Project and Portfolio Managers: What's the Big Difference?

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Categories: Portfolio Management

Frequently, I hear stakeholders confuse "project managers" and "portfolio managers."  
The misunderstanding may stem from the fact that although portfolio managers may seem to be higher in the organizational hierarchy, it doesn't necessarily mean that they supervise project managers. Also adding to the confusion is that today's project managers have more business acumen than their predecessors to compete in a global economy. 
To determine the difference, remember one thing: Portfolio managers help translate an organization's business strategy into a portfolio of projects' benefits and results, which are delivered by project managers and their teams.
Therefore, the portfolio manager works in a synergic way with project managers to realize business objectives through projects. 
A portfolio manager has to answer three questions about every project:
1. Is it interesting? All projects have to create business value. Consequently, alignment between project deliverables and business strategy is essential. 
By answering if projects are interesting from the point of view of the organization, we are assuring that we have a portfolio aligned with the strategic plan.
2. Is it viable? It is common to have many interesting project possibilities. However, we may not be capable of carrying them out. 
Therefore, a portfolio manager must determine a project's viability. Do we have the resources? Do we have the technical skills?
3. Should we do it? We may end up with a list of projects that are interesting and viable, but we cannot execute all of them at once.
Portfolio managers use scoreboards and other methods such as the analytic hierarchy process to select and prioritize the best projects.
To answer these questions, portfolio managers analyze business cases, project proposals and viability studies. Once there is an approved project charter, a project manager takes over to drive the completion of the project on time and in budget and to ensure that the project stays aligned with the business strategy.  
By the end of the project, the project manager's performance depends on how well he or she planned and managed the project (time, cost, and scope and quality). That is, a successful project would have satisfied stakeholders by delivering what was promised according to the project plan. 
Considering the performance of a portfolio depends on achieving business objectives through projects, portfolio managers use other metrics to measure success. These include:

  • ROI
  • Percentage of projects aligned with strategic objectives
  • Investment targets met
  • Percentage of facilities and personnel used
  • Percentage of financial resource utilization
  • Business value realized
  • Percentage of customer/stakeholder satisfaction
  • Total variances to budget and schedule

Posted by Mario Trentim on: February 06, 2013 06:55 PM | Permalink

Comments (3)

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Mohamed A. Badie
Short Simple and to the point.... enjoyed reading it.

Mounir Ajam
A couple of questions 1. Is this portfolio manager becoming a common position in organizations? 2. Is there any organizational context? Meaning is this article applicable within small or medium organizations or a division in large organizations? The reasons we ask is because I have been in project management for over 25 years and a consultant in PM for the last 10 and i have not met one portfolio manager yet. Also in my personal experience - and in large companies, some of the roles described above are not left to one position or person - they are either with business planning, strategic planning, or executive management.

Mário Trentim
Hello Mounir Ajam, I know a couple of portfoliio managers and I believe that the answer to your first question is yes. However, complementing with your second question, in my experience this article better explains an organizational context of large companies. I totally agree when you say that "some of the roles described above are not left to one position or person". It is also usual to find organizational structures dedicated to business and strategic planning that perform PMO roles. In my opinion, portfolio managers have more to do with business and strategy, while project managers are more at an operational / execution level. Thank you for your comment. Mario

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