Project Portfolio Management Terminology
Many people are familiar with the term "portfolio management" in the financial sense. The term implies that you manage your money in a way that maximizes your return and minimizes your risk. This includes understanding the different investment alternatives available to you and picking the ones that best achieve your overall financial goals and strategy. One size does not fit all. The investment decisions you make when you are 30 are different from the ones you make when you are 60. In each case, you don't look at each investment in isolation, but in the context of the entire portfolio.
So, it is with project portfolio management, but before we begin we need to introduce several definitions with which project management readers may not be familiar. The following terms are defined in the specific context of project portfolio management.
- Portfolio - a collection of projects, possibly including "Other Work". We'll explain this situation later.
- Other Work - work that is not characterized as a project or program but which management has determined it will include in the portfolio management process because of its call on the same resources.
- Business Case - a key document in the early life of a project or program that describes the reasons and the justification for its undertaking based on its estimated costs, the risks involved and the expected future business benefits and value. It provides the basis for selection and authorization of further effort on a project's definition, planning and estimating.
- Value Proposition - a quick one-page document briefly describing a potential project or initiative and its justification in terms of benefits. A very simplified form of Business Case and used for very early screening of larger potential projects.
- Benefit - an outcome of change that is perceived as beneficial by a stakeholder.
- Benefits Realization Management (BRM) - the process of organizing and managing, so that potential benefits arising from investments in change are actually achieved.
- Component (i.e. component of a portfolio) - any "Work" that the organization has determine it will include in the portfolio process. Such "Work" may be represented by the documentation of a Value Proposition; a Business Case; a Project Charter or Brief; Execution Performance Report; Work Order; Bug Report; or similar document that implies commitment of resources.
- Categorization - the grouping of potential components into categories to facilitate further decision-making.
- Executive - that part of a whole organization or Business Unit responsible for governance and stewardship, i.e., strategic planning, administering and managing their entire part of their organization.
- Project Management - the management of projects including entities such as a Project or Program Management Office (PMO).
- Operations - that part of an organization responsible for the on-going deployment of products and services and who are also responsible for realizing the business benefits from the products of projects.
- Steering Committee - a group of "Executive-level" clients and stakeholders who are responsible for providing portfolio strategic guidance, prioritization and approval of "Work" for the portfolio and then monitoring the portfolio throughout the year.