By Jen Skrabak, PMP, PfMP
In the first part of this series, I introduced PMI’s new governance practice guide and reviewed basic differences between organizational (corporate) governance, portfolio management governance and portfolio governance.
With that foundation, I’ll now discuss the four basic governance functions, which together can ensure alignment to strategy. Since portfolios include programs and projects by definition, those are not called out separately.
- Oversight. Provide guidance, direction and leadership for portfolios
- Control. How to monitor, measure and report on portfolio status
- Integration. Provide strategic alignment and integration for the portfolio
- Decision-making. Provide decision-making structure, thresholds and membership, including delegation of authority for portfolios
In addition, there are four basic governance domains:
- Alignment. Creating an integrated governance framework, and defining the governance relationships and hierarchy between portfolio governing bodies and other governing bodies (enterprise, functional, program and project-specific)
- Risk. Identifying and resolving threats and opportunities proactively to ensure the balance of risk and reward for the portfolio
- Communications. Disseminating information, engaging stakeholders and ensuring organizational change is carried out effectively
- Performance. Measuring and evaluating KPIs to ensure portfolio value
For some portfolio managers, there may be confusion over governance activities versus portfolio management activities. Portfolio managers may play a governance role on certain programs and projects and provide oversight and decision-making. However, day-to-day portfolio management is distinct from governance, as shown in the diagram below:
Look for part three of this series—which will be focused on key success factors—in the coming weeks! And comment below to share your reactions.