1. Introduction

If we take the example of a company that has just finalized its strategic planning cycle. We notice that strategic goals are established, be it new goals or updated ones. Goals could be penetrating a new market, increasing brand awareness, or launching a new product line.
The company would then note its new goals in a strategic plan, from which a set of initiatives is created to serve the strategic goals. For example, for increasing brand awareness, initiatives could be designing a marketing campaign, open exposure to new markets, designing a new product, serving ads, and others.
Now comes the fun; those initiatives will be grouped into portfolios, programs, and projects.

2. Portfolio

All companies, whether big or small, have, implicitly or explicitly, created a portfolio to showcase the capabilities and strengths of the business’s services.
Portfolios serve investment decisions. They form the tracks a company has towards its vision; in other terms, they highlight the mission an organization adopts to reach its vision. A common decomposition of initiatives under portfolios is by geographical locations e.g., AT&T might decompose its portfolios into west, east, etc. for network coverage. Other common groupings include market, age, and product. So, Portfolios, by definition, group endeavors under an investment track towards one or more strategic goals.

For the purpose of example, we will consider a company ABC with a strategic goal of penetrating the banking industry in the U.S. using a new banking software system. Taking the assumption that this company has a worldwide presence, it will create a new portfolio for the U.S. and group the software development endeavors in the U.S. under it. Noting that other groupings can exist i.e., by bank or by market.

Because Portfolios serve investments, they have to constantly compete for budget and human resources, amongst others. Resources are given to portfolios with higher priorities. In our example of company ABC, we might have endeavors grouped under our portfolio such as a mobile app development, website design, dashboards design, new ATM system, new banking system, etc.
Noting that not all portfolio components are usually covered by the budget. So, the portfolio manager would need to prioritize the components and choose the ones with higher priority, given mainly the budget and human resources constraints. For example, if the portfolio was given a budget of 2 M USD; considering that it cannot undertake all components within this budget, and if the lowest project’s priority is for the website, then the portfolio manager will remove the website from the active components and leave it aside for the next budgetary cycle during which he or she can get the necessary budget. We will cover prioritization in a future article.
A reminder here, even when the company thinks it does not have a portfolio, it will be serving one implicitly.

3. Program

Moving forward, some of the initiatives, or endeavors, under a portfolio, would have interdependencies. And this is where the concept of programs comes in place.
Such endeavors usually provide some sort of outcome or benefit to the organization. In our example of company ABC, endeavors could be building a mobile application and a website to promote the new product or designing new intuitive dashboards to ease the lives of the management in banks.
In the above example, the three projects could be interdependent; they could use the same backend system (APIs) and the same database schema. They could even have reusable UI components and libraries. So, can they be grouped under a program?
Well, not yet. Endeavors grouped under a program need to deliver greater benefit to the company than if they were undertaken separately. In our case, using the same backend system, database, and UI components, can significantly decrease resource usage to develop each system one time instead of duplicating efforts for each project. It can as well enhance the product by having less parts to maintain and a better troubleshooting and fixing mechanism. Eventually, this will lead to a greater ROI, a more rigid SLA with customers, and a greater market penetration. So, yes, those endeavors can be grouped under a program.

4. Project

Till now, we have defined a portfolio and a program. Let us continue with defining a project. A project can serve under a portfolio or a program. If it has interdependency with other components that leads to a greater benefit, it can be grouped under a program, otherwise, under a portfolio. If the project does not serve neither a portfolio, nor a program, then it should be terminated because it does not serve the company since it does not provide benefit and it does not fit to a certain strategic goal. So, strategic alignment and value delivery are missing.
A project is considered as an endeavor with clear time boundaries; meaning a start and expected end dates. It balances the 4 pillars of time, cost, scope, and quality throughout its lifecycle e.g., if you have a budget cut, you need to chip off from other pillars i.e., removing features, hence shrinking the scope, or lowering the quality of the delivered output. Projects optimize the delivery of business value to the operational entities, where the business value will be acquired; for example, by using the delivered product.
Projects in our example include designing a website, building a mobile app, building banking dashboards, and many others.

5. Conclusion

The size, complexity, or magnitude of an endeavor does not make it a portfolio, program, or project. So, a portfolio is not a big program, and a program is not a big project. Differentiating between the three is what we have covered in this article. You can check the next post which highlights the difference between PMP, PgMP, and PfMP certifications.

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