“What is the difference between project management and project portfolio management (PM vs. PPM)?”– this fundamental question is asked by many businesses that are reorganizing or are considering a PMO. This question also implies an uncertainty as to whether a PMO is actually necessary for the successful implementation of projects. Project Manager Bob Buttrick provides a simple, easy-to-understand answer:
Project management is about doing things right, portfolio management is about doing the right things.
The effective synergy of PM and PPM in a business means, ultimately, “doing the right things right.”
A look at the various levels of project organization also provides initial answers to this question about the difference between project management and project portfolio management.
The management at the top of the pyramid provides strategic guidelines and by doing so acts at the level of the PMO.
The PMO, that has been assigned the task of PPM, works on project and program portfolios. PPM analyzes, measures, consolidates, and aggregates data received from the surrounding levels and, in turn, delivers information. When it comes to resource management, the PMO acts on the level of PM.
In PM, project managers and their teams carry out the individual projects.
So, PPM falls between the management level and the implementation level of a business. This middle position could be called the planning and evaluation level.
A look at the projects themselves shows that they, too, are organized and carried out in a three-step process.
Step #1: Project Portfolio Management
The task areas on the project portfolio management level can be described as follows:
Strategic project management: selecting and prioritizing projects in accordance with the specified strategic objectives
- Resource management: planning staffing levels in accordance with the skills and availabilities of human resources, taking into account the time frame and budget
Rough milestone planning: initiating, planning, implementing, and completing the projects
Training and coaching for project managers and teams
Introduction and maintenance of PM methods, tools, and technologies
Project portfolio controlling: monitoring and evaluating project progress
Project support: operational support in carrying out PM tasks; this task area will diminish more and more in the future
The PMO is the central hub for projects in the business, driving PPM on a largely strategic level. The PMO is a fixed and permanent entity within the business organization. The focal points of its work are resource management and cross-level as well as cross-project communication (source: Strasser).
In other words, the purpose of a project management office is to prioritize projects, plan them realistically (keyword: resources), monitor them, and keep all involved parties informed about their status.
PPM also addresses the frequently occurring problem of businesses implementing too many, rather unimportant, projects. This practice causes employees to be constantly overloaded and overextended, which soon leads to projects being stopped again due to substandard quality or non-feasibility. This bottom-up approach consumes unnecessary resources, neglects the business strategy, and pits the projects against one another in a competition that usually only has one winner.
PPM, on the other hand, follows a top-down approach. This ensures that important, less risky projects are implemented first and that they also have the necessary resources. Remaining capacities are then used for additional initiatives. PPM places great value on resource planning and resource conflict resolution, thereby increasing value creation in a business.
Step #2: Program Management
Projects often go through yet another tactical level between PPM and PM, known as program management. Programs are sub-portfolios or groups of projects with similar content, which serve to fulfill the same strategic objective. Unlike PPM, program management is time-limited, like the projects in question, and operates on the basis of specific objectives or subjects. However, the distinction from PM is fluid. It could be said that program management is used when the respective task can no longer be handled within the scope of an individual project. In general, program management comes into play for large, complex projects (source: ProjektMagazin).
Step #3: Project management
The last step that a project goes through is project management. Project management is the implementation of the individual, singular projects in accordance with the PMO’s plan and works on a purely operational level. A project has a project manager and a project team. The project manager can manage several projects as long as he or she has sufficient capacity. The project manager has the following tasks:
Clarify the objectives and assignments
Plan dates and detailed milestones
Check the progress of the project as well as its adherence to the time frame, budget, and requirements
Monitor the risk portfolio
Manage the team to success. This involves overcoming conflicts on the lower level, tying in key stakeholders, and communicating with team members and the PMO. A project manager can request more resources from the PMO and report problems, if necessary.
Accordingly, a project manager needs to have not just technical skills, but also a number of soft skills, including team management, social competency, self-management, and stress management.
The line between project management and project portfolio management is often blurred in literature and in practice, because people are more than happy to group all three steps under the heading of “project management.” This stems from the fact that many businesses do not yet have a PMO, and so inaccurate terminology persists. This leads to confusion with regard to the specific task areas of each step and the distinctions between them.
Project managers are assigned more or fewer tasks depending on whether or not a PMO exists within a business. However, if the PMO is clearly established, a huge difference can be seen between project management and project portfolio management. This difference is in respect to the hierarchical position within the organizational levels, the type of the task areas (strategic vs. operational), the scope of activity (portfolio with all projects vs. individual project), and the chronological continuity (time-limited vs. open-ended).