5th Edition PMBOK® Guide—Chapter 1: The Relationships Among Projects, Programs, and Portfolios


In this blog post, I discuss the topic of the relationships among projects, programs, and portfolios.

1. Definitions of a Project, Program, and a Portfolio

a. Project

We’ve dealt with the definition of a project in the blog post for January 9th. Let’s compare it in the chart below with the definitions according to the 5th edition of the PMBOK® Guide of a program and a portfolio, which are larger units of management within an organization.

Fig. 1. PMBOK® Guide Definitions of Project, Program, and Portfolio

Level

Definition

Project A temporary endeavor undertaken to create a unique product, service, or result.
Program A group of related projects, subprograms, and program activities managed in a coordinated way to obtain benefits not available from managing them individually.
Portfolio Projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives.

b. Program

The key words in the definition of a program are “related” and “coordinated”. An example from the real world would be an aerospace company that makes different kinds of aircraft. The design of one particular type of aircraft would be handled as a program, and the design of parts of that aircraft, such as the engine, hydraulic system, electrical system, fuselage, etc., would each be a separate project. It should be clear that these projects are all related because they are all parts of the same aircraft, and they should be coordinated for that very reason.

For a visual explanation of the relationship between a project and a program, let’s take a look a conceptual scheme of a program that includes, let’s say, three projects and a subprogram that is outside of the scope of the discrete projects in the program.

Fig. 2. Conceptual diagram of a Program

c. Portfolio

The key words in the definition of a portfolio are “strategic objectives.” Elements of a program are related internally through their link to the same business objective, whereas elements of a portfolio are related externally through their link to the overall strategic objective. An example from the real world would be an aerospace company that makes different kinds of aircraft. The design of one particular type of aircraft would be handled as a program, and the design of aircraft in general would be handled as a portfolio. The elements of the portfolio may be independent of each other in terms of their design, but they will be related to the same strategic goal (gaining market share in the aerospace industry).

Let’s take a visual look a conceptual scheme of a portfolio made up of a project, two programs and a subportfolio.

Fig. 3. Conceptual diagram of a Portfolio


Hmm … looks very familiar, somewhat like the conceptual scheme of the Program, right? However, here’s the important difference between the two schemes. The projects and related work that are managed as a part of the program are thematically related, indicated in Fig. 2 by all boxes being a shade of blue. The projects and program under the portfolio, on the other hand, may be independent, as indicated in Fig. 3 by the boxes being different colors. But of course they COULD be interdependent or even directly related.

However, projects in a program CANNOT be independent in the same way. Here’s a summary of the possibilities based on the definitions.

Fig. 4. Summary: Relatedness of program/portfolio components

Level

Directly related/

interdependent

Independent

Program

Yes

No

Portfolio

Possibly

Possibly

An example of a program would be the design of an aircraft, with the different projects being the design of the various systems within the aircraft. These would obviously have to be coordinated since they are all parts of the same aircraft, and changes in one system might have an impact on the other systems.

An example of a portfolio with interdependent or directly related components would be the design of a whole series of aircraft, with each program being one type of aircraft.  This would be especially true if the various aircraft shared components or even whole sub-systems.

An example of a portfolio with independent components would be an energy company that has facilities that produce energy from various sources including wind, solar, fossil fuels, and nuclear materials. Setting up production of these would be independent because the energy sources would require vastly different methods (or tactics) of production, but they would all be related strategically to company’s objective of profitable energy production.

This concludes the discussion of the difference between a project, program, and portfolio.

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One Response

  1. What’s up, just wanted to say, I liked this article.
    It was helpful. Keep on posting!

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