Projects, Programs and Portfolio in Context.

I am constantly asked to explain the difference between projects, programs and portfolios. I am posting this short article to try and answer that question.

For more than 50 years, the project management community has strived to distinguish projects from operations; it is now time to include operations to this list.

Typically, organizations perform two main functions: RUN and TRANSFORM. Running the organization is also called Business-as-Usual (BAU), it includes all ongoing activities that enable it to assert their market position. Transforming the organization comprises all the initiatives that will enable the organization to improve their market position.

Operations generate or support the production of products or services that can immediately generate a revenue for the business; they are at the core of the business performance.

A business portfolio comprises all the activities that an organization undertakes, both ongoing and transforming. On the other hand, portfolio management is an ONGOING activity that consists of analysing and optimising this portfolio by selecting the activities, or initiatives, that will constitute the best investment for the available resources. Portfolio direction will balance between running activities and transforming initiatives so that the organization maximises its long-term value through a healthy mix of current and future revenue. This balance varies according to the organizational and market context.

Project portfolio is a subset of the organizational portfolio and cannot be managed independently from the organization’s portfolio.

Whereas both operations and portfolio management are ongoing, mandatory activities, programs and projects are discretionary activities, focused on transformation; these latter activities are not necessary for a firm’s immediate survival, but are essential to ensure its future.

Programs consist of “a collection of change actions purposefully grouped to realize benefits” (Thiry, 2004-2017). A program includes strategy development, business analysis and value management activities, projects as well as transition, integration and operational activities that will ensure the sustainability of the transformation. A program usually starts with one or more strategic objectives that are detailed through its formulation stag. During the preparation stage, alignment and achievability are confirmed through a mix of business analysis and value management activities and the candidate component projects are identified. The deployment stage consists of the delivery and transition of capabilities through projects, as well as the integration of those capabilities into operations and the appraisal of their business value.

Programs are cyclic in nature and the above activities are repeated until the objectives are achieved, or it has been demonstrated that they cannot be achieved. A program cannot be as accurately predicted as a project, but each cycle should be well-defined and yield tangible benefits. Resources are typically projected for the whole program and committed at the end of each cycle, for the next cycle.

Projects should be well-defined from the start; a project charter must include a budget, timeframe and list the main expected deliverables. Each project delivers a set of results that provide new organizational capabilities. The transition of those results into operations can or not be part of the project scope, but it is always part of the program scope. Benefits will occur only after the capabilities have been transitioned.