Distinguishing Portfolio Management, Program Management, and Project Management

There is often a misunderstanding, and hence a mixed and overlapping use of terms, when it comes to program management. Sometimes a program is called a project. Sometimes a project is called a program. In addition, sometimes project portfolio and program are mistakenly used interchangeably. This article is intended to clarify the main differences and to distinguish the unique aspects of project portfolios, programs, and projects.

A great way to start to think about these is to think in terms of a pyramid hierarchy. At the top of the pyramid is portfolio management, which contains all of the projects and programs that are prioritized by business objectives. Below that is program management, which contains numerous projects that are interrelated, since they support a particular business objective. Programs consist of multiple projects, but projects can be independent and simply part of the portfolio. Projects differ from programs in that they are strictly tactical in nature.

Here is a more detailed look at each:

Portfolio ManagementOne of the key distinguishing features about Project Portfolio Management is that it is a process that is clearly characterized by business leadership alignment. Priorities are set through an appropriate value optimization process for the organization. Risk and reward are considered and balanced, and programs are selected based on their alignment with organizational strategy. Feedback is provided from program and project implementation so that portfolio adjustment can occur, if necessary. Strategic changes can also require portfolio adjustments.

Program ManagementA key distinguishing feature of Program Management is business sponsorship. Almost by definition, based on decisions made at the Portfolio Management level, programs are sponsored by business needs. The Program takes on the ownership of benefits and is measured primarily based upon achievement of those benefits. Programs can also sometimes have “benefits streams”, or sets of interrelated benefits, such as increased R