Portfolios, Programs and Projects – The NEW Definitions in PMBOK 8th Edition

In the value-delivery system of an organization, all 3 Ps – Portfolios, Programs, and Projects – are integral parts. However, interestingly, the definitions of all three have changed in the latest PMBOK Guide, 8th edition. 

Put differently, in the future it will impact all – aspiring Portfolio Management Professionals (PfMP), Program Management Professionals (PgMP), Project Management Professionals (PMP), and Risk Management Professionals (RMP). 

Definitions are important because they create a clear and shared understanding. Without precise definitions, communication can become confusing or misleading, as people may interpret the same word in different ways. 

In management as in everyday contexts, definitions act as a foundation for learning, discussion, and critical thinking. They help us to organize knowledge, set boundaries for meaning, and ensure that our arguments or explanations are consistent, coherent, clear, and logical. 

Read this article carefully – not the way one browses social media feed, forwards or reels in seconds, which brings little to no value. Real learning doesn't happen in seconds or two minutes.

In this article, we will explore these concepts in more detail. In organizations, initiatives typically begin at the portfolio level, so we will first examine the definition of a portfolio, followed by those of a program and a project.

Portfolio Definition

Earlier, we had the following definition:

A collection of projects, programs, subsidiary portfolios, and operations managed as a group to achieve strategic objectives.

Now, the definition is significantly changed: 

A collection of programs, projects, and operations managed as a group to maximize overall value delivery and achieve strategic objectives, meet mandatory obligations, or generate income streams.

There are a few noticeable differences here:

1. Subsidiary portfolios are no longer mentioned, but in reality, it’ll be there!
2. Overall value maximization is emphasized explicitly.
3. Generation of income streams are introduced for the first time. 
4. In addition, it can be also about meeting mandatory obligations, e.g., legal, regulatory or others.

Above all, the continued focus on achieving strategic business objectives is there.  

The "generation of income streams" part is completely new. In fact, it has been added for the first time. In a portfolio context, an organization might run multiple initiatives that each create different income streams, so they’re not dependent on just one source of revenue.

Let’s take an example. You’re running a set of initiatives in a SaaS (software-as-a-service) start-up to get recurring revenue from software tools. These projects, within a portfolio, are not related, but can have some commonalities such as technology being used and hence, part of a portfolio. 

Program Definition

Earlier, we had the following definition:

A group of related projects, subsidiary programs, and program activities that are managed in a coordinated manner to obtain benefits not available from managing them individually.

Now the definition is changed to: 

A group of related projects and program activities managed in a coordinated manner to obtain benefits not available from managing them individually. 

Here we have one difference:

1. Subsidiary programs are no longer mentioned, but on reality, it’ll be there!

Programs are always about benefits and hence value. In addition, it's coordinated management of program components to deliver benefits. 

Program has a dedicated domain called Benefits Management, where we do benefits analysis, planning, delivery, transition, and finally, sustainment of benefits. The whole idea of having a program is to have coordinated work in order to deliver benefits/value to organization. 

Project Definition

Earlier the definition of the project was:

A temporary endeavor undertaken to create a unique product, service, or result.

Now the definition has changed and it is: 

A temporary initiative in a unique context undertaken to create value.

This is a real change of words here. The differences are:

1. No longer an endeavor, but an initiative.
2. Context has to be unique.

The initiative word confuses many. It need not be the case. 

As I've written here many times at ManagementYogi, an organization's strategic plan is subdivided into a set of organizational initiatives influence by the market conditions, customer requests, or obligations etc. to be met. 

Next, a number of initiatives are grouped into a portfolio. In other words, a portfolio can contain proposals for various initiatives such as projects, programs, subportfolios, operations etc. It can also encompass already existing projects or programs within an organization. 

In that sense, the definition of a project is perfectly aligned with portfolio and its management. Because a project is indeed is an initiative within a portfolio. 

The other aspect is the uniqueness of context. It’s possible for two projects to involve constructing two identical buildings, but the context can still differ. For example, the location, technology, and resources may vary between these projects. Isn’t that right? 

The most important one is the final aspect of the definition – creation of value. Project is now about creating value, not deliverables as was the case earlier. 

Figurative Representation 

The following figure outlines portfolios, programs, and projects in an organization.

                                 

As shown above, an organization’s vision, mission and strategic objectives are documented in the strategic plan. This plan is subdivided into a set of initiatives. Initiatives are then grouped into portfolios. 

Portfolios of programs and projects in an organization provide the value delivery system. And, as we just learned, all 3 Ps – Portfolios, Programs and Projects – are about creation, enablement and/or maximization of value delivery.

Conclusion

If you've followed my books and/or used my courses, you'll know that I say the following:

Project creates and delivers. Programs coordinates and guides. Portfolio decides and drives.

For more details, check out this article and also Part 2.

By now, you would have noticed that a shift has occurred across all three Ps toward value delivery. I'll change it from the value delivery perspective. 

Project creates and delivers value. Program coordinates to obtain benefits and value. Portfolio maximizes overall value. 

I can also shorten it further and say:

Project creates value. Program coordinates benefits/value. Portfolio maximizes overall value.

References:

[1] PfMP Live Lessons - Guaranteed Pass or Your Money Back, by ManagementYogi.com

[2] PMP Live Lessons - Guaranteed Pass or Your Money Back, by ManagementYogi.com

[3] RMP Live Lessons - Guaranteed Pass or Your Money Back, by ManagementYogi.com