If you’re looking for new ways to manage your projects that improve alignment, accountability, and execution, you might consider portfolio management vs. project management.
In this article, we'll discuss the key differences between portfolio management and project management so that you can decide which approach is best for you.
What Is Project Portfolio Management?
Project portfolio management (PPM), or simply portfolio management, refers to the techniques involved in managing a collection of projects. Whereas program management involves managing a group of related projects or projects that inform each other, projects in a portfolio are not necessarily related to one another (although they could be.)
As a portfolio manager, you are responsible for ensuring that your organization’s projects are aligned with the company’s strategy and objectives and that each project in the portfolio is properly resourced and managed. This can be quite the challenge, and often becomes a major pain point for portfolio managers.
Portfolio management is useful because it offers a big picture view for both leadership and the project teams involved. Often, the portfolio manager is part of a project management office (PMO) that is responsible for centralized management of projects, including prioritizing projects.
A portfolio may comprise various types of projects, such as new product development, marketing campaigns, or even IT initiatives. The portfolio manager's job is to ensure that the portfolio achieves the desired results.
Why Companies Use Portfolio Management
There are several reasons why companies might choose to use portfolio management:
- They may want to better align their projects with strategy, optimize available resources across the organization, or simply improve their project selection process so they’re focusing on the right projects.
- Portfolio management can also help companies prioritize and track initiatives, giving a high-level view into the milestones and overall progress of key projects and deliverables and offering accountability.
- Additionally, analysts may use portfolio management to assess organizational health by analyzing a company’s project mix and execution performance metrics.
What Is Project Management?
By contrast, project management is the process of managing a single project throughout the project life cycle. A project manager is responsible for ensuring that a project is completed on time, within budget, and to the required standards.
Although project management is focused on a single project, proper project management does involve some degree of strategic planning to ensure the project timeline matches the business’s strategic goals.
As a company matures, it may decide to move to portfolio management to understand the big picture view of its projects. Understanding the strategic intent of each individual project in the portfolio of projects is a useful prerequisite for evaluating a group of projects against business objectives.
While project management is used for one-off projects, such as building a new factory or launching a new product, it’s built on task management and real-time dependencies that may challenge the planned outcome.
Project management software and other project management tools can be used to optimize efforts and ensure things remain streamlined across everyone involved.
Why Companies Use Project Management
There are several reasons why companies might choose to use project management methodologies:
- Project management can help businesses save time and money through proper resource management, ensuring that planned timelines and strategic objectives are met.
- Project management can help businesses to improve communication and coordination between different departments, team members, and stakeholders while implementing digital projects.
- Smaller companies with fewer or less complex projects to manage may opt for project management over portfolio management for the sake of simplicity. They may not be at a stage of maturity where they would benefit from aligning their projects with an overarching business strategy.
Choosing The Right Approach For You
So, which is the right approach for you—portfolio management or project management?
The answer depends on the nature of your business and the nature of the projects you’re working on. (And you might want to also read up on the difference between task management and project management.)
If you have multiple projects underway at any given time, portfolio management may be the best approach. Portfolio management saves you time and money by ensuring that projects and project goals are aligned with business goals and that resources are used efficiently across the organization. If you’re a portfolio manager, consider options for project portfolio management software or apps.
If your new project is a one-off, project management may be the best approach. Project management improves communication and coordination between different departments and optimizes resource allocation and forecasting on the project level.
Ultimately, the decision comes down to what's best for your business and your projects. If you're ready to get started with project management, check out our article on 7 ways to sell the value of project management to your org so you can get your team on board.
And if you want to stay up-to-date on all the ways to implement project and portfolio management, subscribe to The Digital Project Manager newsletter and check out my blog and newsletter.