What are programmes and portfolios?

What happens when a major project becomes so big that it contains multiple projects?

Organisations often manage engineering projects in a layered structure. They might start with projects, which they can group into larger structures known as programmes and portfolios.

We manage projects, programmes and portfolios in a slightly different way from each other. An organisation will decide on which structure is best, depending on the types of projects involved.

Up until this point in the course, you have seen projects in isolation. As the academic Rodney Turner has stated, this is the conventional view of how of we manage projects:

"The traditional project management assumption is of the large, isolated project with a dedicated team in which:

they deliver well-defined, independent objectives, which provide the full benefit on their own
they are relatively independent of other projects and operations with few minor interfaces
they have a dedicated team, wholly within the control of the project manager; the manager may desire a larger team, but he or she sets the priorities for the team’s work day-by-day." - (Turner, 2009, p. 323).

In reality the vast majority of projects take place as one of a group of projects either as a programme or portfolio of projects.

Defining projects, programmes and portfolios

The Project Management Institute provides some helpful definitions of these terms: project, programme and portfolio.

Definitions are important because stakeholders need to understand each other in order to work together efficiently. Many costly and dangerous mistakes are made as a result of a misunderstanding over terminology. Therefore, it is important to be rigorous.

This is true in project management, but it is important in all the sciences more broadly. In science and project management we must avoid synonyms because these can result in significant mistakes. Now let's consider the definitions of our key terms.

Project

The Project Management Institute defines a project as:

"a temporary endeavour undertaken to create a unique product, service or result ." - (Project Management Institute, 2013, p.553).

Example: An oil and gas company may be building a new road to allow vehicles to access the plant site more easily. The construction of a new road has a specific goal within a time and budget constraint and so you would describe this as a project.

Programme

You can organise and manage projects as a programme. The Project Management Institute explains that:

"A programme is defined as a group of related projects, sub-programmes, and programme activities managed in a coordinated way to obtain benefits not available from managing them individually. Projects within a programme are related through the common outcome or collective capability. If the relationship between projects is only that of a shared client, seller, technology, or resource, the effort should be managed as a portfolio of projects rather than as a programme." - (Project Management Institute, 2013, p.9).

Programmes are comprised of a number of projects and can also be divided into sub-programmes. How you manage a programme depends on how it relates to other projects and programmes within a portfolio.

Examples of programmes might include:

the various projects required to plan and deliver the Olympic Games such as building or improving the stadium and swimming pool, hosting facilities (for athletes and non-athletes), infrastructures such as railways etc, and event advertising.
the projects required to plan and deliver the FIFA World Cup such as the construction of stadiums. Each stadium can be seen as a separate project.
the projects required to develop an oil field: extraction facilities, refineries, pipelines.
the delivery of 10 identical (or nearly identical) power plants in 10 sites.

Portfolio

At a broader level, you can group projects and programmes together into a portfolio.

A description of a portfolio is:

"projects, programmes, sub-portfolios, and operations managed as a group to achieve strategic objectives. The projects or programmes of the portfolio may not necessarily be interdependent or directly related." - (Project Management Institute, 2013, p.553).

A portfolio is a large collection of projects, programmes, sub-portfolios and activities. They have been grouped together because it would be strategically beneficial to manage them collectively. There is likely to be a close relationship between the organisational and strategic aims of the portfolio and the smaller components of the portfolio.

Examples of portfolios might include:

the overall portfolio of an oil and gas company with upstream facilities (ie exploratory activities like mining) and downstream facilities (ie refining and purifying raw materials) all over the world.
the portfolio of software developed by a software company.
the drugs under development by a pharmaceutical company.

You can often group projects together within a programme, but they can also be separate and exist independently as part of a portfolio. They share the overall strategic aim of the portfolio but you manage them as an individual task. Project managers will organise specific projects and prioritise them based on factors associated with the activity, such as risk and funding.

You will examine case studies to help you explore the relationship between projects, programmes, and portfolios in greater depth.

Please refer to the glossary to check any terminology you are unfamiliar with: Glossary of Project Management Terms

Coming up...

In the next section you will explore a case study example of programme management.