There is often a misunderstanding, and hence a mixed and overlapping use of terms, when it comes to program management. Sometimes a program is called a project. Sometimes a project is called a program. In addition, sometimes project portfolio and program are mistakenly used interchangeably. This article is intended to clarify the main differences and to distinguish the unique aspects of project portfolios, programs, and projects.
A great way to start to think about these is to think in terms of a pyramid hierarchy. At the top of the pyramid is portfolio management, which contains all of the projects and programs that are prioritized by business objectives. Below that is program management, which contains numerous projects that are interrelated, since they support a particular business objective. Programs consist of multiple projects, but projects can be independent and simply part of the portfolio. Projects differ from programs in that they are strictly tactical in nature.
Here is a more detailed look at each:
Portfolio Management One of the key distinguishing features about Project Portfolio Management is that it is a process that is clearly characterized by business leadership alignment. Priorities are set through an appropriate value optimization process for the organization. Risk and reward are considered and balanced, and programs are selected based on their alignment with organizational strategy. Feedback is provided from program and project implementation so that portfolio adjustment can occur, if necessary. Strategic changes can also require portfolio adjustments.
Program Management A key distinguishing feature of Program Management is business sponsorship. Almost by definition, based on decisions made at the Portfolio Management level, programs are sponsored by business needs. The Program takes on the ownership of benefits and is measured primarily based upon achievement of those benefits. Programs can also sometimes have "benefits streams", or sets of interrelated benefits, such as increased R & D capabilities combined with increased market penetration, that cut across functions in the organization. Because programs, naturally consisting of multiple projects, span functions within an organization, they have all elements of a business system, and hence are general management oriented.
Project Management Project Management is most concerned with delivery of capabilities, typically as defined within a program. Projects need to be strategy-driven, but do not own the strategic initiative as does a program. Rather, the project takes inputs and develops and implements a tactical plan. Monitoring along the way and final measurement of success is typically based more on the tactical considerations such as budget and schedule than upon achievement of a strategic business objective.
Now, with the basic distinctions among Project Portfolio Management, Program Management, and Project Management defined, each organization must "personalize" its implementation of these 3 processes within the organization. Some key factors and how they affect choices made about implementing each are as follows:
Industry - Industry provides insights into the stability and consistency of operations. Some industries, like pharmaceuticals, are be very driven by product lifecycles, albeit fairly long ones that include a major regulatory process. Consumer electronics companies are driven by much shorter project lifecycles and rapidly evolving technology, with little regulation. Construction firms are highly porjectized and deal with very stable technologies and products.
Organization size - Generally, greater size requires more formal organization. Without structure, the relationships between strategy, portfolio management, programs, and projects can become blurred and disjointed. The 2 points of focus here are to have well-considered organizational frameworks for each of portfolio, program, and project management, and then to pay special attention to building strong ties among them for communication, collaboration, and information flow.
Operational Breadth - A more narrowly defined operational capability, such as found in a sales-focused or production focused organization, will tend to require less formality, and information will flow more freely among portfolio, program, and project management processes. In organizations that are well-integrated horizontally, containing well-developed core competencies in R&D, marketing, production, distribution, and the like, there will be natural separations that need to be managed. This will make program management especially challenging, since it is likely to cross those boundaries.
Strategy - Like the various operational considerations, the strategy will effect organization of portfolio, program, and project management based on how complex it is. One key consideration not mentioned above is strategic alliances, which can greatly effect how tightly managed and how structured these processes need to be.
Standards for Portfolio, Program, and Project Management Standards for Project Portfolio Management, Program Management, and Project Management do exist, and clear definitions can be found within. The worldwide Project Management Institute (PMI, www.pmi.org)) has developed and published the following standards (free for members):
The Standard for Portfolio Management The Standard for Program Management A Guide to the Project Management Body of Knowledge (PMBOK® Guide)—Third Edition
Program Management focuses on achieving an organization's long term interests, enacting its strategy, or reaching its vision. It includes identifying the needed organizational steps to enact the strategy or reach the vision and then turning those critical steps into a change program made up of multiple, manageable projects.
Program Management ensures that all projects have the resources needed to complete their unique tasks on target, on time, and on budget. It also ensures that projects have necessary coordination and cooperation to keep them from colliding, conflicting, taking resources from each other, etc.
Program Management includes formal Risk Management, systematically identifying and mitigating possible risks to the change program. In addition, it flexes projects around the highs and lows, ebbs and flows of the business to keep the right overall amount of organizational energy focused on completing the change program.
In short, Program Management exists to ensure that needed changes are systematically and successfully integrated into the day-to-day operation of the company.
The second management discipline is Project Management. Project Management focuses finite resources on the completion of its unique assigned work on target, on time, and on budget.
It gives the capability to bring concrete results to a defined task in a defined time period. For example, we might use Project Management to guide the installation of a new telecommunications system, or to plan and control the alteration of the employee performance systems in a merger to ensure that employees of both companies were paid from the same compensation structure.
Project Management needs to be done in a similar fashion in all projects to enable Program Management to understand overall status or progress toward its enacted strategy or desired vision.
Failure to adopt a uniform Project Management method will ensure that the organization will not do a good job managing change, and that the projects that the organization attempts to run simultaneously will not be comparable, making overall Program Management practically impossible to do well.
The use of Program and Project Management allows the organization to assign clear responsibilities and accountabilities for enacting strategy or reaching a desired vision.
Of course the ultimate responsibility and accountability for any change program rests with the CEO. The CEO can delegate the day-to-day work of Program Management to another executive team member with both the needed experience/capability and organizational rank/credibility. Projects can then be assigned to other team members who have the capability to make the project successful.
For Red Zone Program and Project Management to be effective, we believe that both the program and project managers should be formally appointed and should show up on the firm's organization chart. There should be a direct attachment between the Program Manager and the CEO. It is also recommended to link a Steering Committee above the Program Manager.
Generally, the members of the Steering Committee are the CEO and his direct reports, although on some occasions, other members might be added depending on the nature of change program.
So there you have it, the two most valuable tools for managing an organizational change on target, on time, and on budget. Program and Project Management have what it takes for effective change. Where are you and your organization in developing needed Program and Project Management competence?
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