What is the difference between project management and project portfolio management?

Both the terms project management, or PM, and project portfolio management, or PPM, are familiar, but you may not be clear on the difference.

Some people presume they're the same thing. But they aren’t.

One supports individual projects and project managers in particular. The other supports a whole range of projects (the portfolio), and the department in charge, known as the Project Management Office or PMO.

Project management versus project portfolio management: PM versus PPM

For a company to develop, it must complete a multitude of different kinds of projects in line with its ambitions and across the organization.

Successful development depends on teams seek mastering both project management and project portfolio management. Let’s take a look.

What is Project Management?

These days, the notion of project management is widespread at every organizational level. But before talking about project management, let's remind ourselves what a project is. A project enables you to get from A to B in a context where the pathway is complicated or even complex. A project refers to all the activities to coordinate and achieve to maximize the chances of reaching point B. There is also the notion of risk in a project.

Without risk, and when the pathway from A to B is under control, it is more of an action plan than a project.

Project management therefore applies to subjects that are complex by definition.It involves using a chosen methodology to organize a significant number of tasks to achieve a specific result within a set timeframe. A project director or project manager runs the project. Their main tasks are to:

• Set clear objectives and deadlines;
• Assign tasks and responsibilities to teams;
• Plan, monitor, and update milestones and deadlines;
• Regularly check how the project is progressing in terms of the schedule, budget, constraints, and risks;
• Drive teams and coordinate energy to successfully complete the project.

A project manager is like the conductor of an orchestra. They combine and control the ways and means required to effectively project manage. They coordinate different tasks and team members with resources and constraints to ensure project goals are met on time and within budget. Project managers need technical know-how as well as management and organizational skills. On the other hand, their scope or vision is often limited to factors that have a direct impact on the smooth running of their project. Nothing else matters. Project management focuses on a restricted, very specific scope.

What is Project Portfolio Management?

Project portfolio management involves organizing and running a group of projects. Portfolios may contain strategic projects, IT projects, innovation projects, operational excellence projects, to name a few. For example, a portfolio could include all projects relating to the company’s digital transformation.

Once you reach a certain number of projects, it’s essential to create a Project Management Office or PMO. A PMO is a department within an organization that focuses on managing and coordinating the portfolio, without getting into the nitty gritty of projects on a daily basis.

The PMO’s principle mission is to conduct the orchestra, ensuring the projects advance in harmony. The fundamental challenge is implementing a rigorous prioritizing and scheduling process, coordinating projects with each other, while also proactively managing risks.

Project management focuses on the day-to-day methodology and operational performance, whereas portfolio management takes a more global view of governance and steering to ensure the organization continues to develop.

Project portfolio management is key to performance in an organization where projects abound and to reach excellence in all areas: clients, employees, products/services, quality, health and safety, CSR, finance, logistics, and purchasing.

Project managers can often do without what are often complex project management tools. Project management offices (PMO), on the other hand, need a suitable software solution to juggle the different aspects of the various portfolios.

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The nuts and bolts of managing project portfolios

Opt for Program Management when necessary

When several projects cannot be managed in isolation to get the required result they become a program.

In a project portfolio, projects generally contribute to the same objective. All the projects need to be driven forward, without endangering the overall success of the portfolio.

A program, on the other hand, responds to the challenge of assembling building blocks, dividing and sequencing interconnected deliverables. If there’s a problem in one project, all the other projects are directly affected.

Program and project are often confused. Organizations talk about “megaprojects” as one project. It’s never long before a megaproject becomes too unwieldy. The only way forward is to split it into two or three projects and call it a program, overarching a group of projects.

Project portfolio and project program: different management approaches

Portfolio management can be compared to an air traffic control tower. The aim is to help planes take off and land and ensure traffic runs smoothly. A problem on one plane doesn’t stop the others from flying. Likewise, a problem with one project doesn't stop the others moving forward. In portfolio management, mistakes are allowed.

Program management is more like a space center and launch pad: planning, preparing, launching, and monitoring rockets taking off into space. The slightest problem can setback the whole mission, even proving fatal to the program.

Managing without traditional project management tools

When looking for portfolio management tools, the first reaction tends to be consulting the Information Systems Department (ISD) which manages programs and IT projects using the following PPM tools: Jira, MS Project, Wrike. Yet 90% of the time, portfolio management requires clarity, sharing, prioritizing, commitment, and team empowerment. Successfully managing a group of projects requires more than visualizing a schedule and a Gantt chart. It requires an overview of all the resources and projects in progress with their priority for the organization in order to identify when even the smallest trade-offs need to be made.

As with air traffic control, the goal is to ensure the portfolio runs smoothly. Technical solutions such as Jira or similar solutions can prove counter-productive because they add a layer of complexity where simplicity is needed.

Choose accessible PPM software for your teams

Project portfolio management: what’s changed in the last 10 years?

These days, companies don’t aim to manage top-down portfolios. They aim for range of transformation, innovation, and operational excellence programs to boost competitiveness. Each department manages its own portfolio. Projects are no longer the preserve of the IT department. They are spread across the company.

As a result, the notion of portfolio no longer applies exclusively to projects. It covers major projects, action plans, and ideas. Companies now prefer to talk about initiative portfolios to reflect the diversity of their activities.

These days portfolios are multidimensional. They must integrate the company’s organizational dimension (geographical, services), the business dimension (processes, products, or services, clients) and the performance framework.

A process manager has to be able to manage initiatives relating to their process, and a site or service manager must manage those relating to their entity. The same goes for a program manager or a cross-functional manager (quality, health and safety, CSR). As a consequence, portfolio management requires a view from various angles.

Working in silos is finished. All initiatives need to be incorporated on a single platform to avoid operational staff running out of steam when faced with multiple project management applications.

IDhall: easy-to-use initiative portfolio management software

By integrating Project Portfolio Management software, selecting a single collaborative tool guarantees:

• A global, structured, and organized view of all initiatives;
• Subject transparency and progress visibility in one click;
• Initiatives prioritized across all portfolios rather than in just one;
• Committed stakeholders who take responsibility so initiatives become everyone’s business and not just the realm of a few project managers or portfolio managers.

Traditional project management tools that are too complex don’t get as many people as possible on board.

If they’re too simple, they don’t meet requirements for structure and coordination.

If they’re too specialized, the portfolio managers find themselves isolated in their ivory towers.

As for MS Excel spreadsheets, you waste more time fishing for and consolidating information than on tasks that add real value.

Get your business moving with IDhall, the intuitive solution that:

• Optimizes involvement, develop supports, commitment, and teamwork, and empowers contributors;
• Enables efficient management of simple actions, major projects, action plans, and projects;
• Offers initiative lists, reports, and tables that consider every conceivable permutation of portfolios.

IDhall is a digital solution for managing initiative portfolios. Unlike technical solutions such as Jira, our efficient, no-frills platform is designed to optimize teamwork.

This article was originally published on December 2, 2019 and was updated on April 26, 2023.