Project Portfolio is usually understood as group of projects that are executed in one company. They don’t need to concern only one topic. They don’t need to be connected. Sometimes they are managed by one person, sometimes by many people. So, there is no one and only exact definition.
- What are elements of Project Portfolio?
- How many projects are in Project Portfolio?
- Who manage Project Portfolio?
- How to report Project Portfolio?
- To whom report Project Portfolio?
- Why Portfolio matters?
- Differences between Project Management and Portfolio Management
- Differences between managing Portfolio and Program
What are elements of Project Portfolio?
Project Portfolio is usually understood as all projects in the company. In big companies you may have many projects concerning similar topic. Projects concerning similar area are usually gathered in one Program. As companies may have different sectors that they are addressing with their products and services, in one company there may be many Programs.
We can have Hi-Tech company that specializes in making navigation equipment. They address Defense and Civil Industry which differ a lot especially considering requirements, quality standards and procedures and it is understandable that projects are divided into two Programs: Defense and Civil.
How many projects are in Project Portfolio?
Number of Projects in the Portfolio may have very wide range. Even a few projects can be a Portfolio.
In small companies there may be just a few projects and still they are considered as Portfolio. For some of you it is not really a Portfolio – just a few projects – it is not worth to name it like this. But remember that for the Owner and her/his employees it is what they are making profit and need to manage it. In that case they still must gain control and have a bigger picture. Portfolio approach is very important to them. Why so? If you have Portfolio of 100 projects (let’s assume) – profitable on almost the same level- and you must pause or terminate the project. What then? If it is not the most profitable one – you can manage (it is 1% of projects after all) to cope with that situation. If you have 5 projects it makes a huge difference and it can be a game changer for the small company. It’s 20% of all your projects!
Who manage Project Portfolio?
Project Portfolio is usually managed by Portfolio Project Manager. You do not really need this job title to manage the Portfolio. Imagine that you have a big pot of soup. This is your Portfolio. Inside it there are all kinds of ingredients – those are company projects. But to make a tasty soup you cannot just put anything inside and mix it together. You need to have proper ingredients in appropriate amounts. Additionally, every company has different vision, mission and strategy which makes every company a soup of different kind. The key role of Portfolio Project Manager is to translate the soup name coming from the company strategic goals to right mix and amounts of ingredients. So, in short make a dedicated recipe for the soup with carefully selected projects.
How to report Project Portfolio?
Project Portfolio may be reported in many ways:
- using office software,
- using dedicated management software.
It may have different form but the most convenient is having a Portfolio Report prepared in paperless or paper form.
In many cases, especially in smaller companies the verbal form is used. But to be more exact and to really know what is going on in projects you should have raw data, analyze them, have your own conclusions on the basis of data and combine them with your unique knowledge about the company. In many cases is not so easy to put in exact parametric form and then present those data together with your conclusions and unique insight in form of a Portfolio Report. Especially verbally.
The crucial aspect is making your Report easy to understand for others. There are many techniques to achieve that. Here are some of them:
- color codes for projects,
- simple criteria,
- clear definition of all parameters,
- additional data to back up Your report.
To whom report Project Portfolio?
Project Portfolio is usually reported to Higher Management of the company. In small companies it can be reported directly to the Owner or Owners. In bigger companies it will be reported to the Board. Many times, to one of the Vice-President.
Companies may have different organizational structure and it will have direct impact to whom the Portfolio is reported. However, if the company is project-oriented organization, the report will go to Higher Management but in vertical manner as the whole company has projects rather than departments. If the company has matrix structure which is more common – there will be departments in vertical and projects that builds the whole Portfolio in horizontal manner. In that case the Portfolio will be usually reported directly to the Board – not to Departments Management.
Why Portfolio matters?
Let’s assume that we have perfect projects, perfect progress. Everything is prepared on time. Projects sticks strictly to their budget regarding time and values of costs and profits. I believe that many managers are laughing a lot reading this. This will be our ideal world.
And now let’s put off our pink glasses. We will see that in almost every project we have problems:
- cost exceeding those estimated,
- delays in the tasks foreseen,
- new risks identified and new materializing,
- team members that are changing their jobs or having some unexpected for employer personal extended leaves.
Now most of you is nodding and faces one or more of those problems every day. If not – please tell us where you work, you will have a lot of volunteers to be your new staff:)
So, those of you, who are nodding, can easily see that having many projects leads to issues on many levels. But still the finances and the resources of the whole company are limited. If we want to succeed in many projects or initiatives, we must juggle them to make it happen. That is why we must know what is going on every project level and then try to manage some problems. Not only within the project but across the whole portfolio, sharing human and financial resources. At the same time, we must make sure that every project in the company is part of a puzzle that, at the end, makes a whole company shaped according to its vision, mission and strategy.
Differences between Project Management and Portfolio Management
Project Management concerns one project and management within limits of that project. While Portfolio Management concerns management of many projects and maintain balance between them with limitations coming from company strategy.
The difference is very well reflected during initiation phase of the Project. You prepare the Project Charter or some similar documents with very reasonable and balanced schedule, budget and resources. From the perspective of this one project as alone entity it is well balanced and everything looks perfect.
Then it comes to “just a formality” – receiving a “green light” from the Higher Management to start the project. And then- baam- your perfectly prepared project receives a “red light”. You cannot see by yourself the reasonable explanation for that having everything so well prepared. You know what you are doing and you know you have done your job well. So, what happened?
Your project is one of many projects in the company and all those projects builds company Portfolio. The “green light” is not just a signature form the Higher Management added to your very valuable work. It is -or should be- guarantee that this project is in line with the company strategy, strategic goals, stays within operational plan and brings important added value to the company. And sometimes, unfortunately, when you assess you project with those new parameters, the outcome is a “red light”.
Differences between managing Portfolio and Program
Programs are mostly a mid level between Projects and Portfolio. Portfolio is all Projects in the company. Those projects may vary a lot in their specific topic. Especially in bigger companies, there are some more specific strategic areas for the company. Those define Programs that gathers projects of one area. In that case, the Portfolio gathers Programs and Programs gathers projects of similar topic.
How the management works? When we have Programs, usually that means we have many projects in the same area and we need to gather them. We need to have a Program Manager assigned to them to get the bigger picture inside the Program. The Program Management has many similarities with Portfolio Management. However, in that case Program Managers reports to the Portfolio Manager to find balance on this additional Program level. Portfolio Manager has a few Program Managers to be in close contact.