- Both Project Management and Portfolio Management focus on achieving business goals. But there are key differences between the roles of Project Managers and Portfolio Managers.
- Project Managers work towards the delivery of specific objectives within a fixed time window. They manage the successful execution of a project from a tactical viewpoint.
- Portfolio Managers are rather concerned with the strategic goals behind project activity. They manage groupings of projects from a higher-level perspective to maximize the strategic benefits at the company level.
The roles of Project Managers and Portfolio Managers are often confused. Understandably so: Project Management, Project Portfolio Management… At first glance, the difference is subtle! However it does exist, and it’s actually significant. Here is an overview of the respective purposes, responsibilities and skill sets of Project Managers and of Portfolio Managers.
Differences Between Project Management and Portfolio Management
The Project Management Institute (PMI) defines Project Management as “the use of specific knowledge, skills, tools, and techniques to deliver something of value to people.”
According to the same source, Portfolio Management is “the centralized management of one or more portfolios, which includes identifying, prioritizing, authorizing, managing, and controlling projects, programs, and other related work, in order to achieve specific strategic business objectives.”
Although these definitions are deliberately broad, they provide insights into some of the key differences between PMs and PfMs.
We understand that a project is a focused initiative that’s geared towards delivery of a product, service or system (the “something of value”). In contrast, a portfolio is something of a longer-lived, dynamic entity that involves business strategy considerations.
Project Management pursues the realization of well-delineated objectives over a given time-frame. Portfolio Management is more of a big-picture discipline that focuses on seeking the maximization of company-wide profits and resources.
The complementarity and synergy between both fields are obvious, and organizations usually need both Project Managers and Portfolio Managers. However, because of the diverging natures of PM and PPM, their roles and required skills differ significantly.
Key Responsibilities and Competencies of a Project Manager
A project is a specific, time-bound endeavor that’s focused on a unique goal or targets a specific area for improvement — whether the launch of a new product line, the implementation of a new system, or the successful rollout of a marketing strategy. A Project Manager is accordingly responsible for meeting the objectives within the boundaries of fixed timelines, budgets and resource allocations.
The exact responsibilities of a Project Manager tend to vary from one organization to the next, but they’re usually in charge of the following:
- Making sure that the project objectives and requirements are clear and achievable
- Planning the project along a realistic timeline including a breakdown of tasks and key milestones
- Mapping out budget requirements
- Monitoring the progress of the project and ensuring adherence to budget and timeline while keeping an eye on project risk
- Managing the project team to ensure cohesion and proper collaboration
- Communicating important project information with the right stakeholders
A key challenge for Project Managers is to reconcile the operational concerns tied to work collaboration and task management with the changing requirements and expectations of clients or project owners, whose requests may prove challenging to integrate.
They are also required to re-evaluate the project situation on a regular basis. Even in the absence of new client requests or specifications, it’s all too easy for a project to creep off track during the course of execution because of changes in the organizational or market environment. A great Project Manager stays on the lookout to detect any unexpected problem that may arise and delay the project or prevent it from achieving the desired outcome.
Among the skills and competencies sought in professional Project Managers are:
- Discipline and attention to detail for project scheduling and task management
- A good business culture, including some degree of financial and technology savvy, to manage deliverable quality, cost and risk
- Great leadership and communication skills to manage interactions with project teams and key stakeholders
Key Responsibilities and Competencies of a Portfolio Manager
While a Project Manager focuses their efforts on the delivery of individual initiatives, a Portfolio Manager has to consider a set of multiple projects and visualize the connections between them and with the firm’s long-term objectives and vision.
A portfolio of projects is a collection of business endeavors that have been grouped together in order to achieve specific objectives — usually strategic ones. Therefore, successful Portfolio Management requires the ability to embrace a higher-level perspective and to look at the big picture.
Here are a few of the main areas of focus of Portfolio Managers:
- Project Selection: Separating the wheat from the chaff, examining numerous projects and picking the best in order to build (or re-balance) high-achieving project portfolios
- Strategy Realization: Identifying patterns and trends across project and establishing connections with the organization’s strategies and goals to ensure the strategic fitness of the portfolio
- ROI Maximization: Efficiently optimizing human and financial resources and prioritizing projects based on objective analysis in order to maximize business return
- Data-based Analysis: Tracking analytics in real time to gain a fine and dynamic understanding of portfolio health, simulating what-if scenarios to plan the best course of action
While Portfolio Managers oversee the Project Management process and often need to look into individual projects to assess adherence and efficiency, their role is much more strategic in nature.
As a result, the skills required for a Portfolio Manager to succeed are also more strategic: outstanding analytical abilities to make sense out of masses of complicated data, and equally excellent communication skills to share the analysis and recommendations with operational and leadership teams; the ability to read markets and situations in order to anticipate problems or opportunities; decisiveness and the ability to bring people together around a vision.