What this is

Organisations utilise different levels of management to ensure teams are aligned with business objectives related to strategy, financial growth, and operational efficiency. The three primary levels of strategic management are project, program, and portfolio management. While these terms are sometimes used interchangeably and share similarities, they have distinct contributions to larger organisational goals. The following definitions of portfolio, program, and project are derived from the UK Government Office of Government Commerce's 2008 publication "Portfolio, Programme, and Project Offices (P3O)." These definitions align with the core principles of the Project Management Institute's (PMI) definitions.

Defining Projects, Programmes and Portfolios

• Projects: Projects focus on outputs and are relatively less complex. They have defined start and end dates, agreed budgets, specific scopes, and lower risk levels. Projects can be viewed as temporary organisations, existing for shorter durations than programs or portfolios. They deliver one or more outputs, typically aligned with a specific business case.

• Programs: Programs focus on outcomes and are higher in complexity compared to projects. They typically have longer timeframes, larger budgets, less defined scopes, and higher risks. Programs can be seen as temporary and flexible organisations established to coordinate, direct, and oversee the implementation of related projects and activities. Their purpose is to deliver outcomes and benefits aligned with an organisation's strategic objectives.

• Portfolios: Portfolios aim to maximise return on investment. They represent a balanced mix of projects, programs, and operational activities that contribute to an organisations strategic objectives. Portfolios are ongoing and involve higher levels of risk. They encompass an organisation's total investment (or a segment thereof) in the changes necessary to achieve strategic objectives. A portfolio may consist of various projects or programs from the same or different business units within the organisation.

Leading practices of Project Management (P3M & P3O):

The international organisations, Project Management Institute (PMI) and the Office of Government Commerce (OGC), are working towards promoting better project management practices and aligning the definitions of "Portfolio," "Programme," and "Project." They use the term P3M as an umbrella term to encompass the application of project, programme, and portfolio management practices, methods, procedures, techniques, and competence to achieve defined objectives. The term P3O refers to a functional model that provides a decision-enabling and delivery support structure for organisational change. This model can be established as a single permanent office, which may have different names such as Portfolio Office, Centre of Excellence, Enterprise, or Corporate Programme Office. It is important to note that P3O not only refers to the function itself but also encompasses the P3O accreditation program and the P3O manual for practitioners seeking certification in this field.

The terms P3M and P3O are commonly used in a government context in the UK, New Zealand, Australia, and Canada, originating from the UK Government OGC's 2008 publication "Portfolio, Programme, and Project Offices (P3O)."

The leading international organisations, PMI and OGC, are the most influential advocates of better practices in P3M. The Project Management Institute (PMI) is a not-for-profit membership association that claims to be the world's leading professional organisation for project management. They include the disciplines of programme and portfolio management within their definition of "project." PMI has published globally recognised standards, such as:

• PMBoK® - The Project Management Body of Knowledge

• The Standard for Program Management

• The Standard for Portfolio Management

• OPM3® - The Organisational Project Management Maturity Model

PMI has also overseen the development of the international ISO Standard 21500 "Guide to Project Management," involving over 30 countries, which was published in 2012.

The UK Government's Office of Government Commerce (OGC) was established to help the UK government achieve optimal value from its spending. OGC is well-known for developing and promoting high-value P3M practices and methodologies, including:

• ITIL - Information Technology Information Library

• PRINCE2® - Projects in Controlled Environments

• MSP® - Managing Successful Programmes, developed to address increasingly complex change programs in Government that PRINCE2 alone could not handle

• OGC Gateway - an assurance review process for large, high-risk projects and programmes

• P3M3® - Portfolio, Programme, Project Management Maturity Model

• P3O® - Portfolio, Programme, and Project Offices, providing guidance on establishing support structures, often referred to as PMOs, for the management of portfolios, programmes, and projects

• Portfolio Management Guide - guidance on portfolio management in organisations

The evolution of project management maturity models

In recent years, P3M advocacy groups have made significant progress in developing Capability Maturity Assessment models and methods to assist organisations in the following:

1. Understanding their level of P3M capability compared to international benchmarks.

2. Assessing improvements in the value of their P3M implementations resulting from investments made in capability.

3. Identifying which aspects of P3M practice capabilities to focus on to achieve the highest return on investment (for their capability-improvement budget).

Two primary maturity models have emerged from this work:

1. OPM3® - Organisational Project Management Maturity Model, developed by PMI.

2. P3M3® - Portfolio, Programme, and Project Management Maturity Model, developed by OGC.

Project management as a discipline typically exists on a maturity continuum within organisations. These organisations may employ legacy or current best practice methodologies or have recently reengineered their ways of working to deliver more effective strategic outcomes. The complexity of terminology, maturity levels, and the diverse range of experience project professionals bring to their work can make project delivery challenging. This challenge applies not only to newcomers in the field but also to well-established practitioners.

Why this is important

In simple terms, portfolio management plays a crucial role in delivering organisational strategy and objectives by emphasising the selection of the appropriate mix of projects. On the other hand, project and programme management are concerned with executing these projects correctly.

The methodologies and models

Primary certification bodies

• Project Management Institute

  • CAPM: Certified Associate in Project Management

  • PMP: Project Management Professional

  • PfMP: Portfolio Management Professional

  • PgMP: Program Management Professional

  • + a variety of other certification routes i.e. Programme Management, Agile

• PRINCE2

  • PRINCE2 Foundation

  • PRINCE2 Practitioner

  • + a variety of other certification routes i.e. Agile