Differences of Project , Program , and Portfolio Management
When I read Project management book and watch course every time 3 words come across to me: Project, program, and portfolio.
I know definitely, you have a basic knowledge of theirs. However, sometimes differences between them are confusing. In the last blog, I talked about comprehensive project management and manager. Now I try to inform you about differences in program, portfolio, and project.
Before defining each part of management, it is important to know that these 3 managements are interconnected with one another`s.
Before starting the topic just imagine the interconnection of 3 managements types just like a Matryoshka doll 🤨
Project management and Project manager :
I will inform a brief overview of this part because I have written about this part of my last blog.
The project is temporary in that its have start and finish, it is unique, has scope and resources. People who know each other or not, it doesn`t matter, work together.
Project management is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements. Maybe this formal definition but for my mind, it is a simple definition for project management.
As I mentioned before, project management has phases: Initiation, Planning, Executing, Monitoring and Controlling, Closing.
Project manager:
A project manager is a person responsible for successfully overseeing a project from start to finish. A project manager, with the help of their team, is charged with multiple responsibilities that span the five project phases of a project life cycle (initiating, planning, executing, monitoring, and closing).
Program management and manager:
A program is a group of related projects managed in a coordinated manner to obtain benefits not available from managing them individually. Program management is the application of knowledge, skills, tools, and techniques to meet program requirements. Organizations with mature program management are far more successful than those without it, according to our research. (PMI)
Program management includes multiple projects or roughly we can say to for clearly understand the meaning of program just thinks a bunch of projects.
Maybe these definitions can not help, that`s why I wanted to quote when I learn program management it was really helpful.
A program manager is like a scout looking out across the organization for opportunities to create more value for the business and grow revenue. Program management takes the long view, assessing project teams, and managing multiple projects, often with a focus toward the future.
Project portfolio management(PPM):
The invisible side of the iceberg is portfolio management or the smallest matryoshka doll (but with the biggest duty).
A portfolio is a collection of projects and programs and others` work that is grouped together for ease to effective management of that work to meet strategic business objectives.
In general terms, portfolio management is the science of decision-making about how to invest your money. The concept includes strategies and policies for matching investment selection to an individual’s objectives, risk tolerance, and asset allocation requirements. All portfolio management strategies seek to balance risk against performance.
Although portfolio management strategies vary, they generally fall under four categories:
- Active
- Passive
- Discretionary
- Non-discretionary
Active portfolio management
Active portfolio management requires a high level of expertise in the markets. A portfolio manager implementing an active strategy primarily aims to generate better market returns than the market. The strategy requires a quantitative analysis of the market, broad diversification, and a sound understanding of the business cycle.
The biggest benefit of active strategies is the potential for generating market-beating returns.
Passive
Passive portfolio management isn’t concerned with ‘beating the market’ because its proponents subscribe to the efficient market hypothesis. In other words, they believe fundamentals will always be reflected in the value of the underlying asset. Investors who seek to minimize risk often prefer passive strategies. Maybe “ The biggest risk is not taking a risk” who knows :D.
Discretionary
A discretionary(arbitrary) approach to portfolio management gives the fund manager complete control over their client’s investment decisions. The discretionary manager makes all the buy and sell decisions on behalf of their clients and utilizes whatever strategy they think is best. This type of strategy can only be offered by individuals who have extensive knowledge and experience in investments. Clients who use discretionary managers feel confident in handing over their investment decisions to an expert.
The primary advantage of discretionary investing is that you’re handing over all your investment decisions to an expert. This tends to make life a lot simpler, especially if you agree with your manager’s buy and sell suggestions.
Non-discretionary
A non-discretionary portfolio manager is essentially a financial adviser. They will give you the pros and cons of investing in a particular market or strategy, but won’t execute it without your permission. This is the primary difference between a non-discretionary approach and a discretionary approach.
The primary benefit of non-discretionary investing is it gives you access to a financial expert without relinquishing control of your investment decisions.
After talked a brief overview of each management now let`s talk about what exactly is differences among them?
Project management versus Program management
A project is designed for a temporary organization to deliver a particular output. It has an exact start and finish time (deadline). Also, after finish the project, members of a team can be separated if they want. Project management is a bit more tactical than program management: it mainly focuses on the operational elements of the project such as meeting deadlines, staying within budget, and completing
deliverables.
However, programs include a lot of projects, and it is designed for long-term purposes. A program manager needs to articulate the goals and objectives of the program and how it will impact the business.
Program management versus Portfolio management
The difference between program management and project PPM is a little harder to notice, but there are distinct differences between these two practices as well. Mainly, program managers are responsible for maintaining budget and monitoring risk but only at the program level. Project portfolio managers need to worry about the budget and risk of multiple programs, along with future projects and overall business goals.
The last important thing is program management is a bunch of related projects. However, portfolio management contains related and non-related projects/programs.
If you read the whole blog you may stick one thing: Wait, wait why do not you talk about differences between project and portfolio? Because as I mentioned before, these 3 managements are all about interconnection.(Matryoshka doll). If you know project and program`s differences it`s enough to differentiate project versus portfolio.
I hope I`ll get feedback from you about which topic do you want to write for the next blog))
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