Many organizations have multiple simultaneous projects. As a result, keeping the overview is quite a challenge: how does each project contribute to the strategic goals? To ensure that goals can be achieved, good project portfolio management is crucial. However, for an organization to be able to execute this successfully, we need to start with the basics: understanding how projects, programs and portfolios differ but also how they relate. Then, organizations can get started with creating and maintaining an overview.
We start at the lowest level: projects. A project is, just like a program, a temporary enterprise, and is intended to achieve a predetermined result. Within each project there is, in addition to a goal, a budget, time schedule and tasks, a project team working on the project.
Multiple projects can together form one program. Just like a project, a program has a specific duration. It consists of multiple projects. The areas of focus of these projects may differ and be implemented by different departments, but they serve a common goal that cannot be achieved without merging the projects. For example, if a company wants to launch a new product, it requires different projects in the development, sales, marketing and distribution departments. In such case it is useful to have a program manager to keep an eye on the status of the projects in his program. He also ensures that the common goal of the program is always top of mind.
Finally, there is the overarching portfolio, which unites the various projects and programs within an organization. The projects and programs do not necessarily have to be interrelated in order to fall within one portfolio, but all work towards the same strategic objectives. An example: a commercial company has profit maximization as goal. There are several separate projects and different programs that can ensure this. By putting these projects and programs together in a portfolio, there is one overview of the initiatives that work towards this goal.
More than one portfolio
That does not mean that there is only one portfolio in an organization: under the umbrella portfolio there are often several portfolios, within different layers of the company, such as at departmental or even business unit level. Using this structure, projects and programs are grouped for which one particular manager is responsible. By using portfolios at various levels in the organization, responsible managers can more easily manage the set of projects and programs while keeping the big picture in mind.
Start from the beginning
To get the focus on the big picture, insight is required. Get started with creating a centralized overview of the various projects and programs. Determine which initiatives contribute to the strategic goals and prioritize. The projects and programs then in turn become part of one or more portfolios. Subsequently, constant monitoring must be carried out to ensure that the portfolio is still consistent with business objectives and all stakeholders are up to date with the project portfolio status. Finally, using clear reports will give management the required information to manage the project portfolio successfully.