Eight Distinctions between Portfolio Management & Program Management

A leader of a strategic initiative needs to have an expert understanding of program management and be knowledgeable in the principles and application of portfolio management. He or she needs to be able to intelligently discuss this question:
“What are the differences between portfolio management and program management?”

The following table shows differences along eight use dimensions. In the attempt to write in a concise manner, I acknowledge that I have simplified numerous complex concepts of theory and practice. My goal is to provide useful insights to strategic initiative practitioners.

Why Lump Together Project Portfolio Management and Program Management?

I mentioned that this is a complex topic. One complexity is that some practitioners use the term Portfolio Management to refer to both “Project Portfolio Management,” as well as what I call “classic Portfolio Management.”

It appears to me that Program Management and Project Portfolio Management have more similarities than differences; thus, I grouped them together and contrasted them with classical Portfolio Management.  Do you agree?

Within the project portfolio or program, managers make goal-oriented decisions that are consistent with an intended strategic outcome.  Each treats risk as uncertain events that affect the outcome and are subject to managerial control. The governance processes of Program Management and Project Portfolio Management are similar; for one example, both apply roll-up reporting of the individual components for the purposes of monitoring, control, and decision making.

I encourage you to place the term portfolio management into the search function of an online bookstore; you will get an excellent peek into the rich literature of portfolio management.

What About the Distinctions with Project Management?

The reader should also review A Concise Guide to the Difference Between Projects and Programs for more detail.

Implications for Leaders of Strategic Initiatives

The leader of a strategic initiative is accountable for delivering turning vision into results, and is navigating through considerable ambiguity with strategic thinking skills:

  • A core problem is that “strategic alignment” is only useful in the context of the kind of strategy under consideration. For example, managers of functional strategies tend to be pre-occupied with resource availability and getting work done with assigned resources; thus, strategic alignment and functional mission are nearly identical. Business-level strategies place a higher emphasis on strategic alignment as a selection criterion. I recommend that you follow the below link for definitions of the three types of strategies (functional, business, and corporate).
  • The most successful organizations have fewer strategic programs, and these programs are staffed with the best resources. These successful organizations are skilled at portfolio management; that is, they understand how to invest and disinvest in programs and projects.
  • Strategic initiatives are transformative and involve stakeholders that do not have training in program and project management concepts. All strategic initiatives are programs, but not all programs are strategic initiatives.
  • Experienced professionals don’t always agree on the terms and distinctions.  Standards in project portfolio management and program management are still maturing.

Do these distinctions make sense to you? How can this knowledge help you lead a strategic initiative?

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About Greg Githens

Author, How to Think Strategically (2019) Executive and leadership coach. Experience in driving change in Fortune 500 and mid-size companies through strategic initiatives and business transformation. Seminar leader and facilitator - high-impact results in crafting and delivering strategy, strategic initiatives, program management, innovation, project management, risk, and capturing customer requirements.
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12 Responses to Eight Distinctions between Portfolio Management & Program Management

  1. Pingback: A Concise Guide to the Differences between Programs and Projects | Leading Strategic Initiatives

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  3. PM Hut says:

    Hi Greg,

    This is probably the most comprehensive article distinguishing between portfolio and program management.

    We would like to republish this article on PM Hut, please either email us or contact us through the “Contact Us” form on the PM Hut website if you’re OK with this.

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  9. Ishmael R. Pajibo says:

    Hello Greg
    While researching the differences between project, program and portfolio management, I came across your article. This article provides comprehension into the contrast of the three mentioned terms. Thanks to you, knowledge was enhanced. I am a student at Keller Graduate School of Management, Devry University; reading Business Administration, with a concentration in Project Management.
    Hoping this communication solicits your permission to discussion your article in class, Tuesday September 18, 2012.

    • Greg Githens says:

      I welcome discussion from others. Where do you agree and disagree? You also might want to see a similar article I wrote on this blog on “A Concise Guide to the Differences between Projects and Programs.”

      Note that my focus is on strategic initiatives. A strategic initiatives are programs (thus amenable to program management tools) but not all programs are strategic initiatives.

  10. Michael says:

    Hello Greg,
    I appreciate your article and table here. I teach project mgt introduction and struggle with the breakout definitions of these terms. I have been a project manager and i have been a program manager (training) within an organization. The way I have explained these terms have been in the following order (relying on my organizational development background):
    Program — is managing a segment of work like training, safety or operations that have multiple portfolios with interdependent projects being worked
    Portfolio — is a subset of a program with multiple projects (2 or more) that have interdependencies
    Project — is temporary work that produce an outcome (product) with a definable starting and stoping point (doing “new stuff”)

    I think where I get confused is the distinctions between project portfolio management and an investment portfolio.

    Your thoughts please. Thank you,

    • Greg Githens says:

      You question is one that many people have.

      The highest order (most strategic) concept is portfolios, and portfolios are investment tools that align with the strategy. Here are two real world examples: First, an individual has an investment portfolio with the strategy of reaching retirement with a suitable set of assets (adjusted for risk). Most every person who is planning for retirement is making some sort of active decisions on their investment, and they shift the mix of assets to correspond with risk. A second example of portfolio management is common in firms who are involved in new product development: they make sure their mix of new products has some line extensions and also some breakthroughs. This is also a form of risk management. A portfolio management decision is really a very simple decision: do I invest or do I disinvest?

      They question of whether to invest in a project or cancel one is on that is based on strategy. A good portfolio is diversified (to manage risk) and composed of those assets or projects that have the best value (considering long term or short term perspective).

      Here is a third example. Visual artists often collect their artwork in to a portfolio. They alter the contents of the portfolio so that they can convince as sponsor that their work has merit.

      A program is a collection of projects and other things that are managed together because you get benefits greater than managing them individually. You could think of programs as a superset of projects. Your definition of project is sound.

      A portfolio is not a subset of a program.

      Now, project portfolio management is the collection of all projects and programs. The same principle applies: a portfolio decision is to invest or disinvest (that is, charter or cancel) a project or a program.

      I think that many people in the project management community (including those who write books) are confused about portfolio management and just start making up their own definitions. It would be extremely helpful if they would clarify that they are talking about portfolios of projects versus any other kinds of portfolio. They should never use the term portfolio management when they really are talking about projects. Otherwise, people take a risk of walking into the office of business people who really understand portfolios and sounding ignorant.

      Thanks again for your questions and comments. Does my answer make sense?

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