Effective and efficient project management should be considered a strategic competency within organizations. It enables organizations to:
uuTie project results to business goals,
uuCompete more effectively in their markets,
uuSustain the organization, and
uuRespond to the impact of business environment changes on projects by appropriately adjusting project management plans (see Section 4.2).
1.2.3 RELATIONSHIP OF PROJECT, PROGRAM, PORTFOLIO, AND OPERATIONS MANAGEMENT 1.2.3.1 OVERVIEW
Using project management processes, tools, and techniques puts in place a sound foundation for organizations to achieve their goals and objectives. A project may be managed in three separate scenarios: as a stand-alone project (outside of a portfolio or program), within a program, or within a portfolio. Project managers interact with portfolio and program managers when a project is within a program or portfolio. For example, multiple projects may be needed to accomplish a set of goals and objectives for an organization. In those situations, projects may be grouped together into a program. A program is defined as a group of related projects, subsidiary programs, and program activities managed in a coordinated manner to obtain benefits not available from managing them individually. Programs are not large projects. A very large project may be referred to as a megaproject. As a guideline, megaprojects cost US$1billion or more, affect 1 million or more people, and run for years.
Some organizations may employ the use of a project portfolio to effectively manage multiple programs and projects that are underway at any given time. A portfolio is defined as projects, programs, subsidiary portfolios, and operations managed as a group to achieve strategic objectives. Figure 1-3 illustrates an example of how portfolios, programs, projects, and operations are related in a specific situation.
Program management and portfolio management differ from project management in their life cycles, activities, objectives, focus, and benefits. However, portfolios, programs, projects, and operations often engage with the same stakeholders and may need to use the same resources (see Figure 1-3), which may result in a conflict in the organization. This type of a situation increases the need for coordination within the organization through the use of portfolio, program, and project management to achieve a workable balance in the organization.
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Figure 1-3 illustrates a sample portfolio structure indicating relationships between the programs, projects, shared resources,andstakeholders.Theportfoliocomponentsaregroupedtogetherinordertofacilitatetheeffectivegovernance and management of the work that helps to achieve organizational strategies and priorities. Organizational and portfolio planning impact the components by means of prioritization based on risk, funding, and other considerations. The portfolio view allows organizations to see how the strategic goals are reflected in the portfolio. This portfolio view also enables the implementation and coordination of appropriate portfolio, program, and project governance. This coordinated governance allows authorized allocation of human, financial, and physical resources based on expected performance and benefits.
Organizational Strategy
Sample Portfolio
Program Program Portfolio ABA
Program
B1 C
Program
Project 123456789
Project Project Project Project Project Project Project Project
Operations
Shared Resources and Stakeholders
Figure 1-3. Portfolio, Programs, Projects, and Operations
Looking at project, program, and portfolio management from an organizational perspective: uuProgram and project management focus on doing programs and projects the ¡°right¡± way; and uuPortfolio management focuses on doing the ¡°right¡± programs and projects.
Table 1-2 gives a comparative overview of portfolios, programs, and projects.
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Table 1-2. Comparative Overview of Portfolios, Programs, and Projects
Organizational Project Management
Projects
A project is a temporary endeavor undertaken to create a unique product, service, or result.
Projects have defined objectives. Scope is progressively elaborated throughout the project life cycle.
Project managers expect change and implement processes to keep change managed and controlled.
Project managers progressively elaborate high-level information into detailed plans throughout the project life cycle.
Project managers manage the project team to meet the project objectives.
Project managers monitor and control the work of producing the products, services, or results that the project was undertaken to produce.
Programs
A program is a group of related projects, subsidiary programs, and program activities that are managed in a coordinated manner to obtain benefits not available from managing them individually.
Programs have a scope that encompasses the scopes of its program components. Programs produce benefits to an organization by ensuring that the outputs and outcomes of program components are delivered in a coordinated and complementary manner.
Programs are managed in a manner that accepts and adapts to change as necessary to optimize the delivery of benefits as the program¡¯s components deliver outcomes and/or outputs.
Programs are managed using high-level plans that track the interdependencies and progress of program components. Program plans are also used to guide planning at the component level.
Programs are managed by program managers who ensure that program benefits are delivered as expected, by coordinating the activities of a program¡¯s components.
Program managers monitor the progress of program components to ensure the overall goals, schedules, budget, and benefits of the program will be met.
Portfolios
Definition
Scope
Change
Planning
Management
Monitoring
Success
Success is measured by product and project quality, timeliness, budget compliance, and degree of customer satisfaction.
A program¡¯s success is measured by the program¡¯s ability to deliver its intended benefits to an organization, and by the program¡¯s efficiency and effectiveness in delivering those benefits.
A portfolio is a collection of projects, programs, subsidiary portfolios, and operations managed as a group to achieve strategic objectives.
Portfolios have an organizational scope that changes with the strategic objectives of the organization.
Portfolio managers continuously monitor changes in the broader internal and external environments.
Portfolio managers create and maintain necessary processes and communication relative to the aggregate portfolio.
Portfolio managers may manage or coordinate portfolio management staff, or program and project staff that may have reporting responsibilities into the aggregate portfolio.
Portfolio managers monitor strategic changes and aggregate resource allocation, performance results, and risk of the portfolio.
Success is measured in terms of the aggregate investment performance and benefit realization of the portfolio.
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1.2.3.2 PROGRAM MANAGEMENT
Program management is defined as the application of knowledge, skills, and principles to a program to achieve the program objectives and to obtain benefits and control not available by managing program components individually. A program component refers to projects and other programs within a program. Project management focuses on interdependencies within a project to determine the optimal approach for managing the project. Program management focuses on the interdependencies between projects and between projects and the program level to determine the optimal approach for managing them. Actions related to these program and project-level interdependencies may include:
uuAligning with the organizational or strategic direction that affects program and project goals and objectives; uuAllocating the program scope into program components;
uuManaging interdependencies among the components of the program to best serve the program; uuManaging program risks that may impact multiple projects in the program;
uuResolving constraints and conflicts that affect multiple projects within the program; uuResolving issues between component projects and the program level; uuManaging change requests within a shared governance framework;
uuAllocating budgets across multiple projects within the program; and
uuAssuring benefits realization from the program and component projects.
An example of a program is a new communications satellite system with projects for the design and construction of
the satellite and the ground stations, the launch of the satellite, and the integration of the system. For more information on program management, see The Standard for Program Management [3].
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1.2.3.3 PORTFOLIO MANAGEMENT
A portfolio is defined as projects, programs, subsidiary portfolios, and operations managed as a group to achieve strategic objectives.
Portfolio management is defined as the centralized management of one or more portfolios to achieve strategic objectives. The programs or projects of the portfolio may not necessarily be interdependent or directly related.
The aim of portfolio management is to: uuGuide organizational investment decisions.
uuSelect the optimal mix of programs and projects to meet strategic objectives. uuProvide decision-making transparency.
uuPrioritize team and physical resource allocation.
uuIncrease the likelihood of realizing the desired return on investment. uuCentralize the management of the aggregate risk profile of all components.
Portfolio management also confirms that the portfolio is consistent with and aligned with organizational strategies.
Maximizing the value of the portfolio requires careful examination of the components that comprise the portfolio. Components are prioritized so that those contributing the most to the organization¡¯s strategic objectives have the required financial, team, and physical resources.
For example, an infrastructure organization that has the strategic objective of maximizing the return on its investments may put together a portfolio that includes a mix of projects in oil and gas, power, water, roads, rail, and airports. From this mix, the organization may choose to manage related projects as one portfolio. All of the power projects may be grouped together as a power portfolio. Similarly, all of the water projects may be grouped together as a water portfolio. However, when the organization has projects in designing and constructing a power plant and then operates the power plant to generate energy, those related projects can be grouped in one program. Thus, the power program and similar water program become integral components of the portfolio of the infrastructure organization.
For more information on portfolio management, see The Standard for Portfolio Management [2].
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1.2.3.4 OPERATIONS MANAGEMENT
Operations management is an area that is outside the scope of formal project management as described in this guide.
Operations management is concerned with the ongoing production of goods and/or services. It ensures that business operations continue efficiently by using the optimal resources needed to meet customer demands. It is concerned with managing processes that transform inputs (e.g., materials, components, energy, and labor) into outputs (e.g., products, goods, and/or services).
1.2.3.5 OPERATIONS AND PROJECT MANAGEMENT
Changes in business or organizational operations may be the focus of a project¡ªespecially when there are substantial changes to business operations as a result of a new product or service delivery. Ongoing operations are outside of the scope of a project; however, there are intersecting points where the two areas cross.
Projects can intersect with operations at various points during the product life cycle, such as; uuWhen developing a new product, upgrading a product, or expanding outputs;
uuWhile improving operations or the product development process; uuAt the end of the product life cycle; and
uuAt each closeout phase.
At each point, deliverables and knowledge are transferred between the project and operations for implementation of the delivered work. This implementation occurs through a transfer of project resources or knowledge to operations or through a transfer of operational resources to the project.
1.2.3.6 ORGANIZATIONAL PROJECT MANAGEMENT (OPM) AND STRATEGIES
Portfolios, programs, and projects are aligned with or driven by organizational strategies and differ in the way each contributes to the achievement of strategic goals:
uuPortfolio management aligns portfolios with organizational strategies by selecting the right programs or projects, prioritizing the work, and providing the needed resources.
uuProgram management harmonizes its program components and controls interdependencies in order to realize specified benefits.
uuProject management enables the achievement of organizational goals and objectives.
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