Today, the term portfolio is used in different contexts and has to do mainly with a variety of items and objects. The most common meaning of the portfolio refers to a collection. In addition, the combination of the term portfolio with other words such as “project” and “management” has created new terms such as “Project Portfolio Management (PPM)” and “Portfolio Management” that most of the time are used mutually to indicate the management of multiple projects.
Portfolio and PMI
The Project Management Institute (PMI) defines Project Portfolio Management (PPM) as a coordinated management of portfolio components to achieve specific organizational goals. Organizations can be effective when they use processes, methods, and techniques that support them to achieve organizational goals. It is important to note that there is a distinction between program and portfolio. In fact, a program can be defined as a collection of correlated projects that are part of a bigger initiative. At the same time, projects and programs that compose a portfolio can be independent of each other. PMI says that a portfolio can be made of other portfolios, programs, and projects.
Organizations can use Project Portfolio Management (PPM) to determine the optimal resources needed to best reach their operational and commercial goals. In addition, PPM provides companies with tools and instruments to schedule, monitor, and control activities by taking into consideration strategic objectives.
Companies can also reach their goals by using Project Management Office (PMO) which is responsible for implementing governance and processes in order to use the right number of resources to execute projects and programs. Moreover, the PMO is responsible for choosing the most valuable projects and programs for the companies’ portfolios.
Even if some general elements of PMI can be considered in adopting PPM, those standards do not include all the needed details to implement a process. In general, organizations should implement a PPM model according to their needs and goals.
Different types of portfolios
There exist different types of portfolios such as investment portfolios, IT portfolio, patent portfolio, and so on. Let’s analyze the characteristics of two of them: the investment portfolio and the IT portfolio.
The investment portfolio is a collection of assets such as stocks, bonds, and cash held by an institution or a private individual. In general, investors can reduce their investment risks considering investments from companies from different fields. By doing so, if some of the investments decline, other more profitable ones can keep the whole portfolio in balance.
Francesco Pecoraro, PMP, PSM, PSPO, SSYB, SSGB, SSBB, CL, CC is the founder of francescopecoraro.com where he shares useful and practical information about project management, program management, project portfolio management, and agile methodology. Francesco has extensive experience as a project, program and portfolio manager, project management officer (PMO), digital transformation and strategic consultant. He is also considered a communication, public speaking, and leadership expert. Francesco writes about project methodologies, program, and portfolio management.