Both project (PM) and portfolio management (PPM) are core processes for driving growth in many businesses – large and small.
While it’s easy to confuse the two, they serve very different purposes.
So what exactly is PM and PPM, and what are the key differences between the two processes?
Project Management vs Portfolio Project Management
One of the best ways to visualize the difference between PM and PPM is to put yourself at sea on a boat.
When you’re out at sea, there are various factors to consider. Some that are within your control such as the state of the boat and the direction you’re heading, and others that aren’t such as weather conditions and other boats on the water.
Project management is everything that happens on the deck. It’s the deckhands who propel the boat forwards or anchor at bay. The crew that handle clients that may be on the boat and serve their needs.
Portfolio project management is the domain of the captain. The captain course-corrects based on weather conditions and takes into account the number and strength of his crew when making important decisions.
Where PM focusses on ground-level concepts, PPM adopts more of a birds eye view.
Let’s examine the core roles, responsibilities, and results associated with both processes to give you an idea of what these differences mean on a practical level.
In the project management process, there can be a wide range of roles such as:
- Project managers
- Team leaders
Since complex project management often deals with one project at a time, it’s important to have synergy between team members – sometimes across different departments.
Your overall project manager might assign tasks and allocate resources, but it’s the team leaders that will coordinate with one another to make headway on the project in question.
You also have to consider stakeholders which have a vested interest in the project’s success, and how you can take their input on board during the process.
The core responsibilities of organizational project management vary wildly since you’re dealing with time, money, and labor.
Here are some of the main elements to consider when managing projects:
- Task management – The day-to-day of project management involves assigning and checking off action items or tasks.
- Resource allocation – Resource allocation refers to how you manage your workforce and operate within your budgetary constraints.
- Budget estimates – For client-facing projects you may need to provide a budget estimate upfront based on your prior knowledge of how long similar projects take and the resources at your disposal.
- Time-saving automations – With project management software, you have the opportunity to create automations to drastically cut down the time you spend on trivial tasks such as sending out an email when a task has been completed, or manually adjusting project statuses, work estimates, or start and finish dates.
- Schedule setting – Time management is an integral part of project management, and setting up a schedule that works for your team with milestones and deadlines helps ensure you stay on track.
- Stakeholder communication – Keeping your stakeholders in the loop is imperative as it might be their money or reputation on the line, so finding ways to be transparent and stay in touch is important during the project management process.
The success of project management usually boils down to a series of concrete deliverables.
It could be that you are creating a website for a client, in which case the finished website would be the end product of your project.
Projects can take anywhere from a few days to a few months, depending on a variety of factors. Typically you would submit the finished project directly to the client, but in some cases you would submit earlier versions or drafts to make sure everyone is satisfied with the direction.
Core Challenges and How to Overcome Them
Now let’s take a look at some of the most common project management challenges and the best strategies to overcome them.
When you’re in the thick of it working as part of a cross-functional team, effective communication is key.
Not only do you need quick and effective ways of keeping in touch with your coworkers, but also to stay connected with other departments to assess how their progress affects yours.
If there’s a weak link anywhere in the chain of communication, that’s when mistakes and misinterpretations are likely to creep in. Plus, if you’re in a remote work environment you might also have to consider issues such as time difference and how that impacts meetings and day-to-day communication.
Solution: Asynchronous and synchronous communication
To ensure no important information falls through the cracks, use a mix of asynchronous and synchronous communication to coordinate on projects.
Asynchronous communication is any form of messaging that doesn’t require the recipient to be present, such as:
- Task labeling and commenting
- Pre-recorded video
With this style of communication, you can coordinate with team members even if they’re in different timezones or have their own work schedules.
Synchronous communication is real-time messaging, and includes:
- Video conferencing
- Instant messaging
- Phone calls
You can use this style of communication to host meetings and invite feedback from those present, or get hold of a coworker immediately through an instant messaging tool.
#2 Scope Creep
Scope creep is what happens when the project scope expands beyond the resources you assigned to it.
It could be that you’re running over budget, or that you don’t have enough team members to complete the project without risking burnout.
While it can be seen as a failure to plan accordingly, scope creep is common in project management as there are always many factors that influence your ability to complete a project within the scope you assign it.
Solution: Project management software
To prevent and avoid the issue of scope creep, you need to be able to visualize everything that goes into your projects.
With the right project management software, you can do just that.
Using a software solution will allow you to accurately estimate budget and timeframes for individual projects and follow your progress as you go. Gantt charts and dynamic timelines can be useful assets for evaluating progress at a glance and reacting in real time.
#3 Time Management
Managing your team’s time is an important part of the project management process.
For example, you might have to decide whether it’s best to have your team spend the day coordinating on a single task or to fragment their focus and complete several tasks concurrently.
Both approaches can be effective, but you need to know your team inside and out to know how to allocate their time well. You also need to understand – based on previous knowledge – how long certain tasks and projects take, so you can meet deadlines on time and follow your projected timelines.
Solution: Time tracking
If you want to know where your team’s time is going, implementing a form of time tracking is one of your best options.
With manual or automatic time tracking software, you can track team member time down to the minute which provides you with opportunities to improve operational efficiency and adjust team member priorities.
Portfolio Project Management
In portfolio project management, the emphasis shifts from the ground level to a more high-level overview. With PPM you aren’t just managing a single project, but you’re handling a series of projects to ensure alignment with your company’s overall strategic goals and objectives. You’re responsible for making sure resources are used efficiently, priorities are aligned, and budgets are managed across a multi-project ecosystem.
In portfolio project management, there are typically fewer roles, including:
- Project portfolio manager
- Project sponsor
To return to our earlier nautical-themed analogy, the roles associated with PPM are similar to that of the ship’s captain – making sure the boat reaches its final destination.
Less concerned with the progress of individual tasks and teams, the project portfolio manager’s main role is to see each project with respect to how it drives the company closer to its strategic goals.
The project sponsor is someone who takes responsibility for the selection of some projects over others, presenting the business case for individual projects and getting approval from senior leadership.
At the PPM level, there’s less micromanagement and more macromanagement as the portfolio project manager oversees the progress of various projects at the same time.
Here are some examples of PPM responsibilities:
- Budget allocation – The project manager may be in charge of the budget for an individual project, but it’s the portfolio project manager that assigns them that budget in the first place considering a variety of factors including what other projects are underway.
- Regular status reports – A portfolio project manager is effectively the link in the chain of command from project managers to senior leadership. As such, they should provide regular status updates to senior leadership regarding the individual projects in the company’s portfolio.
- Strategic alignment assessment – To make sure each project helps a company reach its strategic goals, the portfolio project manager must assess the level of alignment, and make sure everyone in the company is operating on the same page.
- Project forecasting – Project forecasting is an important process for getting a snapshot picture of what the next few months will look like. Forecasting simulations in PPM software can help you map out future projects with a high degree of accuracy.
- Prioritization – Taking everything else into account, a portfolio project manager must prioritize the focus of project managers and teams to make sure everything is in alignment and deadlines are met.
With PPM, there’s less of a focus on the completion of each individual project, and more towards metrics and KPIs that suggest the company is moving towards its strategic goals.
Here are three important KPIs in PPM:
- Operational efficiency – Operational efficiency refers to how much output you see compared to the input. If you can reduce the level of input without compromising output, you can improve operational efficiency and increase the speed of project completion.
- Budget Variance – Budget variance refers to how much you spent on a project compared to your initial estimates.
- Time – Using time tracking you can assess how much time it takes to complete different types of projects, which is valuable for informing your forecasting and billing.
Core Challenges and How to Overcome Them
PPM can raise different challenges than PM, and we’ll explore 3 of the most common now.
#1 Allocating Resources
In PPM, there’s a heavy emphasis on how you manage the company’s resources to complete all the projects in your portfolio in a timely fashion and within the assigned budget.
This not only applies to budget though.
You also have to bear in mind your labor resources, and how you can distribute workloads evenly so there aren’t imbalances that can lead to issues such as burnout and slow progress.
Poor resource allocation can negatively impact your relationships with clients and stakeholders, and place undue stress on your workforce.
Solution: Resource Leveling
To effectively allocate your resources, you need a detailed understanding of work schedules, priorities, and the budget you’re working within.
LiquidPlanner’s balanced workload tool can help you stay within your means across the projects in your portfolio. With automatic resource leveling, you can easily factor in new priorities and constraints as well as those you set out with in order to manage your portfolio on the fly.
You can also gain insights into workload levels and employee availability which can help you reshuffle resources when necessary. Seeing and understanding the capacity of your teams across the entire project portfolio is essential.
#2 Risk Management
At the PPM level, there are many risks involved that could throw your plans off course and disrupt progress towards your strategic goals.
Risks can be categorized as:
- External – External risks are those outside of your control. It could be that your competitors are jostling for market share and putting your strategy in jeopardy, or that the economic climate has changed which affects the types of projects you can take on.
- Internal – Internal risks are related to the key decision-makers in your company as well as any structural changes that threaten to negatively impact your processes or procedures.
- Process-related – Process-related risks come from the day-to-day execution of projects. Any issues within the workforce or the tools you use to complete projects can hinder progress.
Solution: Predictive Scheduling
To handle and manage risks in the PPM process, it helps to have an accurate system for forecasting projects into the future.
With LiquidPlanner you can find that in the sophisticated forecasting engine, which uses Monte Carlo simulations to run real-time forecasts across your portfolio. With this data you can identify risks and stumbling blocks ahead of time with a high level of accuracy.
You can also rely on the smart schedule bars to give you up-to-date status reports on when projects are likely to finish which you can then present to senior leadership.
#3 Strategic Alignment
Reaching strategic alignment with the projects you take on is one of the most difficult challenges of portfolio project management.
It isn’t simply a case of picking and choosing the projects that align with your goals, since project scope and other factors can influence their direction over time. As such, you need to be both proactive and reactive to make sure your projects line up with strategic goals in the long run.
Solution: Structured Prioritization & Intelligent Insights
Juggling a series of projects and making sure they align with your strategic objectives is much easier when they are a part of the plan and when you have access to intelligent insights on the data.
In LiquidPlanner, projects and tasks are always prioritized. Structured prioritization is simply built into the planning process, as the schedule engine actually references priority when building schedule forecasts.
You can use LiquidPlanner’s real-time dashboard and data-rich reports to make sure each project you have in your portfolio aligns with your strategic KPIs and pushes you in the right direction.
You can even go in and add your own custom properties to the projects in your remit to make sure the data you receive tells you what you need to know.
PM or PPM: How Should You Use Both?
Whether you are part of a large or small organization, you are probably already using both project management and portfolio project management in some capacity.
But how well you do them depends on how you position your team to address the challenges of each. The complexity of your process and tools will largely depend on the size of your team, and the number of projects, stakeholders, and budgets involved.
Adapting portfolio project management to your organization can be a matter of asking the right questions to make sure your portfolio is set up for success. Identify the unique problem sets your team faces and develop an action plan to address some of the key challenges outlined above.
If done right, the captain and crew on deck will easily work together to steer the ship to shore without veering off course, even if the waters get a little stormy here and there.