Should Your Portfolio Include Projects Only or the "Whole Portfolio"?

Portfolio management is a coordinated set of processes to ensure that your organization spends its scarce resources on the work that is of the most value. This includes processes to determine which projects you want to fund (portfolio planning), and the processes to staff and monitor the work (portfolio execution). When most people talk about portfolio management, they are referring to the management of projects and programs. This is commonly referred to as "project portfolio management'. But there is another way to organize your portfolio of work – the "whole portfolio". Project Portfolio Project portfolio management focuses on identifying, selecting, prioritizing and executing  projects. Most organizations would love to be efficient and competent with how they plan and manage projects. For most organizations portfolio management is complicated enough and they should stick to the basics – project portfolio management. Whole Portfolio Portfolio management processes help ensure that your organization allocates its scarce resources to the work that is most value. However, what constitutes "work"? Projects are certainly important, but projects might represent only a fraction of the money and resources that are allocated to work. In fact in some mature organizations, the money spent on projects may only represent 20% of the entire work budget. The concept of the "whole portfolio" allows you to take other work into account within the portfolio. For example, you can include the following types of work as well. Operations / support Management and leadership Related non-labor resources like equipment, supplies, hardware, etc. If you manage the whole portfolio you can bring any or all of the other work and resources into the portfolio. This portfolio model is more complicated to plan and to manage. So, what is the benefit? The benefit of the whole portfolio is to gain visibility and set priorities into all of the work that is funded each year. Today in most organizations the funding for projects, operations and support work happens in isolation. It is actually much more enlightening to understand the tradeoffs that take place between these three areas. For example, perhaps you could reallocate funding as follows. You could squeeze the support budget and use the extra money to fund projects to generate more revenue You might decide to spend less money on operations work to fund projects that increase market share You may elect to spend less money on equipment (non-labor) so that you can fund projects to reduce costs These tradeoffs are hard to understand when the budgets are allocated separately. The tradeoffs are easier to understand when all of the work and resources are part of the same portfolio and all of the work is vying for the same pool of money. Yes, the whole portfolio is a little more complicated to plan and manage. But the ability to prioritize across all of the work (not just projects) allows you to make much better priority and tradeoff decisions for the entire organization.