Project and Portfolio Managers: What’s the Big Difference?

By Mario Trentim, PMP, PMI-RMP
Frequently, I hear stakeholders confuse “project managers” and “portfolio managers.”
The misunderstanding may stem from the fact that although portfolio managers may seem to be higher in the organizational hierarchy, it doesn’t necessarily mean that they supervise project managers. Also adding to the confusion is that today’s project managers have more business acumen than their predecessors to compete in a global economy.
To determine the difference, remember one thing: Portfolio managers help translate an organization’s business strategy into a portfolio of projects’ benefits and results, which are delivered by project managers and their teams.
Therefore, the portfolio manager works in a synergic way with project managers to realize business objectives through projects.
A portfolio manager has to answer three questions about every project:
1. Is it interesting? All projects have to create business value. Consequently, alignment between project deliverables and business strategy is essential.
By answering if projects are interesting from the point of view of the organization, we are assuring that we have a portfolio aligned with the strategic plan.
2. Is it viable? It is common to have many interesting project possibilities. However, we may not be capable of carrying them out.
Therefore, a portfolio manager must determine a project’s viability. Do we have the resources? Do we have the technical skills?
3. Should we do it? We may end up with a list of projects that are interesting and viable, but we cannot execute all of them at once.
Portfolio managers use scoreboards and other methods such as the analytic hierarchy process to select and prioritize the best projects.
To answer these questions, portfolio managers analyze business cases, project proposals and viability studies. Once there is an approved project charter, a project manager takes over to drive the completion of the project on time and in budget and to ensure that the project stays aligned with the business strategy.
By the end of the project, the project manager’s performance depends on how well he or she planned and managed the project (time, cost, and scope and quality). That is, a successful project would have satisfied stakeholders by delivering what was promised according to the project plan.
Considering the performance of a portfolio depends on achieving business objectives through projects, portfolio managers use other metrics to measure success. These include:
  • ROI
  • Percentage of projects aligned with strategic objectives
  • Investment targets met
  • Percentage of facilities and personnel used
  • Percentage of financial resource utilization
  • Business value realized
  • Percentage of customer/stakeholder satisfaction
  • Total variances to budget and schedule

The views expressed within the PMI Voices on Project Management blog are contributed from external sources and do not necessarily reflect the views and opinions of PMI.

Article source: http://blogs.pmi.org/blog/voices_on_project_management/2013/02/project-and-portfolio-managers.html

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