The world of project management is full of confusing terms. The distinction between portfolio vs program vs project is just one of many that some people struggle with. However, understanding and using them correctly is invaluable. Don’t worry. This article is here to dispel any doubts you might have about these three fundamental phrases.
Aside from explaining the portfolio vs program vs project conundrum, you will see examples for each term. It’s a good idea to start with the smallest one and work our way up. In this case, it means shedding some light on a project.
Project in a nutshell
To understand the term “project,” it would be wise to get familiar with its definition. It’s “a temporary endeavor undertaken to create a unique project service or result.” In other words, a project is an undertaking that starts and ends in a given time frame, focusing on producing a specific output in the form of pre-established deliverables.
It’s the answer to the question of what needs to be done to deliver the desired outcome. Projects have certain defining characteristics. They are unique, specific, purposeful, and time-bound.
What do projects consist of?
While the specifics of each endeavor are unique, there are certain elements that all of them share. Here’s a short list of the most important ones:
- Success criteria,
- Scope of work,
Without these aspects, it would be difficult to monitor progress, estimate workload and timelines, calculate the costs, or verify the outcome.
Consequently, businesses adopt different ways of approaching project management, also known as project management methodologies. On the practical level, the choice of methodology has huge implications. Each one has different rules, processes, and tools.
Examples of a project
Imagine a company that manufactures tools. For that particular business, a project could be a creation of a new electric drill. In construction, on the other hand, a great example of a project is building or renovating a house. In both cases, it’s a rather large endeavor, but it fits the project’s criteria. Here is a Work Breakdown Structure for such a project:
Naturally, projects don’t need to pertain to physical objects. Project management is ever-present in software development, so let’s switch gears to an example of this industry. In software, a project could be a new feature for one of the cloud solutions.
That was the first part of the project vs program vs portfolio comparison. It’s time to move to the next level – the program.
Program in a nutshell
Organizations of all sizes conduct multiple projects simultaneously. Even though they are separate entities, some are confined to one business area. To regulate actions within these areas better, you need a step above the project. That’s where the program comes into play.
A Program’s definition states it’s “a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually.” As such, the program aims to gather all relevant projects and oversee them holistically.
Furthermore, implementing a program makes it easier to determine whether the projects provide the business with desired opportunities or solve problems.
Similarly to projects, programs are temporary. As soon as its last chunk is complete, the program ends.
Characteristics of the program
We can define four main traits that all programs share. Let’s take a closer look at them:
The first characteristic refers to the fact that programs incorporate multiple projects. Therefore, it’s logical the scope of the program would be extensive. The second one also stems from many elements in the program. Business-wide benefits tend to take a long time to complete. That is why program managers should prepare for this type of initiative to last for a long time.
While projects are specific and focus on distinct deliverables, the encompassing program must be general enough to cover the scope of all the projects in a given area.
Programs support the execution of strategic objectives of the organization. In other words, the scope of the program concerns the bigger picture of a business compared to the lower-level deliverables of a project.
Example of a program
To visualize the differences between a program and a project, how about we expand on the previous examples?
In the case of the manufacturer of tools, a program would entail the launch of a new line of power tools. Each product would be enclosed as its own project, but the entirety of the line-up would constitute a program.
For a construction business, it could be all the houses built or renovated in a particular area of town. An example of a program in the software industry would be an update containing several new features expanding the product.
Portfolio in a nutshell
The Project Management Institute defines a portfolio as “a collection of projects, programs, and other work that is grouped together to facilitate the effective management of that work to meet strategic business objectives.” In other words, a portfolio is a set of various initiatives under a single umbrella.
Managing a portfolio is a continuous process. As it pertains to all the objectives of a business, incoming programs and projects are included in the portfolio as they appear. Crucially, the portfolio’s elements must align with the business’s long-term strategy and objectives.
Key processes in portfolio management
Overseeing an entire portfolio of programs and projects is a tall order, no matter the size of the business. However, there are processes in place that support executives and portfolio managers in making the right decisions regarding the oversight of the portfolio.
Examples of a Portfolio
The tool manufacturer uses a portfolio to manage the entire lineup of upcoming products. As such, all future initiatives will be categorized, prioritized, and divided into smaller units, such as programs and projects.
Similarly, in a construction company, a portfolio will serve a similar purpose for all the houses that need to be built or renovated across the entire business.
In the case of a software product, a portfolio will encompass all projects and programs related to the development of the application.
Managing portfolio vs program vs project – one tool or many?
Most organizations use separate tools to manage projects, programs, and portfolios. However, this approach impedes the coordination of all three levels. When each sphere is in a different tool, making changes, monitoring the progress, and establishing goals take longer and add additional complexity.
On top of that, there is a larger chance of miscommunication between the tools or making a mistake in one of them. That can disrupt the proper alignment of the objectives with the corresponding benefits and deliverables.
With BigPicture, you have a clear view of all management levels: portfolios, programs, and projects. From a comprehensive top-down overview of the entire portfolio structure to the minuscule part of a project, your organization has everything it needs to manage all initiatives in a single place.
Portfolio vs Program vs Project – summary
As you can see, all three terms relate to the management of initiatives in an organization. Hence, it’s worth noting that they relate to each other in the following order.
- Portfolio: all-encompassing, consisting of programs, projects, and other types of initiatives.
- Program: consisting of projects.
- Project: consisting of tasks.
Now you should be able to distinguish between a portfolio, a program, and a project with no issues. You can check out a quick recap of the most important information regarding these three terms below.