achieving the overall portfolio objectives. Organizations must understand and apply these concepts to effectively manage their projects, programs, and portfolios.