Portfolio management, program management, and project management all sound very similar yet serve different functions. Can you describe the difference? Nelson Biagio Jr. offers up a helpful explanation on how we can differentiate them.
He says the best way to think of the three is as pieces of a hierarchical pyramid:
At the top of the pyramid is portfolio management, which contains all of the projects and programmes that are prioritised by business objectives. Below that is programme management, which contains numerous projects that are interrelated, since they support a particular business objective. Programmes consist of multiple projects, but projects can be independent and simply part of the portfolio. Projects differ from programmes in that they are strictly tactical in nature.
Portfolio management is characterized by business leadership alignment by which priorities are set through an optimization process and risk and reward are balanced. Biagio humorously indicates that if you are a portfolio manager, that makes you the “King of the Project Management Forest!” Program management is meanwhile distinguished by business sponsorship. High level business needs dictate programs, which generally consist of lots of smaller projects and span multiple functions in an organization. As such, program management is general management-oriented. This leaves project management at the bottom, which is all about strategy-driven deliveries. Projects take the inputs brought down by programs and devise a tactical plan around them. The tactical considerations of things like budget and timetable most often define the final success of projects for the organization.