1.1 Project portfolio management, project management, and line management


1.1 Project portfolio management, project management, and line management

Project management, project portfolio management, and line management are three distinct functions; they have different purposes and time frames and require specific knowledge, authority, skills, and tools. Irrespective of the particular organizational form adopted—functional-, product-, project-, or matrix-oriented—all three functions are needed to accomplish an organization's goals. What changes from one organizational form to another is where the specific function is located and who has control over it. For example, in a matrix organization, the project management and line management functions will be performed by persons with different reporting lines, while in a functional organization they will be performed by the same or different people, but within a single scope of control.

Each function has different goals. For the project portfolio management function, this is to complete all projects to best achieve the business goals of the organization. For the project management function, the goal is to coordinate the work of a multidisciplinary team to produce a defined set of deliverables on-time and within budget. For the line management function, the goal is the timely provision of competent resources necessary to carry on the planned projects. Figure 1.4 shows the main relationships between them and with the rest of the organization.

click to expand
Figure 1.4: Relationships among project management, project portfolio management, and line management. (After: [4].)

The specific responsibilities laid out in this book for each of the functions are summarized in Table 1.1.

Table 1.1: Proposed Organizational Responsibilities
 

Project Management

Project Portfolio Management

Line Management


Time frame

Defined start and end

Ongoing

Ongoing

Focus

Manages team priorities to deliver within time, quality, and cost constraints

Manages workload to keep development pipeline operating efficiently

Develops organizational capability (resources, competencies, and processes)

Key decision areas

Prepares project schedule
Prepares project budget
Authorizes project expenditures
Maintains communications with project sponsor
Directs project team

Prepares long-term plans to enable appropriate decisions concerning the allocation of scarce resources
Oversees the execution of projects on time and within budget
Allocates project management personnel to projects
Controls management reserves

Prepares line budgets.
Staff development
Determines staff compensation
Recruiting and termination responsibility
Owns functional process



1.2 The project portfolio

An organization's project portfolio is the set of all projects, planned or in execution, formally acknowledged by the organization. Formal recognition usually comes in the form of the project clearing some type of gate put in place to separate the good projects from the not so good. At a minimum, the project scope will have been documented, the resource requirements estimated, the window of opportunity established, and the benefits to be derived from the project's execution evaluated so that an informed decision can be made regarding whether or not to go ahead with the proposal. Typical questions asked at the portfolio level include the following:

  • Do we have the resources necessary to execute project x in the time frame defined by its window of opportunity?

  • What is the opportunity cost of project x?

  • How does the cost-benefit ratio of project x compare with that of other projects in the portfolio?

  • Can we rearrange the project mix in order to maximize the return?

  • How can we offset the risk associated with project x?

The important thing about the project portfolio is that, similar to an investment portfolio, it allows the organization to select initiatives consistent with acceptable levels of return and risk.