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PRM303BBusiness Portfolio Management Framework Study Unit 1
& Operations: Operations are the day-to-day running of a company that
and Program Management Principles produces the core products and services that justifies the company’s
existence.
& Portfolio: A portfolio is an organisational fund that forms part of the
Glossary
company structure at executive level, with the purpose of attracting
& Business management by portfolio: Business management by funds for funding and activating portfolio programmes and portfolio
portfolio is a business philosophy followed by companies with a high projects.
level of business maturity. & Portfolio programme: A portfolio programme is a combination of
& Framework: A framework usually refers to the supporting structure related projects that work together as part of a portfolio to contribute
of an object, such as a building or vehicle. In a business management to the achievement of strategic organisational goals.
context a framework is the basic structure underlying the activities of a & Portfolio project: A portfolio project is a combination of related
company. deliverables, combined with their associated activities that form the
& Functional organisation: A functional organisation is decomposed scope of work produced in definite time, cost and quality for
by areas of speciality (such as marketing, procurement or finance) with contributing to the achievement of strategic organisational goals.
clear lines of managerial responsibility. & Product quality: This refers to the degree to which product
& Life cycle: A life cycle is a phased timeline, consisting of sequential characteristics comply with product requirements, as specified by the
structured work or process groups that provide structure to the life of product customer.
a project or service from its initiation stage, through to its retirement
stage.
& Matrix organisation: A matrix organisation combines a traditional 1. The Evolution of Management Theory
functional organisation with a project organisation in a matrix Before the 1890s, there were six different approaches to
configuration. When needed, functional staff have dual reporting lines: management:
vertically, they report to a functional manager and horizontally, they D Behavioural – this approach is centred on individual and group
report to project manager. behaviour to improve the efficiencies in the company.
& Maturity: This is the organisation's ability to apply business portfolio
management to realise it strategic organisational goals by adapting to D Classical – including:
high levels of uncertainty, adapting or developing processes and business o the administrative approach, providing the general duties and
tools, and innovating new products and services. functions of managers,
& Methodology: Methodology is a system of methods used in a o the best possible structure approach,
particular area of study or activity. In a business management context, a o and the scientific approach, based on production efficiency.
methodology refers to the system methods. Used by an organisation to
realize its goals and objectives. D Contingency – according to this approach, there is no ‘best’ way for
managing anything, as what is best is contingent upon various factors
Notes by Chrizel Breytenbach
, PRM303B
such as how complex the environment is, how the technology is 2. Portfolios, Programmes and Projects
deployed, what the strategy is, and how big the company is.
D Quality – focuses on the quality of products and services, and this
was followed by Total Quality Management (TQM), a new
management approach that uses knowledge, tools and techniques of
quality across all aspects of the organisation. Implementing TQM
involves continuous business improvement,
D Quantitative - includes several techniques, some still in use in
portfolio management today, such as: decision tree, game theory, linear
programming, Monte Carlo simulations, queuing theory and statistics.
D Systems - the systems approach embraces the idea that the sum of
the parts is greater than the whole. It means that there are different
parts in an organisation, such as departments or teams and individuals,
all of which can be made better combining the management of
these parts. In addition, the company exists in an environment, which
also provides input to the processes in the company. In this way, the
company is part of a bigger system, and the company is a sub-system of
a bigger whole.
Although these approaches still play a role in companies today, our focus in
this study guide will be on one of the key approaches that emerged at the
end of last century, business management by portfolio and
programme management.
As the above management approaches matured and evolved, it gave rise to
business management by portfolio, a framework in which
managers can:
§ Specify the boundaries of their business systems.
§ Structure their companies.
§ Arrange how they lead their companies.
Notes by Chrizel Breytenbach
, PRM303B
2.1 Portfolios, programmes, and projects-How they fit The illustration below shows how strategy, portfolio, programmes, projects,
and operations work together:
together
– known as Organisational Project Management (OPM) - are
aligned with a company’s strategies and they each help with the attainment
of the company’s strategic goals.
Ø Portfolio management lines up the portfolio and company
strategies by choosing the right projects and programs, making sure
the priorities are right, and ensuring the necessary resources are
available.
Ø Programme management blends the elements of the program
and regulates interdependencies towards achieving the benefits that
were specified.
Ø Project management helps the company to accomplish its
objectives and goals.
OPM can be described as a framework where portfolio, programme
and project management are combined with company enablers to
realise strategic purposes.
The objective of OPM is to ensure that a company works on the right
projects and assigns important resources in the right way. The processes of Portfolio Management and Programme
Management permit companies to organise and manage their businesses
in a coordinated way. Looking at an organisation from the top down, the
Board governs the company, and to do so they subdivide the work into
portfolios.
At Operations level, where the products are governed, the products are
organised into programmes, which in turn are made up of projects.
Projects belong to portfolios and programmes, although not always in a
one-to-one relationship, and all projects in a programme are not necessarily
related to one another.
Notes by Chrizel Breytenbach
, PRM303B
For a project manager to manage their project with insight and impact, they 2.2 Programmes and Projects as part of achieving strategic
need to understand the context of the portfolio and programme in which
their project exists, so that they can contribute to all the processes involved goals
in the management of the portfolio and programme. Programme and project management focus on doing projects and
programmes in the correct way.
Portfolios, programmes, and projects are sometimes used
interchangeably, so it is important to understand the differences, as well Portfolio management ensures that the right programmes and projects
as the fact that one can be contained in the other. The project manager are done.
must not only manage their own project to be within budget, on time and to
the required quality, but must do so while also supporting the
programme and portfolio outcomes, which in turn leads to success
for the company
Management levels in an organisation are defined as follows:
1) Portfolios that support the company’s strategic goals. [Top level].
2) Programmes within the portfolios that support the portfolios and
the company’s strategic goals and deliver organisational benefits.
3) Projects that support the portfolio and strategic goals of the
company.
4) Deliverables must be planned in such a way that it helps to realise
the project goals, programme goals and strategic goals. The level of
planning must be sufficiently detailed to meet the business
requirements within the required time frames and costs.
5) Activities must be planned to support the achievement of the
deliverables.
When activities are completed, this leads to the completion of deliverables,
projects, programmes, and portfolios, all in service of the strategic goals of & Project management as “a temporary endeavour undertaken to
the organisation. create a unique product or service.”
® Temporary means that every project has a definite end.
What started out in the previous century as the first steps to formalise ® Unique means that the product or service is different in some
management has evolved and been incorporated into OPM, which distinguishing way from all similar products or services.
represents the environment in which we manage portfolios, programmes, ® This means that business activities can also be delivered via
and projects, as well as the way in which we manage them. methods other than project management.
® Most of the work in the company is still delivered in the
traditional operations work stream.
Notes by Chrizel Breytenbach
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