Will the real Portfolio Management please stand up?
Portfolio Management guidance issued by the Project and Programme Management (PPM) community here in the UK places Portfolio Management firmly in a hierachical relationship to PPM: § The Office of Government Commerce (OGC) guidance issued in 2004 identified the pre-requisites for successfully implementation of project portfolio management as including – “Organisational capability in Programme and Project Management (PPM) governance and standards”§ The OGC’s P3M3 Maturity Model sees portfolio management building on existing project and programme management maturity – “This means that organizations can use the model to evolve their maturity across all disciplines in an integrated approach or by addressing Project Management then Programme Management and then Portfolio Management in sequence.”[1] § Most recently, Venning[2] (2008) states that the prerequisites of portfolio management include, “Organizational capability in programme and project management with consistent standards” and, “organizations should not attempt to establish a portfolio management function until they are confident that they have reached an appropriate level of maturity in their programme and project management approaches. The minimum recommended level is Level 3 of the OGC’s P3M3”. The problem we immediately face is that one of the explanations for the absence of formal evaluation of the P3M3 maturity model is that the majority of organizations are at relatively low levels of maturity. If we accept this analysis, then most organizations should not even consider implementing project portfolio management. But this analysis is illogical and furthermore it rests on a misunderstanding of the nature of portfolio management. Firstly, the consequence of the above view is that an organisation needs to develop its capability to deliver projects irrespective of their business value before asking the question are they the right projects to undertake in the first place – so putting the ‘delivery’ cart before the ‘strategy’ horse. Secondly, portfolio management calls for a different set of competencies and disciplines from project and programme management. Whilst the latter involves detailed planning and a focus on managing implementation, portfolio management core competencies relate more to the disciplines of business strategy, finance and economics – in deciding what projects to undertake, where to continue to invest and how to optimise value from the investment made. Let’s be clear – the two discipines are related but project portfolio management is not Über-programme management. Consequently, whilst effective project and programme management plays a crucial role in addressing the delivery issue of ‘doing projects right’, ultimately portfolio management addresses the wider questions of, ‘are we doing the right projects and programmes’ and ‘are they achievable’ and ‘are we realising the potential benefits’? Seen from this perspective, and whilst not underestimating the importance of PPM, project portfolio management can add value irrespective of the degree of organisational maturity in project and programme management. It’s time our PPM colleagues realised this.
[1] Souce: Capability Maturity Models – Using P3M3 to Improve Performance, Outperform
[2] Venning C (2007) Managing Portfolios of Change with MSP from programmes and PRINCE2 for projects, TSO