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Projects, Programmes & Portfolios

My most recent blogging activity was replying to a comment on my post ‘Project Management vs. Programme Management’. My reader queried the difference between programme management and portfolio management. As I had myself described a programme as a portfolio of projects I had to think about that and check some sources.

The APM Body of Knowledge defines programme management thus: “Programme management is the coordinated management of projects and change management activities to achieve beneficial change.” It also defines portfolio management as “Portfolio management is the selection, prioritisation and control of an organisation’s projects and programmes in line with its strategic objectives and capacity to deliver. The goal is to balance change initiatives and business-as-usual while optimising return on investment.”

I often use the Apollo programme to illustrate a coordinated set of projects (missions), with the objective of landing a man on the Moon and returning him safely to Earth. But as this year marks NL70, the 70th anniversary of the Normandy landings, I think I’ll switch analogy.

Operation Overlord was the allied code name for the battle of Normandy. Perhaps less well known is Operation Neptune which was the code name given to the crossing of the English Channel, a massive undertaking involving 6,000 ships. Part of Operation Neptune was the transportation of the Mulberry Harbours (A&B) across the Channel. These harbours comprised 6 miles of flexible steel roadway, 144,000 tons of concrete, 85,000 tons of ballast and 105,000 tons of steel. They had been pre-fabricated in secret by at least eleven major construction companies including Balfour Beatty, Sir Robert McAlpine and Costain, three companies I work with today. Indeed two of WSP’s most prestigious design projects are the redevelopment of London Bridge Station and the new Crossrail Bond Street station, Costain are the contractor for London Bridge and in joint venture with Skanska for Bond Street.

Operation Pluto (Pipe Line Under The Ocean) was a project conceived in 1942 to build oil pipelines across the Channel to support the allied invasion. This project involved, amongst others, the Iraq Petroleum Company, Burmah Oil, the National Physical Laboratory, Siemens Brothers, Stewart & Lloyds, Tangye Pumps, Callender Cables and Johnson & Phillips.

So clearly there were many major projects that contributed to the Allied invasion. That makes Operation Neptune a programme since there was management of a coordinated set of projects and the successful landings were a beneficial change, to the sponsor(s) anyway. And as we have seen Operation Neptune was a programme within the wider programme of Operation Overlord.

Returning to the definition of portfolio management, let’s look at “the selection, prioritisation and control of an organisation’s projects and programmes in line with its strategic objectives and capacity to deliver.” The main allied strategic objective was to win the war. The selection and prioritisation was a delicate balancing act of allocating resources between Normandy, Italy, Russia, the Mediterranean and the Far East, amongst other theatres. The Arctic conveys taking tanks and other resources to Russia were a calculated prioritisation to keep Russia in the war at the expense of resources that could have been employed elsewhere. The phrase “the goal is to balance change initiatives and business-as-usual” reminds us, at project level, that whilst we may be engaged in organising an invasion, the troops still have to be fed, watered, entertained, trained and sometimes disciplined.

At sponsor level, whilst the war might appear all consuming, the day to day running of the country has to go on, as does the planning for peace. For the project sponsor the project is often a distraction from the day job. The day job may be to run trains or cure the sick, and the project, when completed will help the sponsor to do that more effectively. In the meantime the project will be consuming the sponsor’s valuable time and resources, perhaps creating disruption, noise, dust and all sorts of other problems. The sponsor must always remain focussed on the phrase “optimising return on investment.” Thankfully in my world that means managing the business case to ensure that the project NPV (Net Present Value) is positive, i.e. that the benefits outweigh the costs. If costs escalate beyond forecast benefits, and efforts at value management are fruitless, the project sponsor may have to consider cancelling the project.

In summary a project should have a well-defined scope to deliver a defined beneficial change. A programme is a coordinated set of projects designed to deliver a defined beneficial change. The number and scope of projects may flex, but the beneficial change required of the programme is well defined. A portfolio is a selected, prioritised set of programmes and projects designed to optimise return on investment whilst balancing the change initiatives with business as usual. It is in that selection, prioritisation and balancing that the strategic beneficial changes are defined. Strategic changes are necessary because organisations operate in a dynamic, competitive environment, and as in war, the optimum allocation of resources to maximise return will change. The tricks are to:

  • Not have all your eggs in one basket
  • Give projects and programmes time to deliver: constant change has costs but no benefits.
  • Cut your losses when a project is no longer viable

[ribbon_new header=”h3″ style=”dark”]Author Bio:[/ribbon_new]David West graduated with a masters degree in Engineering Science from the University of Oxford, and later added an MBA. He is a chartered civil engineer, member of the Association for Project Management and also the Institute of Risk Management. He has worked on projects in the power, nuclear, petro-chemical, building, leisure, health, defence, rail, and development sectors. He has worked right across the project spectrum including roles as: designer, design manager, site manager, construction manager, project manager, project sponsor, risk manager, business unit manager, developer and project sponsor. He has also taught on the Open University MBA programme. He is the author of Project Sponsorship: An Essential Guide for Those Sponsoring Projects Within Their Organizations, ISBN 978-0566088889 published by Gower. David is a Senior Technical Director with WSP, a global design engineering and management consultancy specializing in Property, Transport & Infrastructure, Industry and Environment projects. Information about his Project Sponsorship paperback book can be found at www.gowerpublishing.com/isbn/9780566088889 and Project Sponsorship ebook at www.gowerpublishing.com/isbn/9781409410799.

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