Portfolio Management, Program Management, and Governance: A Rational Approach

There's an informative article by Michael Hanford on IBM's website about "Portfolio Management Governance." While it's aligned with IBM's Rational methodology, it provides useful information in general on the topic.

Many people confuse portfolio management, program management, and the relationship of governance to the both domains.

While there's no "right answer" per se, the generally accepted view is that portfolio management focuses on alignment with organizational strategy; setting priorities vs. resource and/or financial constraints; and insuring the right mix of initiatives to meet organizational goals. This is not unlike the management of a financial portfolio.

Program management on the other hand, deals more with execution of a group of related projects, insuring that the interrelationships are managed across them, and leveraging economies of scale (i.e. shared administration, management of benefits, etc.).

More importantly, portfolio management is ongoing and cyclical, while program management is temporary. Of course, some organizations refer to certain "channels" of work as programs, or even refer to mega-projects as programs, but the PMI Standard for Program Management considers these areas in the domain of functional/operational management or project management, respectively.

As for governance, it can work on multiple levels. There can be portfolio management governance, which makes decisions and sets policies at the portfolio level, or program management governance, which acts at the program level. Ideally the two work hand-in hand. For example, an executive council (and sub-councils if need be) can make decisions at the portfolio level (including authorization or termination of programs and projects), while a program oversight committee can govern a specific program, in alignment with the portfolio needs.

For more, here's the IBM article...

Establishing portfolio management governance: Key components