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Project Management: Part 4 – Basic concepts Project / Program / Portfolio

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For a large organisation, projects can be gathered in two kinds of collections: Program or Portfolio.

The PMI definitions are as following PMBOK (4th Ed.):

A “Program is a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually. Programs may include elements of related work outside of the scope of the discrete projects in the program.”

 “A portfolio refers to a collection of projects or programs and other works that are grouped together to facilitate effective management of what work to meet strategic business objectives.”

 An easy way to figure it out is to imagine portfolios and programs as containers that can include projects.

Portfolio, program and project organization

A portfolio is at business strategy level. Its scope is larger than any program or project within the organization and has strategic goal to reach. Thus it contains a set of project or programs that complete each other for that purpose. Nevertheless, those programs and projects are not necessarily related or dependent.  The main raison for creating a portfolio is to centralize, synchronize and prioritize all the components needed to carry out the business goal.

A program is a component of a portfolio that groups a set of related projects that need to be coordinated to accomplish a larger target than the target of the projects individually.

Let’s apply this to an example:

Suppose a developing country “Alpha” has identified tourism as major axe to develop to enhance its economy. “Alpha” has identified also that a large number of pediments that act against this opportunity such as:

  • Bad infrastructure: few international airports with limited capacities, missing highways and roads.
  • No easy access to natural parks and historical sites
  • Limited high standing Hotels.
  • Poor marketing
  • Restrictive lows
  • Etc…

So “Alpha” creates the following projects (to keep it simple, we will stop at this infrastructure and hotels level)

  • Portfolio: “Welcome to Alpha”

    • Portfolio1.1: “Transportation program”

      • Program 1.1.1: Highway between cities “A” and “B”

        •          Project Highway Section 1 (“A” to “N”)
        •          Project Highway Section 2 (“N” to “M”)
        •          Project Highway Section 3 (“M” to “B”)

      • Project 1.1.2: Highway between cities “A” and “C”
      • Project 1.1.3: Enlarge the international airport of city “A”
      • Project 1.1.4: Add a road from city “B” to the historical site “H”
      • Project 1.1.5: Add a road from city “C” to the natural site “N”

    • Portfolio1.2: “Hotels”

      • Project 1.2.1: Build Airport hotel in city “A”
      • Project 1.2.2: Extend hotel “X” in city “B”
      • Project 1.2.3: Build hotel near the site “N”
      • Project 1.2.4: Build hotel near the site “P”
      • Project 1.2.5: Build hotel in city “C”

The role of the portfolio managers is to coordinate and prioritize all these programs and projects by providing all the necessary infrastructure, processes and assistance needed to facilitate the accomplishment of the main goal.

But one has to keep in mind that applying this model of projects hierarchy requires a maturity in the organization. In fact, a bad implementation or misunderstanding can lead to more chaotic results and can go against the original purpose for which it was undertaken.

See you later.

Sif E. Elharti,


Written by selharti

March 6, 2010 at 2:52 am

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