Wednesday, August 23, 2023

Book Excerpt from 'I Want To Be A PfMP' – Life Cycles and Component States in Portfolio Management

This article is an excerpt from the Book - I Want To Be A PfMP

It is from Chapter – 2: Portfolio Management and Organization. 

For the index of the book, refer: Book Index - I Want To Be A PfMP. 


“The velocity of portfolio components’ completion determines the velocity of the organization.”

- Yogic Quote

You would be hearing these terms “organizational velocity” and “velocity of portfolio component’s completion” for the first time. But most of you would have heard the terms "speed" and "velocity". However, there is a subtle difference between speed and velocity. 

Speed is a scalar concept, whereas velocity is a vector concept. Speed tells how fast you are moving or covering a distance, whereas velocity tells how fast you are moving in a particular direction. Speed is direction agnostic, whereas velocity is direction aware.

But what does it have to do with portfolios, their management and organization? 

When I say velocity of a portfolio component’s completion, it means how fast we are completing a portfolio component, be it programs or projects. This in turn informs how fast the strategic objectives of an organization are being met, i.e. the organizational velocity. Because, as we have seen before, it’s portfolios of programs, projects and operations that achieve an organization’s strategic goals and objectives. This in turn leads to realization of an organization’s mission and vision. The vision is the direction of the organization. Portfolio and its components are geared towards it! 

The velocity of portfolio components’ completion determines the organizational velocity because portfolios represent organization's intent (strategic), direction (vision) and progress (performance).

Hence, it’s important to know portfolio management from an organizational perspective. 

Portfolio management happens in an environment broader than the portfolio itself. At the same time, portfolios operate within the value boundary of an organization.

In this chapter we will learn more on portfolio management and organization, organizational influences, roles of portfolio manager, among others.

2.1 Life Cycles

In the context of portfolio, portfolio management and associated processes, one can think of three life cycles. 

  • Portfolio Life Cycle
  • Portfolio Component Life Cycle within Portfolio
  • Portfolio Management Life Cycle

There is also another cycle called Portfolio Management Process Cycle. 

To understand the first three, we need to first understand what a life cycle is. The life cycle is the time-span from the beginning of life to the end of life. In other words, one can say, the life cycle constitutes a set of states or stages from the beginning of life to the end of life.

Between portfolio life cycle, portfolio component life cycle (within a portfolio) and portfolio management life cycle there are subtle differences:

  • Portfolio life cycle is obviously the life cycle of the portfolio. It’s managed by the Portfolio Manager.
  • When I say portfolio component life cycle, it’s actually the life cycle of the portfolio components within the portfolio
  • When I say portfolio management life cycle, it’s actually a set of processes to manage the portfolio

In the SPfM3, only Portfolio Life Cycle is briefly mentioned, where others are not. Rather, we have a Portfolio Management Process Cycle. We see them all! 

2.1.1 Portfolio Life Cycle

Portfolio life cycle can be defined as follows: 

“A life cycle of the portfolio from its beginning to closure.” 

Though portfolios are ongoing in nature, it also can get closed. When a portfolio is closed, the life cycle of the portfolio ends. 

2.1.2 Portfolio Component’s Life Cycle within Portfolio

A portfolio component passes through many states from initiation to authorization, within the portfolio. The components states are mentioned in the below table.

As you can the components are going from collection, initiation to authorization. Once authorized, a portfolio component’s management is taken over by the component manager, such as program manager or project manager. 

“A component life cycle within the portfolio consists of states or stages from collection, identification, categorization, evaluation, selection, prioritization, balancing to authorization of the component.” 

When the project or program is authorized, then that portfolio component’s life cycle within a portfolio comes to a closure. Beyond that, it becomes a project life cycle or the program life cycle. 

However, the status or performance of the components is reviewed by the portfolio manager and reports (feedback) are given by the respective program or project managers to the portfolio manager. This leads to the Portfolio Management Life Cycle. 

2.1.3 Portfolio Management Life Cycle

While the Component Life Cycle within a portfolio is about the states involved, Portfolio Management Life Cycle is about the processes used to manage those states. 

. . .

. . . 


Going forward in the book, you will learn the Portfolio Management Life Cycle with examples and how it’s different from other life cycles that we just learned. 

You will also learn Portfolio Management Process Cycle (notice that I didn’t use the word “life cycle”), Go/No-Go decisions and integration of portfolio management processes with organization’s processes. 

You will also learn Portfolio Management Process Implementation, Portfolio Stakeholders (all of them), Portfolio Governance, Role of Portfolio Manager, Portfolio Process Assets, Portfolio Documents, among many others in the following sections. 

  • 2.2 Portfolio Management Process Implementation
  • 2.3 Portfolio Stakeholders
  • 2.4 Portfolio Governance 
  • 2.5 Role of Portfolio Manager
  • 2.6 Role of PMO in Portfolio Management
  • 2.7 Portfolio Management Common Inputs and Outputs

Many get confused between Portfolio Process Assets (PPAs) and Organizational Process Assets (OPAs), or Portfolio Documents and Portfolio Process Assets. These are clearly differentiated with detailed explanations and number of tips.

For price, access, and other details of this new PfMP book, you can refer to this page.

Book Available for PfMP Exam:

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