Project Portfolio Management Governance
No doubt because this title is a bit of a mouthful, current study groups tend to loosely refer to their efforts under the general heading of "Project Governance". Having taken that step, then the natural tendency is to look to how we manage projects and build out from there. This gives us a sort of worldview in which projects are at the center.
Then how they are managed depends on whether we are speaking of a single project, several projects that are a part of a program, or there are several projects and programs that together are managed as a portfolio. Surrounding the whole is then this vague notion of a "project governance" environment that is dealing with anything from a single project to a portfolio of projects. Naturally, this governance "environment" is somewhere close to the level of Corporate Governance of the business as a whole, or for that matter the governance of any level of government department.
But this model is clearly inadequate for several reasons:
- It does not reflect the natural hierarchy from single project, through programs of projects, to whole portfolios of projects and programs.
- It does not take into account the time dimension
- It does not take into account the unique nature of a project and its management, as distinct from the other possible groupings
- Consequently, it mixes apples and oranges.
Therefore, a more realistic view is required to take into account both hierarchy and time frame. Figure 1 is intended to illustrate these more explicit relationships within the corporate environment.
Figure 1: Project portfolio management in the corporate environment
At the corporate level
Several attributes of this scenario are worth noting:
- The primary source of survival of the corporate organization is its operations. These are ongoing as shown in Figure 1.
- The "governance" of corporate operations is generally well established, with appropriate management policies and procedures that are auditable to well established standards.
- While policies and procedures generally address standards of behavior in the present; finance, accounting, audits, and annual reporting all focus on the performance of the organization in the past.
- True, that annual reports are expected to provide an outlook for the future, but rarely are any specific targets described.
- For the survival of the organization, a steady stream of projects, large and small, and in diverse areas of application, are necessary.
In other words, in today's business world, and even in governments, a steady stream of projects needs to be undertaken to survive. Without this stream of projects, the organization will eventually atrophy and die.
At the portfolio level
We see that in general:
- While ever two or more significant projects exist, management of the portfolio will be required, whether the projects are directly related or not.
- The objective of this management is to ensure that the required resources are all coordinated and aligned with corporate strategy, and in a manner that provides the most value at least risk.
- Project portfolio management will be required only until the last project is completed.
- However, if the corporate organization entertains a continuous stream of projects then project portfolio management will also be ongoing.
- Complimenting corporate governance that is accountable for the present and the past, Project Portfolio Management is accountable for the derivation of benefits in the future.
From these notes we see that Operations and Project Portfolio Management have major similarities and convergence. Therefore it can be argued that both should be subject to similar forms of "governance".