What Project Portfolio Management Isn't
Project portfolio management frequently gets confused with enterprise project management, professional services automation, management of multiple projects, and program management. All of these are variances or expansions of project management since they do not address the alignment of projects with strategies or the science of selecting the right projects.
Project vs. Portfolio Management: The "Typewriter Effect"
Let us try to establish a boundary between project management and portfolio management. There is a group of activities often attributed to project managers when in fact they should be attributed to a completely different group known as portfolio managers. Identifying needs and opportunities, deciding which projects should be undertaken and which ones should be killed, are all activities that correctly fall into the portfolio management domain. Similarly, establishing project priorities, assessing revenue and cash flow projections, aligning project mix with organizational goals and balancing the project portfolio also fall into this domain. These should all be the responsibility of portfolio managers or high-level executives rather than project managers (see Figure 4).
Figure 4: The initiation and project selection process
The phenomenon known as the "Typewriter Effect" will help us in establishing the desired boundary. Imagine, that project manager Bob was hired by Company X and told to deliver the best model of the typewriter ever built. He may have questioned the financial feasibility of such a venture, but was told in no uncertain terms to stop complaining and concentrate on the project. As a result, Bob collected all of the requirements from appropriate stakeholders, built the project plan with schedule and resource requirements, managed the team properly and successfully delivered the product on time and on budget.
Once the product was shipped to stores, company management - to their great surprise - discovered that there were no lines of the consumers willing to buy it since most people had been using word processing software instead typewriters for the last twenty or so years.
Can we blame Bob for the product failure? Could he really continue insisting that the project was a bad idea? Would he be able to keep his job if he did that?
This example, albeit simplistic, clearly demonstrates the boundary between portfolio and project management.