Your company is currently working on several projects and has a waiting list of an additional 20 projects that it would like to complete. If available funding will support only a few more projects, how does a company decide which of the 20 projects to work on next? This is the project portfolio management process. It is important to understand the difference between project management and project portfolio management. Debra Stouffer and Sue Rachlin have made this distinction for information technology (IT) projects:
An IT portfolio is composed of a set or collection of initiatives or projects. Project management is an ongoing process that focuses on the extent to which a specific initiative establishes, maintains, and achieves its intended objectives within cost, schedule, technical and performance baselines.
Portfolio management focuses attention at a more aggregate level. Its primary objective is to identify, select, finance, monitor, and maintain the appropriate mix of projects and initiatives necessary to achieve organizational goals and objectives.
Portfolio management involves the consideration of the aggregate costs, risks, and returns of all projects within the portfolio, as well as the various trade-offs among them. Of course, the portfolio manager is also concerned about the “health” and well-being of each project that is included within the IT portfolio. After all, portfolio decisions, such as whether to fund a ...